India drives Mondelez market sales with double-digit revenue growth

Chocolate and snacks major Mondelez, best known for brands such as Cadbury and Oreo, saw the India market deliver its third straight quarter of double-digit revenue growth, the company’s global Chief Executive Officer (CEO) Dirk Van de Put said on Wednesday.

Addressing investors during a concall following announcement of its first-quarter results of this year, Van de Put, who took over from former CEO Irene Rosenfeld in November 2017, said India was a “standout market”, reporting strong volume gains in the January to March period. The company follows a January to December accounting year.

Asia, Middle East & Africa (AMEA), the region where India sits delivered a net revenue growth of 3.6 per cent in the first quarter, second only to Europe, Mondelez’s largest market. The latter reported a 4.7 per cent net revenue growth for the first quarter, while Latin America saw a net revenue growth coming in at 2.2 per cent and North America posting a decline for the period.

Mondelez, according to analysts, derives around 40 per cent of its global revenue from Europe, followed by 30 per cent from AMEA, 20 per cent from North America and 10 per cent from Latin America.

India, in particular, said Van de Put, gained from a spurt in sales both in chocolates and biscuits, both growing in double digits in the first quarter.

“We increased distribution across the country (India) and coupled that with improved in-store execution and a number of successful new product launches in chocolates. Biscuit growth, on the other hand, continued to be strong, which was led by Oreo,” Van de Put said.

Mondelez is India’s largest chocolatemaker with two-thirds of the roughly Rs 80-billion market under its belt. In recent years, the company has faced stiff competition from players such as Ferrero, Mars, Hershey’s, and Nestle, who have all upped the ante in Asia's third-largest economy.

On Wednesday, Van de Put stressed that the company had seen “strong” market share gains in chocolates in the first quarter, led by brands such as 5Star 3D and new additions to the Cadbury Silk portfolio. “We are also getting some traction on a product called Lickables, which is a combination of a chocolate and a toy,” he added.  

According to sector experts, Mondelez is expected to continue its aggressive push into rural areas as well as traditional trade in India. The move coming at a time when the market is recovering from disruptions caused by demonetisation and introduction of the goods and services tax (GST) in 2017.
Van de Put noted that India was an example where successful execution of on-ground distribution and in-store strategy could result in tangible business gains.