food

Mondelez to Increase Healthy Snacks, Marketing Spending, E-commerce

Mondelez International plans to further increase its stress on healthier snacks; spending on marketing and consumer support; and its emphasis on e-commerce, executives said during at the Barclays Global Consumer Staples conference.

Healthy snacks currently comprise more than a third of its total revenue, but the company plans to have half of its product portfolio be in the "well-being space" by 2020, said EVP and chief growth officer Mark Clouse, reports The Wall Street Journal.  

The plan calls for dedicating about 70% of new product development to healthier products, reducing saturated fat and sodium in its products by 10%, upping whole grains by 25% and dropping artificial colors and flavors from many brands. 

At the same time, Mondelez will up its advertising and consumer support spending to represent more than 10% of total revenue (up from 8% last year), Clouse told Reuters. Digital spending, in particular, is being bumped up, to represent about a third of total media spending. 

He also reported that Mondelez expects as much as 10% of its total CPG sales to come from e-commerce by 2020. While the company projects that e-commerce could jump from under $100 million in revenue currently to as much as $1 billion by 2020, that would still be only about 3% of Mondelez's total annual sales, points out FT.com.

The company will expand its current strategy, which uses "buy now" buttons on Twitter, Facebook and YouTube to send consumers to the sites of local stores where they can buy the products. 

Mondelez also laid out expanded cost-cutting efforts, saying that some of those savings will go into the increased consumer marketing efforts. 

Two activist investors — Nelson Peltz of Trian Fund Management, who is on Mondelez's board, and William Ackman's Pershing Square Capital Management, which last month revealed that it now has a 7.5% stake in the company — have intensified the pressure to cut costs.

The company intends to reduce overhead as a share of revenue by 2.5 percentage points or more by 2016 versus 2013, and cut a total of about $3 billion in costs by the end of 2018, said CFO Brian Gladden, who reported on progress in streamlining production facilities and internal processes. 

Mondelez, like a growing number of food companies emulating 3G Capital, the private investment firm that acquired control of Heinz and merged it with Kraft Foods, has also adopted zero-based budgeting. 

Mondelez maintained its forecast for 2015 organic net revenue to increase by at least 3%, its projection of adjusted operating profit margins between 15% and 16% for 2016, its full-year outlook and its long-term revenue goals, WSJ reported.

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