Mondelēz, like many other CPG companies in the snacking space, has experienced strong sales and market share gains of its legacy brands including Oreo, Ritz, Fig Newtons, and Nutter Butter this year due to the pandemic's impact on consumer behavior.
CEO Dirk Van de Put, who was speaking during Morgan Stanley’s Global Consumer & Retail Conference yesterday, credits the company’s market share gains across several snacking segments to minimal supply chain disruptions thanks to the company's DSD (direct store delivery) systems which kept shipments flowing to retailers and products stocked on shelf.
“The second big reason for our market share gains was that consumers bought our brands more than others, and they clearly are choosing our products over others. And I think that has to do with the fact that our brands are very trusted brands, very well-known brands,” he said.
The plan moving forward, said Van de Put, is to continue that momentum with increased media spending and promotional activities around established brands.
“We are trying to make sure that the first half of next year is the biggest activation with the most exciting activities you’ve seen on our brands,” he said.
“We think we need that because there is a risk for a recession. There is a risk that the categories will slow down and so we will depend on our market share gains.”
The goal, said Van de Put, is to make its existing and established brands as exciting as possible to consumers with new promotions and marketing strategies such as a collaboration between Oreo and Lady Gaga announced yesterday (pictured below), along with “very big” promotions around the Christmas and Easter holidays.
With an eye on the possibility of a recession in 2021, Van de Put added that the company is focused on providing more value to consumers who will be watching their spending more closely when it comes to grocery shopping.
“We are trying to play a little bit more on value,” said Van de Put, nothing that the company will be switching Oreo products to more family packs in-store and online so that consumers can justify spending part of their budgets on the indulgent brand.
Soft demand in gum category
Unlike the market share gains and category growth Mondelēz has registered across its snacking business, its gum brands (which includes Trident and Dentyne) have suffered during the pandemic, noted Van de Put.
“We're treating gum in a way that we have more investment next year. So we're trying to make sure that we are putting everything in place that allows for a fast recuperation of gum next year… So there will be a lot of activity there trying to revamp,” he said.
Plans for 2021 and category focus
Mondelēz EVP and chief financial officer, Luca Zaramella, added that 2020 was a year of record share gains for the company, and the largest gains seen in company history. Therefore, 2021 will be about maintaining those gains.
“The number one goal we have into next year is that we want to retain those share gains and potentially likely grow those share gains, but it's not that we're talking about the same amount of share gains that we have in 2020 into 2021,” said Zaramella.
As COVID-related costs are expected to subside somewhat heading into next year, Zaramella noted: “That's why it is so important that we increase the working media marketing and sales.”
Expanding on which categories the company is most focused on for future growth, Van de Put said: "We like snacking. And we went, frankly, through a lot of trouble to get here with the company. So we want to keep on reinforcing our core. And the core for us at the moment is biscuits, and chocolate."