Mondelez International’s India unit witnessed strong double-digit net revenue growth in the September quarter. The maker of Cadbury chocolates and Oreo biscuits has been maintaining double-digit growth in India for the last 12 quarters barring three quarters which were impacted by the pandemic. In an interaction with BusinessLine , Deepak Iyer, President-India, Mondelez International, pointed out that rural growth continues to outpace urban growth for the company and in-home consumption remains at higher levels than pre-pandemic days despite more people going out to work now. Excerpts:

How was the festival season? What helpedthe company clockdouble-digit growth in the September quarter?

Overall, we are seeing a very positive consumer sentiment. The uptake in vaccinations, pent up demand for certain products and greater mobility are helping people to socialise and celebrate. These factors are working in favour of consumption. At the same time, there are a couple of concerns as Covid-19 is not yet behind us and we are also dealing with inflationary pressures. But the positives have outweighed the concerns. We have always been an intrinsic part of festivities in India with our well accepted gifting portfolio and we had a very good festival season as gifting grew in double-digits over two years.

The key pillars that have really worked for us during pandemic times have been execution excellence at the manufacturing, logistics and sales fronts, being strategically agile and pivoting to the new normal trends and incubating a team with the right mindset.

How are you managing inflationary pressures?

Like all businesses, we are seeing inflationary pressures on three fronts — ingredients, freight costs and in terms of depreciating rupee as we do import certain items like cocoa. While we don’t know what's lurking around the corner in terms of inflation, whatever we are seeing right now, we are clear that we'll be able to manage it with a set of actions.

We use revenue growth management principles to manage pricing. We have hiked MRPs for a few parts of our portfolio in a gradual manner where consumers can afford it while keeping the ₹5 and ₹10 price packs untouched. But price increase is the last resort and there are a set of other actions that we focus on such as managing volumes, stepping up focus on promoting parts of the portfolio that are slightly more profitable and focusing on constant productivity actions for cost optimisation.

The company has been focusing strongly on innovations in pandemic times. Are you looking to foray into more white spaces? Is in-home consumption levels now tapering down?

The tailwinds that we saw for in-home consumption during lockdowns are tapering out. But people are still nesting at home much more than pre-Covid days. The in-home consumption is still higher than pre-Covid times.

Overall, we have a very balanced portfolio. If you look at chocolates, a large portion of it is out-of-home whereas for biscuits and Bournvita, the lion’s share is in-home. We have been taking strategic calls with a focus on innovations for in-home consumption such as the focus on the chocobakery category, comprising cakes and biscuits. We have now launched energy bars. We are also testing a couple of products like Bournvita Fills in the breakfast space and our baked savoury cracker product called Trisbix in Delhi-NCR region. At the same time, we are continuing to innovate in our existing categories.

Is moderation of rural growth a cause of concern?

For us, rural growth is still one-and-a-half times of urban this year, though urban has come back very strongly. Also, one of the key factors that is working in our favour is that categories such as chocolates still haven’t reached the level of penetration like some other packaged food categories. So there is a huge headroom for growth. For us, rural has been a bright spot, became an even brighter spot during Covid and will continue to be a bright spot going forward.

Rural markets saw terrific tailwinds last year, and grew exponentially for us like it grew for everybody else due to factors such as good monsoons, government schemes like MNREGA .

So the rural consumer did have discretionary money to spend and also the rural regions were less impacted by the pandemic. So these factors helped the rural markets grow last year and I don’t think these are going to go away. Due to a very high base maybe now growth maybe seen as moderating but that does not mean there is no growth. The urban demand has rebounded very strongly and we started seeing these trends around Diwali last year.

The company has been focusing on measures for advancingcircular economy for plastic waste. You recently also gave a grantto an NGOfor a pilot to recycle multi-layered plastic. Are more such investments in the offing?

Our focus is to support development of a circular pack economy and we want to realise this ambition by using less packaging, by providing packaging that is designed to be recycled and support the development of infrastructure to physically collect, sort and recycle packaging especially flexible plastic packaging. We have now committed significant investments in the Circulate Capital Ocean Fund focused on advancing scalable business solutions for the collection of plastic waste, notably multi layered packaging film in India. Over 97 per cent of our packaging is Designed for Recyclability (DFR). In 2019-2020 and in 2020-21, the company achieved 100 per cent Extended Producer Responsibility targets in India.

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