Cadbury-Kraft new avatar to begin Rs 2,200-cr cocoa pivot

Last Updated: Tue, Nov 20, 2012 20:12 hrs

Mondelez International, recently formed after separation of the confectionary and grocery businesses of Kraft, the American foods major, has said it would invest $400 million (Rs 2,200 crore) into cocoa production in India, Ghana and the Dominican Republican over the next 10 years, in a move aimed at securing supplies.

With brands such as Cadbury and Oreo, it will work closely with cocoa producers in these countries, as well in the Ivory Coast, the largest cocoa producing country in the world.

The company derives a sizable chunk of its $35-billion yearly revenue from markets outside the US. But faced with the prospect of slow growth in developed markets, it has been turning its attention to those in countries such as India, China, Brazil and Russia in recent years.

During her first official visit to India last year, Kraft's global chairperson, Irene Rosenfeld, who initiated the split between the confectionary and grocery businesses and has been put in charge of Mondelez, had said she was keen to see the company in the top five list of food majors in the country.

India is small for Mondelez when compared to Brazil, Russia and China. However, the business here has been growing at 25-30 per cent annually over recent years. The company closed the 2011 calendar year in India with sales of Rs 3,359 crore, about 35 per cent more than the previous year. It is likely to retain this momentum in the current year, too, despite a slowing in discretionary food spending.

This has partly to do with the action initiated by the company on the brand front. Mondelez has integrated the Kraft brands - Oreo, Tang and Toblerone - which were distributed independently in the country prior to the $19.7-bn acquisition of Cadbury in 2010. Since then, Mondelez has rapidly gained share in categories such as biscuits, which were new areas for it. In chocolates, it retains leadership through Cadbury, which has a little over 70 per cent share in India. In biscuits, it has six to seven per cent.

In a recent interaction with Business Standard, the company's director, snacking & strategy, Chandramouli Venkatesan, had said it was looking to consolidate its presence in cookies and creams, which constitute 40 per cent of the Rs 12,000-crore biscuit market by value, higher than the staple glucose segment.

Oreo is a cream cookie.

The company recently launched a chocolate cream variant of Oreo in addition to the classic vanilla variant, popular across the world. Kraft had priced this new variant at a slight premium to its vanilla flavour, available at Rs 5, Rs 12 and Rs 25, respectively. The Rs 5 price point has been done away with for the new variant, with the company opting instead for Rs 15 and Rs 30.

It has been pushing the new variant aggressively at retail outlets. The company also continues to innovate in categories such as powdered beverages, with a thick format of Tang introduced earlier this year.

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