Mondelez International (MDLZ 0.99%) may not be a recognizable name for most consumers, but the company can lay claim to many household brands that have stood the test of time, with a few dating back to the eighteenth century.
Here are eight things that may surprise you about one of the largest snack food companies in the world.
Mondelez doesn't want consumers afraid of sneaking in that late night snack. Image source: Getty Images.
1. Mondelez is the "leading snacking company in the world"
A total of 85% of the company's $26 billion in annual revenue is derived from snacks, and the company has a presence in 165 countries. If you buy Mondelez stock, you're making a bet on the popularity of snack food -- an industry that is expected to grow about 6% per year over the next five years.
2. Several of its brands are (really) old
Mondelez has 45 brands in its portfolio that are at least 100 years old, with most dating back to the 1800s. Two brands that were started in England -- Fry's and Terry's -- date back to just before the American Revolution in the 1760s. Eight others date back to before the Civil War, including the famous Cadbury chocolate, which was started by John Cadbury in Birmingham, England in 1824.
3. Seven of these old brands are still kicking
Of those century-old snacks, Oreo (U.S.), Cadbury Dairy Milk (England), Milka (Switzerland), Lacta (Brazil), Hall's (England), Toblerone (Switzerland), and LU (France) are labeled "Power Brands" by management. Today, they generate about 70% of annual revenue for the company. These brands also boast stronger growth potential and higher margins than other Mondelez products.
4. Sugary snacks have their own challenges
With many North American consumers flocking to snacks with less sugar content, Mondelez has to find a way to rejuvenate demand for its products in mature markets. Organic net revenue from developed markets grew less than 1% in 2016 and has declined 2.5% so far in 2017. Over the past year, Mondelez has been introducing new well-being snacks that exclude artificial ingredients to improve its North American growth trajectory.
Expected growth in the snack food industry is being driven by new products that cater to changing consumer tastes. Mondelez has released GOOD THiNS, Vea, and organic Triscuits to help the North American segment regain its footing.
Image source: Mondelez International.
5. Emerging markets make up about 40% of total revenue
Emerging markets revenue has grown 2.7%, 10.6%, and 7%, in 2016, 2015, and 2014, respectively. This is while developed markets have not had a single year of growth above 1% over that same period. Clearly, emerging markets represent the company's biggest growth potential, and that's where Mondelez is focusing its investment. Management is building out the infrastructure in international markets to duplicate the strong competitive advantage it has in North America with its vast direct-store distribution network.
6. Mondelez has a golden opportunity in North America as well
Kellogg recently vacated its direct-store delivery in the U.S. snack food market, which is leaving the door wide open for Mondelez to gain extra shelf space in store aisles. On the company's second quarter conference call with investors, CEO Irene Rosenfeld expressed optimism about what this means: "We have every confidence that we will pick up incremental shelf space, incremental displays, and it will be a key contributor to the trajectory change on our North American business in the [second] half of [2017]."
7. Mondelez is no stranger to technology
The struggle in North America cannot be blamed entirely on healthy eaters. The migration to online shopping has something to do with lower growth rates, too. Mondelez has partnerships with some of the biggest tech companies on the planet, including Amazon.com and Facebook. These partners are helping Mondelez connect with tech-savvy millennials who tend to make more purchases online than older consumers. And it seems to be working: Mondelez e-commerce revenue was up 35% last year.
8. A new CEO is taking over
Current CEO Irene Rosenfeld is retiring, and Dirk Van de Put will take over the reins in November. He has 30 years of experience in the food and consumer package industry.
During Van de Put's six-year tenure as CEO of McCain Foods -- the leader in frozen french fries, potato specialties, and appetizers -- sales grew more than 50% and profits were up double digits each year. Despite the challenge presented by developed markets, I'm optimistic he can help grow the business and deliver returns for Mondelez shareholders in the years ahead.
