THE MONDELEZ SERIES – Analyst’s take

Mintel analyst lauds Mondelez’s geographic choices

Kraft’s global snacks spin-off, Mondelez, has chosen its focus markets wisely and can capitalise upon chocolate market growth in Russia and the upcoming FIFA World Cup and Olympics in Brazil, according to an analyst.

Kraft Foods set its vision for Mondelez last week at the Barclays Back to School Conference in Boston, Massachusetts, US, ahead of a spilt into a global snacks business (Mondelez International) and a North American grocery business (Kraft Foods Group) on 1 October.

The focus markets

The company said it would focus on three clusters, in priory order.

Classic BRIC approach

Marcia Mogelonsky, director of insight for Mintel Food and Drink, told that Mondelez had reverted to a more traditional approach with the “classic” BRIC makets.

When Kraft Foods set its strategy in 2008, ten countries, ten brands, and five product categories: chocolate, coffee, powdered drinks, biscuits, and cream cheese, were its focus.

The previous strategy split global interests into ‘growth engines’ (Russia, China, Brazil, Southeast Asia) and 'scale markets' (UK, Australia, Spain, France, Italy, and Germany)

Making up for India omission

“The omission of India was a big strategic mistake, but Kraft recouped with its Cadbury acquisition, which opened the door to India,” said Mongelonsky.

“Refocusing on India through a BRIC focused strategy will allow Mondelez to take advantage of the sophisticated distribution network established by Cadbury and expand more snack/confectionery/gum into the market,” she said.

Russian chocolate

She added that Russia would be the “prime target” for chocolate confectionery, but Mondelez would face stiff competition from Mars, Nestle and Ferrero. “Patriotic support” from local manufacturers, such as United Confectioners, could prove another hurdle, she said.

“Between Russia and Ukraine, they [Mondelez] will have a strong Eastern European presence, and a South African base will be an excellent spot as Africa grows in importance.”

World Cup and Olympic opportunities in Brazil

According to Mogelonsky, Brazil will become more important for the snack food category, particularly in the lead-up to the World Cup and the Olympics being held there.

“It's a market worth Mondelez's attention,” she said.

Mondelez heads the Brazilian market ahead of Nestle and Garoto.

“If the can extend their presence in Latin America, where Mars is not strong, they can then build on that platform to expand towards Asia,” said Mongelonsky.

Mars strength in China

A notable omission in Mondelez’s chocolate priority markets was China.

However, the analyst said that Mars commands 41% of the Chinese chocolate market and has held pole position for many years.

“Mondelez may feel it is better to invest energy in growing chocolate in other areas first; Brazil, India and Russia are good priorities.”

“I think they may feel that ‘China can wait’ for round two of their efforts, and they are better off getting a strong footing in Brazil, where there is little to no Mars presence,“ said Mongelonsky.

Developed market declines

Mintel has forecast chocolate market value declines in some developed markets, such as France, Germany, Spain and Italy.

“Mondelez will have to work hard to retain its share in these western European markets,” said Mongelonsky.

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