SNACKING giant Mondelēz International, the owner of global brands such as Cadbury Dairy Milk, Oreo and local brands like Chappies bubble gum, is aiming to accelerate its growth and share gains in sub-Saharan Africa and Africa.
Africa is the fastest growing continent with an estimated 25 percent of world population by 2050.
Mondelēz South Africa is the largest confectionery business in South Africa competing with companies like food and drink firm Nestlé.
A recent interview with Alisdair Sinclair, MD South Africa at Mondelēz International, a firm valued at $84.92bn (R1.3 trillion), shed light on the group’s operations in South Africa.
Mondelēz makes Cadbury chocolates in Gqeberha as well as some candy and gum. In Matsapha Plant in Eswatini, formerly Swaziland, it manufacturers local brands like Chappies and the "Breathe for it" candy – Halls. This as it markets its products in more than 150 countries and has operations in 80 countries.
It has roughly 800 full time employees in South Africa, and with its business with suppliers, and other third-parties, it provides more employment elsewhere.
Sinclair said they want to grow more in South Africa’s market.
“We will continue to upgrade our current operations, which is what we're doing. There is capital that is put aside on an annual basis that we then leverage to invest in our plants to ensure that we are producing the highest quality standard of product in the market. That's your competitive advantage,“ he said.
The US company in December terminated talks with consumer goods group AVI over the proposed acquisition of its Snackworks biscuit business.
However, Mondelēz is open to not only expansion, but investing in its assets it already owns in Africa.
Sinclair said, “We continue to look to invest in this market (South Africa), and particularly around categories where perhaps we need to build further capabilities,” adding that opportunities in Africa would also be explored
“It could mean we invest in the continent, which could mean that we look at a plant in an area that we believe there’s a greater opportunity for growth, and then leverage that plant to supply our continental or sub-Saharan African requirements.”
Ideally, though, if the firm had the opportunity to build up South Africa and and then export to other markets, that would be “quite key for us”.
During 2021, the group saw increased demand for most of its snack category products in both emerging and developed markets relative to 2020, however, revenue from parts of its business were not yet back to pre-pandemic levels.
Sinclair said that like most companies, Mondelēz has had to navigate the choppy waters of Covid-19 with the resultant supply chain disruption.
Business continuity programmes were in place. Being a multinational with a global sourcing and supply chain, it could leverage off these capabilities and mitigate and mange risk.
For example, in the civil unrest in South Africa last year, Sinclair said one of its packaging suppliers was severely hampered and the plant was impacted. He said it took time, but they had other options to source that particular material to them.
“But now that the world is becoming a little bit more stable, it's coming back to people going back to work. We're also going to drive our gum and candy brands a little bit more, with the primary focus on our chocolate brands in South Africa,” he said.
Being in the business of snacks Mondelēz, like other food firms, is facing higher inflation as well as market volatility in the wake of Russia’s invasion of Ukraine, which has led to record commodity prices such as for wheat, and in cooking oil prices.
Sinclair said while they were trying to contain costs, it was nevertheless necessary to pass on price increases.
He said they were monitoring and evaluating this closely, but price increases were happening almost monthly and “it's moving very, very rapidly.”
“I think it's a little bit of an unknown, given the impact of this unfortunate conflict that we're seeing between Russia and the Ukraine,” he said.
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