The SKUs that will be dropped represent less than 2% of company sales.
The 25% reduction will be net.
It means that Mondelez will launch a number of new items particularly focused on price-pack architecture to hit those price points that they need in specific channels and specific sizes for channels.
In the six months ended on 30/06/2020, Mondelez companywide had net earnings of $1.29 billion, down 28% from $1.78 billion in the same time of the previous year.
Mondelez has gained or maintained share in markets that represent 85% of company revenues year to date, with a significant market share increase, e.g.: Biscuits in China, US, and France, and Chocolate in the UK, Australia, and India. Other categories did not fare as well.
Gum & Candy declined double-digit, primarily driven by gum as it skews toward away-from-home consumption and convenience, this channel has seen significantly reduced traffic during the crisis.
In North America, net revenue rose 17%:
The reason of the increased sales in the US is driven by the biscuits segment, and the biscuits segment is heavily influenced by in-home consumption, and as long as the consumer will be more at home and more consuming at home.
COVID-19 affected emerging markets more than developed markets.
In Latin America, net revenue fell 31%, In Asia, Middle East and Africa, net revenue dropped 9%.
Conclusions:
Measuring:
when 25% of your products represent less than 2% of company sales, it means that you are losing money, either by losing market share, production costs, distribution costs, sales, marketing, etc.
When the numbers are measured at any given minute, you can evaluate your performance and take the necessary actions.
Know your market:
does the gum category declines due to skews toward away-from-home consumption and convenience? Are you losing market share to competitors? Do you see change in customers consumption behaviour?
It is known that Italian & Spanish customers increase their visits to physical stores for grocery shopping due to covid-19.
Financial concerns, impact on daily routine, and the use of face mask – these are just some of the changes that can explain this category’s decline.
Innovations:
to cope with the ever-changing market, every business must innovate, and Mondelez is no exception. Over the past few years, they have made a big push in their innovation pipeline including the launch of its innovation hub SnackFutures in 2018 which has gone on to invest in gut health brand, Uplift Food, chocolate firm Hu Products, and refrigerated nutrition bar company, Perfect Snacks.
Mondelez have always had a lot of innovation projects, not always the most useful ones, therefore they are reducing significantly their innovation projects and number of SKUs. Via SnackFutures, Mondelez is developing an “unconventional ecosystem of external partners”, including entrepreneurs, incubators, suppliers, scientists and “culinary trend-setters”, which allows them to disrupt the current model.
