In a strategic move, Mondelez International is looking at significantly accelerating its investments in India, which it considers as a key market. The maker of Oreo and Cadbury plans to invest about ₹4,000 crore in the 2023-26 period in the country. The packaged food major said this is in addition to investments of ₹1,500 crore made during the 2019-22 period in India.
Deepak Iyer, President, Mondelez India, told businessline the fresh investments will go into ramping up capacity at existing factories, besides augementing warehousing, logistics, and cold-chain infrastructure, including in the rural region.
Make in India
“2023 marks our 75th year in India. We are making significant investments of approximately ₹4,000 crore over the next four years till 2026. This investment is being made to support the surge in the consumption and hence the volume sales of our products. India remains a priority market for Mondelez ,” Iyer said. He added that this capex will be in addition to other investments made on brands and advertising.
Stating that this reinforces the company’s endorsement in “Make-In-India ‘‘ philosophy of the country, Iyer added that at this stage bulk of the investments will go in setting new lines in its existing four facilities in the country and at facilities of its manufacturing partners. “This will modernise and transform our manufacturing footprint. Obviously when one augments manufacturing capacity, one also needs to double down on warehousing and logistics,” he added.
The packaged food major currently has four factories in Maharashtra, Madhya Pradesh, Andhra Pradesh, and Himachal Pradesh. It added that it will strategically focus on growing penetration of its core categories of chocolates, biscuits and choco-bakery.
Betting on Bharat
“The rural market has been growing really well for us in terms of volumes, value penetration and per capita consumption. Obviously it’s way behind urban right now but in terms of percentage growth it continues to lead urban growth. So there is a huge headroom for growth in rural markets for us,” Iyer said.
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Responding to a query on the impact of the current macroeconomic conditions, Iyer said the company continues to be ‘cautiously optimistic’. “We have seen a lot of disruptions in the recent past due to factors including the pandemic, supply-chain disruptions and inflation. Not everything is still behind us. We still have to contend with headwinds such as dairy inflation remaining high. So we still have to watch out. But overall, in the medium term we are very confident of the growth trajectory and consumption continuing to stay strong. That is why we are making significant investments,” he added.
On a global earnings call in February, Mondelez International’s management said India grew in strong double-digits for the full year of 2022 driven by both chocolates and biscuits portfolios. The company’s management said that it saw “very strong volume growth” in markets such as India.