Mondelez International (MDLZ 1.40%) is fresh off its recent corporate breakup. It boasts one of the best snack brand portfolios in the industry and massive global growth opportunities. But Mondelez has doubled down by putting all its chips on emerging nations' tables, which introduces extra risks to the company. I've created a premium report on Mondelez to help investors examine the company's future.
Following is an excerpt from the report, which highlights the company's biggest opportunities. It's just a taste of one section, but we hope you find it useful.
Mondelez International possesses two huge strengths: its geographic mix and its product mix. Together, these characteristics harness the company's biggest sources of opportunity.
Over 80% of Mondelez's $36 billion in annual revenues is generated outside North America, with practically half of company revenues from high-growth developing markets within Asia, Latin America, and the Middle East. Mondelez possesses undeniable international presence and is well positioned to participate in the faster-growing developing-market consumption that's likely to continue, relative to the more mature North American and European markets.
Here's a more detailed overview of Mondelez's revenues from developing markets, as well as their growth potential:
|
Market |
Percent of |
5-Year |
|---|---|---|
|
BRIC |
33% |
Mid-to-high teens |
|
Next Wave Markets |
12% |
Mid-to-high teens |
|
Scale Markets |
27% |
Low-to-mid single digits |
Source: Mondelez International Investor Relations.
The biggest growth driver for Mondelez is developing markets. By 2020, emerging markets are expected to comprise roughly 86% of the global population, and BRIC nations are anticipated to account for roughly half of global GDP growth. In developing nations China, Brazil, and Russia, combined snack food sales grew 15% in 2010 and 11% in 2011 to $17 billion. Relative to most packaged-foods companies, Mondelez has a high level of emerging-markets exposure, and the anticipated growth outlook should serve it well in the future.
Mondelez's second huge opportunity lies in its product mix. Here's a snapshot of it:
|
Category |
Sales |
|---|---|
|
Biscuits |
30% |
|
Chocolate |
27% |
|
Beverages |
17% |
|
Gum and candy |
16% |
|
Cheese and grocery |
10% |
Source: Mondelez International Investor Relations.
Nearly 75% of the company's revenues are generated in the fast-growing snacks category, including biscuits and confectionery. The confectionery category includes chocolate, gum, and candy -- under labels like Cadbury, Milka, Toblerone, Trident, and Stride – and represents over 40% of revenues. The confectionery category is typically less threatened by private-label competition because consumers are willing to pay up for the brands. Furthermore, the higher-margin confectionery category tends to enjoy faster growth rates, and its relatively low price points support growth in emerging markets. And as Mondelez focuses on improving productivity, profit growth may likely exceed revenue growth. Of the projected $335 billion global snack foods market in 2015, confectioneries are expected to comprise over half this amount.
However, in the biscuits, cheese, and grocery categories, private-label and other big-branded-label competition is more challenging. But Mondelez is well positioned to compete effectively based on its strong brands and focus on innovation. It houses a powerful stable of biscuit (cracker and cookie) brands in Nabisco, Oreo, and LU.
Looking for more help?
That was just a small morsel of our new premium report on Mondelez International. If you're trying to figure out whether the company is a buy or sell, the report is an indispensable resource for investors seeking more information. Also, the report comes with updated quarterly guidance so you'll stay in the know. To get started, simply click here.
