Even though global consumers are uneasy due to geopolitical and economic issues, food companies such as Mondelez International are doing well by adapting to changing tastes and trends in different markets. That was the message from CEO Dirk Van de Put in an interview with CNBC's "Mad Money."
Mondelez posted a 3.7% gain in organic net revenue for the first quarter of this year and an 8.4% increase in emerging markets. The company said these increases were partially driven by innovations from established brands such as Oreo and Cadbury being introduced in India and China.
Van de Put emphasized Mondelez has become a market leader when it comes to snacking options. "Consumers are more on-the-go, they eat more out of [the] home — millennials particularly don’t really want to sit down and have a big meal," he told CNBC. "They want to sort of fuel themselves, and they eat 7 times a day, so snacking is really growing as a habit and also the market is growing as a consequence of that."
While Van de Put may have an overly simplistic take on global consumer sentiment, it's tough to argue with recent sales figures showing increasing growth for Mondelez's snack brands. It may also be that as consumers become increasingly jittery about the economy and the future, they reach for well-known snack brands as comfort food as well as for the on-trend options they present.
Mondelez has diversified its portfolio and extended its geographical reach in ways that could help minimize the economic headwinds facing other manufacturers. According to a presentation the company gave at the Consumer Analyst Group of New York in February, Mondelez saw a 5.7% jump in organic net revenue in emerging markets last year.
It also helps that the company boasts nine globally recognized brands within that portfolio — Oreo, Philadelphia, Trident, Halls, Cadbury, Tang, Trident, Toblerone and belVita. Thanks to those powerhouse brands, Mondelez has been able to hold a top market share in biscuits, chocolate, gum and candy in 10 major markets around the world, led by the U.S.
Mondelez is not forgetting its 15 "local jewels," meaning those smaller, more localized brands that can tap into regional preferences and help keep up with consumer demands. These include the Triscuit, Chips Ahoy! and Enjoy Life brands, which together comprised about 47% of the company’s total 2018 revenue.
Mondelez is not resting on its laurels either. Van de Put told CNBC the company plans to ramp up distribution of premium chocolate-chip cookies and other baked goods from Tate’s Bake Shop, which it bought for $500 million in May 2018. The company is also looking at potential adjacencies among various Oreo products, three chocolate brands and savory snacks such as Ritz crackers.
Trimming costs and implementing other changes have made a difference in how Mondelez operates, according to Luca Zaramella, the company's CFO, who spoke at CAGNY.
"We’re starting to run the business in a fundamentally different way," Zaramella said. "As we continue pivoting to a more growth-oriented model, we will benefit from work over the last few years that has strengthened our base and platform."
Mondelez was reportedly the sole bidder for two of Campbell Soup's cookie businesses — Australia-based Arnott's and Danish butter-cookie producer Kelsen Group — but the deal appears to be at a stalemate over the purchase price. There are some challenges for Mondelez. The company's net revenue for 2018 was up just 0.2% to $25.9 billion, but that figure should perk up this year given Mondelez's international focus.
The company's SnackFutures investment strategy has been a bright spot, with the innovation and venture hub formed last fall partnering with Israel's Kitchen food-tech incubator and The Hatchery Chicago. SnackFutures has also taken a minority investment in Uplift Foods and invested in clean-label brand Hu.
If Mondelez can find $100 million in revenue by 2022 from this approach, it could be another lucrative addition to the bottom line and keep the company sailing on — ahead of those potentially threatening headwinds.