Driven by double-digit growth rate, Mondelez India focussing on biz continuity

Abhishek Law Kolkata | Updated on April 30, 2021

Dirk Van De Put, Chairman & CEO, Mondelez International   -  PAUL NORONHA

Snacking major ramps up offerings targeting rural markets, expands distribution

With the second Covid wave leading to a string of lockdowns across consumption centres in the country, snacking major Mondelez India is putting in place a set of arrangements to ensure business continuity.

The global management is expecting a “strong Q2” (April to June), despite restrictions.

In January-March period, Mondelez’s India operations — which owns brands like Cadbury, Oreo and Bournvita — witnessed a double-digit growth driven primarily by chocolates and other categories like biscuits and beverages. In fact, the global management lauded its team here for registering a “higher than Covid-rate” of growth.

India delivered an extraordinary growth underpinned by great execution and robust consumption in chocolate and biscuit. Growth on a two-year average was double-digit and higher than pre-Covid rate, the management said during its earnings call.

Strong Q2

Interestingly, Mondelēz International’s Chairman and CEO, Dirk Van De Put, referred to global trends where consumers continue to snack more for both mental and physical wellbeing; and this elevated home consumption saw an uptrend in mass retail and higher sustained e-commerce adoption.

“For emerging markets, Q1 marks a solid comeback from the impact of Covid and proves that our geographical footprint is a long-term sustainable competitive advantage. These results include double-digit growth in Brazil, India and China,” he maintained.

At the moment, restrictions are only about 10 per cent (of the population) which is under “severe lockdown”. And such restrictions do not materially affect access to its products.

“But if the restrictions would be more expanded that could give us some pockets of disruption. But overall, I think, life continues. People clearly have migrated to our brands. So, we're expecting a strong quarter in India, even in the current circumstances for Q2,” he said.

Facing the second wave

While rural expansion has been a key focus post the first wave of infection, the company has now brought in learnings from the past one year that include creation of buffer stocks, moving stocks closer to consumption centres, reducing transport time, investment in cold chain and storage at retailer-end, among others.

Typically, FMCG companies keep 30-45 days of stocks as buffer depending on consumption patterns. Now, market sources say, with restrictions on movement and lockdowns in place, buffer stocks are up to 60 days.

Focus is also on pushing lower unit price articles in mom-and-pop stores, faster refill and greater visibility on shelves. Local demand, which include pushing faster moving offerings, are being looked at over premium ones. Preference is also for stores where stocks witness faster movement.

“At Mondelez India, we understand the role our products play in consumers’ life. To ensure uninterrupted supply to our consumers and retailers, with the newly imposed restrictions in certain states, we have taken proactive steps based on our learnings from last year. We have moved stocks closer to the market and started building buffer inventory at our factories among other actions to support local needs and evolving demands,” Praveen Dalal, Senior Director – Sales, Mondelez India, told BusinessLine.

Rural push

According to him, Mondelez India has been consciously upping the ante in rural India. It was going beyond smaller offerings of ₹2 or ₹5 and into ₹10 and upwards packs across categories. Dairy Milk chocolates at price points of ₹20 has also been popular and premium products like Silk — priced at ₹70 also witnessed traction.

Post-pandemic, profiling of consumption pattern in villages was being done to push the right offerings.

Offerings, specifically targeting rural markets, like Bournvita Shakti biscuits or ₹5 packs of Bournvita (drink), have been ramped up.

“Direct distribution in rural markets are up substantially. We are reaching out to 80,000-odd villages and about 32 lakh retailers (both urban and rural). We continue to evaluate demand spaces and fulfil gaps in our portfolio,” he said.

Published on April 30, 2021

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