mondelez:  Seeing constant pressure on input costs: Mondelez - Times of India

mondelez: Seeing constant pressure on input costs: Mondelez – Times of India

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NEW DELHI: The overall nervousness around the ongoing Russia-Ukraine conflict can worsen inflationary pressures, said Dirk Van de Put, chairman & CEO at Mondelez, one of the world’s largest snacks companies.
With the two countries playing big roles in the production of oil and grains, any interruption in their supply will push up costs. “We are seeing a constant pressure on our input costs,” said Van de Put. “They come from oil prices, packaging, ingredients and labour. We see more input cost pressures than probably what most of us have seen over the last 30 years.”
The senior executive, however, said the situation has become stable over the last two to three months, enabling the company to get a grip on its cost situation and implement price increases.
“But one of the strangest phenomena we are seeing currently is that despite some hefty price increases – for instance, Mondelez raised prices by 7% in the US – the price elasticity is almost zero. The volume is growing at the same pace as before the increase, which means that the consumer is expecting inflation.”
The company, which makes Cadbury chocolates and Oreo cookies, is, however, bullish on the Indian market. While it took Mondelez 74 years to become a $1.2-billion company in India, it is set to double its revenues in the next five to eight years. “India is one of our strongest businesses in the world with $1.2-billion revenues,” said Van de Put. “In 2021, it grew 21% and in the last three years, we have grown more than 11%. We expect the consumption of our products to keep on growing in the local market.”
While assuring senior Mondelez executives in India of continuous investment support, Van de Put did not rule out the possibility of acquiring a large company in the country to push growth.
“We are number two in coco beverages and we are scaling up the biscuits business, which currently has 2% market share, providing us with large headroom for growth,” he said. “Even online sales have a significant opportunity to grow because it currently accounts for 3% of overall sales in India compared to 6% globally.”
While Mondelez is still growing its market share of chocolates in the domestic market – where it competes in the category with the likes of Nestle, ITC and Mars along with emerging local players – it is looking to increase its play in baked products such as cakes and pies.



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