Mondelez to tap busy shoppers’ snack boom

MONDELEZ International, the world’s biggest chocolate, sweets and biscuit maker after being carved out of Kraft Foods, is optimistic that busy consumers will keep driving booming demand for snacks despite the downturn.

Mondelez, whose brands include Cadbury, was officially launched yesterday after a de-merger from Kraft’s North American grocery business, which is still called Kraft.

The creation of the two entities gives investors the option to either bet on fast-growing snacks or the more stable dividends offered by groceries.

“There is no question these are very challenging times for us in Europe.... The good news is people must eat and drink,” Mondelez Europe head Tim Cofer said.

“Snacking categories are growing faster than non-snacking categories,” Mr Cofer said.

“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,” he said.

Mondelez, which also takes in Jacobs coffee and Trident chewing gum, has annual revenue of about $36bn — more than a third from Europe — and about 100,000 employees in more than 80 countries.

Mr Cofer said Mondelez had taken action to address a poor performance in the gum business, which is particularly exposed to rising unemployment given that people tend to chew gum while at work, or on their way to work.

Kraft has said extra costs associated with the de-merger will hurt earnings in the near term, but it forecasts long-term earnings-pershare growth in the double digits for Mondelez and in the mid-to-high single digits for Kraft.

“We feel very good about our prospects to deliver on that longterm guidance,” said Mr Cofer, who is based at Mondelez’s European headquarters in Zurich. “The benefits associated with the split certainly outweigh the costs.... The benefits will be evident in a year.”

Kraft warned last month that earnings next year for Mondelez — to be headed by Kraft CE Irene Rosenfeld — would likely be lower than some forecasts due to the weakening of various currencies against the dollar.

Mr Cofer said Mondelez was well positioned to cope with volatile commodity prices. Reuters