Sep 14, 2020
The chairman and CEO of Mondelez International Inc, Dirk Van de Put calls the pandemic of COVID-19, “the biggest trial ever in the consumer goods industry.” With the spread of pandemic, the demand shifted away from dinning out occasions. In fear of not getting the supplies on time, consumers started to stock up on various packaged foods, including varieties of products that they may never have tried before. It’s for Van de Put and his associates in the consumer food packaged products industry to figure out how to keep the newly formed consumers happy and in loyalty with the company’ products.
While attending the Sept. 9 presentation at the virtual Barclays Global Consumer Staples Conference, Van de Put shared how the accelerated consumer trial affected some of Mondelez’s brands. The company’s US biscuits business, for example, gained 2.5 points in household penetration when compared to the same period during the previous year.
“…This has extended our leading position,” Van de Put said. “Our penetration increase is double that of our nearest competitor.”
This year by the end of February, 80 per cent of US households have bought a Mondelez biscuit variant at least once, informed Van de Put and out of that 80 to 90 percent became repeat buyers of Mondelez biscuits.
According to the company, the demand has flowed down from the company’s mega-brands like Oreo and Ritz to such brands as Honey Maid, Newtons, Nilla and Teddy Grahams, out of this 50 percent of the buyers of those lesser-known brands were new purchasers.
As gradually the stock-up period is soon to be a memory of past, Mondelez management is shifting resources to maintain the momentum. One initiative includes a “big increase in working media,” Van de Put said.
“US biscuits would see a 60 per cent increase of their A&C in the second half vs. last year,” he said. “Some of those local jewels, (like) Honey Maid, will see four-times that level of investment they had last year”.
With an economic recession possibly taking hold, the company also is focusing on value and package architecture.
“In the US, that takes the form of multi-buys, where we are trying to link brands with each other,” Van de Put said. “So, for instance, buy Oreo and Ritz together or more multipacks and family packs as part of our assortment.”
The company announced in July its plans to remove 25% of its stock-keeping units (SKUs) to simplify its supply chain and reduce cost and inventories. Luca Zaramella, chief financial officer, said the initiative also improves use of working capital and he does not see it impacting consumers.
“As far as consumer choices are concerned, we really believe that with 98% plus of the portfolio having better service and better value is better for consumers too,” he said. “The same goes for innovation that should be in right direction. We want innovation to be meaningful for consumers. So that’s really what is behind this.”