ZURICH: Mondelez International, the global snacks firm that recently separated from Kraft Foods, will focus on its "power brands" to drive growth across Europe, where fiscal problems pose major challenges.
Having started trading earlier this week, the new company is seeking to progress in Europe, which is its largest source of revenue at present, but is also facing considerable financial obstacles.
It will emphasise its "power brands" – such as Milka and Cadbury chocolate, LU biscuits and Carte Noire coffee – today supplying 60% of sales and the vast majority of growth.
"We are allocating even more of our advertising, research and development resource to these brands," Tim Cofer, Mondelez International's president in Europe, told the Wall Street Journal.
"Given the current economic environment, particularly in southern Europe, where unemployment and youth unemployment is high, we do see an impact ... We are not recession proof, but we are recession advantaged given the strength of our brands."
The European snacks sector is worth an estimated $335bn per year, and is anticipated to experience a rapid expansion in sales, potentially helping Mondelez hit its growth targets of 5% to 7% annually.
"Snacking in Western Europe is growing quicker than meal-based food," said Cofer. "We see a growth rate 30% faster than in the non-snacking category."
"We see consumers increasingly having busy lifestyles and evolving over time from three fixed meals to many meals, or snacking in between when they don't have time for a fixed meal."
Gum will be a priority area, alongside launching innovative brand extensions. Small Bites, bite-sized chocolates based on brands like Cadbury's Wispa, is worth $300m after just two years, and "chocobakery" lines are two examples.
"We are Europe's largest chocolate company and Europe's largest bakery company, so who better to take advantage of the link between chocolate and bakery?" said Cofer.
While separating from Kraft Foods in the US is a largely unprecedented move, Cofer proved confident that the advantages would be immediately apparent.
"We feel very good about our prospects to deliver on that long-term guidance," he said. "The benefits associated with the split certainly outweigh the costs ... The benefits will be evident from year one."
Having started trading earlier this week, the new company is seeking to progress in Europe, which is its largest source of revenue at present, but is also facing considerable financial obstacles.
It will emphasise its "power brands" – such as Milka and Cadbury chocolate, LU biscuits and Carte Noire coffee – today supplying 60% of sales and the vast majority of growth.
"We are allocating even more of our advertising, research and development resource to these brands," Tim Cofer, Mondelez International's president in Europe, told the Wall Street Journal.
"Given the current economic environment, particularly in southern Europe, where unemployment and youth unemployment is high, we do see an impact ... We are not recession proof, but we are recession advantaged given the strength of our brands."
The European snacks sector is worth an estimated $335bn per year, and is anticipated to experience a rapid expansion in sales, potentially helping Mondelez hit its growth targets of 5% to 7% annually.
"Snacking in Western Europe is growing quicker than meal-based food," said Cofer. "We see a growth rate 30% faster than in the non-snacking category."
"We see consumers increasingly having busy lifestyles and evolving over time from three fixed meals to many meals, or snacking in between when they don't have time for a fixed meal."
Gum will be a priority area, alongside launching innovative brand extensions. Small Bites, bite-sized chocolates based on brands like Cadbury's Wispa, is worth $300m after just two years, and "chocobakery" lines are two examples.
"We are Europe's largest chocolate company and Europe's largest bakery company, so who better to take advantage of the link between chocolate and bakery?" said Cofer.
While separating from Kraft Foods in the US is a largely unprecedented move, Cofer proved confident that the advantages would be immediately apparent.
"We feel very good about our prospects to deliver on that long-term guidance," he said. "The benefits associated with the split certainly outweigh the costs ... The benefits will be evident from year one."
Data sourced from Wall Street Journal/Reuters; additional content by Warc staff
