Mondelez International, Inc. MDLZ, at the Barclays Global Consumer Staples conference recently held in Boston, highlighted its plans to offer healthier snacks and increase focus on e-Commerce to boost sales. The company also detailed the progress in its cost-cutting efforts and re-affirmed the 2015 outlook.
Interestingly, Mondelez’s announcement came soon after activist investor William Ackman’s hedge fund company, Pershing Square Capital Management LP, revealed a $5.5 billion or 7.5% equity stake in the company in August. Ackman is reportedly insisting the snack company to accelerate revenue growth and cut costs significantly or divest itself to a rival.
Healthier Snacks
During the Conference, management stated that it plans to offer more good-for-you snacks and expects 50% of its product portfolio to comprise “well-being” items by 2020 instead of one-third at present. Apart from simplifying the ingredients and improving nutritional benefits of the existing products, the snacking giant will also develop products to cater to the growing consumer demand for healthier and natural items.
Other food companies are also devising ways to meet the evolving demand for products containing more nutritious or simpler ingredients. The companies are eliminating/reducing unwanted sugar, cholesterol, trans and saturated fat and sodium content from existing products.
Companies like General Mills, Inc. GIS and Kellogg Company K have already committed to remove artificial flavors and colors from their cereals, while The Hershey Company HSY plans to use simpler ingredients like locally produced milk, roasted California almonds, cocoa beans and sugar in its chocolate products. Campbell Soup Company is also focusing on making soups without preservatives, artificial colors or flavors.
Increase Focus on E-Commerce
The Zacks Rank #2 (Buy) company will expand its e-Commerce platforms and generate more online sales taking advantage of the younger generation’s constant connectivity to technology through the Internet, social networks, mobile phones, online videos, text messaging and so on.
Mondelez believes that e-Commerce, its fastest growing platform, can generate $1 billion in annual revenue by 2020 versus the $100 million garnered presently.
Progress in Cost-Cutting Efforts
At the Conference, the maker of Oreo biscuits and Trident gum confirmed that its global supply chain re-invention efforts are now generating net productivity improvement of around 3% of cost of goods sold which can be re-invested in margin expansion.