“We’ve done a lot of work on our overall marketing approach and… understanding the consumer and connecting to the consumer as a key stepping stone to our approach”by becoming “what I would call ‘margin centric’ to ‘consumer centric’, Van De Put tells investors gathered at the Bernstein Alliance 37and Annual Strategy Conference on June 2.
He explained that when he took over the reins of the company almost four years ago, Mondelēz had just completed a “very successful period where it focused on expanding margins”, and was ready to move to a more local business model that delivered consistent operational excellence to win with consumers.
To do this, the company reorganized itself, “came with a good list of growth engines and growth catalysts,”changed the culture to empower local teams and strengthened its supply chains – all measures that have served Mondelēz well during the pandemic.
It also adopted a new marketing approach that more effectively communicates the company’s values and how its products meet the individual needs of consumers, Van De Put said.
He explained that the first step in this transformation was “understand what our brands stand for, what their purpose is, how we achieve it, [and] how do we explain this to consumers.
Mondelēz’s response has been to increase its overall marketing investment in digital marketing to 60% – 35% of which is personalized – to drive “very high commitmentsaid Van De Put.
Because “digital creative excellence is very different from television or print,” and personalization requires a deeper understanding of consumers, he explained that Mondelēz has also invested more heavily in better insights and analytics, and hired a marketing team that is digitally savvy and understands how today’s consumers communicate. .
To provide sufficient support for the marketing team and the new approach, Mondelēz is reinvesting half of its annual gross profit increase back into the business, including increased investment in A&C, Van De Put said.
“You have to keep investing in your brands and differentiating them and making sure the consumer continues to really love them,”he explained.
So far, this approach is paying off with strong returns on investment, Van De Put noted. He explained: “We’ve made a 14% improvement over the past five years per year, and last year was a really balanced year with a 25% improvement in our marketing ROI. For example, in the creative space, 50% of our creatives are now at the top of the creative rankings, which has helped us a lot to improve our ROI. »
He added the company “We also worked hard on our partner ecosystem, the agencies we work with, and made it simpler, more efficient and better.”
“Where consumers buy in the world has changed”
In addition to expanding and refining its marketing efforts, Mondelēz is also exploring how to expand distribution beyond grocery, where it currently primarily operates.
“Where consumers shop around the world has changed a lot. It has changed in one way before COVID. It has changed in another way after – during COVID. We will see where we end up after COVID,”he said. But to make sure Mondelēz is covered, Van De Put said the company is “shifting our presence and focus from channel to channel and getting our fair share in each channel”,which is not yet the case.
E-commerce will play a “big piece”in this strategy with the “the greatest opportunity” for the business focused on special e-packs and online sales of more volume per consumer.
“But there are other channels, such as discounters in Europe, traditional retail in emerging markets, and clubs and convenience stores in the United States,”he added.
Other white spaces Van De Put sees for Mondelēz are increasing premium offerings, such as in chocolate where Toblerone could take the lead, and entering categories adjacent to those the company already plays in, including including bars – both candy and health bars – and in cakes and pastries, which closely aligns with the company’s existing strength in cookies.
Gum business: ‘We are carrying out a strategic review’
Asked about the gum business, which includes brands such as Trident and Dentyne, CFO Luca Zaramella said: “We onere carry out a strategic review. As we have said many times, the number one priority we have right now is to fix the business and get it back close to 2019 levels, which is pre -COVID.
“Obviously, this is a company that has been disproportionately impacted by COVID, given that it is consumed for the vast majority on the go. It clearly has a significant presence in developing markets, which allows us to scale. And for developed markets specifically, we’re evaluating if there are other options other than to retain and retain the business. That’s 5% of total revenue.”
He added: “From a profit perspective, given the downsizing we faced in 2020, it’s roughly in line with the rest of the business at this point, so not disproportionately higher. But, as we said, we need to correct the activity and then assess whether there are other ways for us to create more value for Mondelēz shareholders. »
