Name of the Company: Mondelez International
Business Sector: Food Processing
Operating Geography: United States, North America, Global
About the Company: Mondelez International is an American confectionery, food and beverage company. It produces confectionery, gum, biscuits, and powdered beverages. It has employee strength of about 90,000 worldwide and is headquartered in Illinois, USA. The name Mondelez was adopted after 2012 spin-off of Kraft Foods Inc. Its portfolio includes many billion-dollar brands such as Cadbury, Stride, Halls, Oreo, Trident, etc. and has consumers in 165 countries.
Revenue: $25.9 billion – Dec 2016
Competitive Analysis of mondelez international
|1. Brands with high revenue generating potential|
2. Recent R&D investments
3. Strong distributor and dealer community
|1. Decline in net revenue
2. Fluctuating earnings per share
|1. Biscuit sales in Latin America|
2. Markets in developing countries
|1. Volatile nature of commodity and other input costs
2. Third-party service providers
1. Brands with high revenue generating potential: Mondelez has billion-dollar brands such as Oreo, LU, BelVita Biscuits, Milka, Cadbury Dairy milk, Toblerone, Trident gum and Halls candy. These brands continue to generate revenue for Mondelez. Apart from these, brands there are a plethora of brands which have high potential to generate revenue and become power brands in the near future.
2. Recent R&D investments: In September 2016, Mondelez International announced to invest $65 million in Global Research and Development Hubs in Brazil, India, Poland, Mexico, etc. The investment will help them to recruit better, retain and develop talent across a range of science and technology field.
3. Strong distributor and dealer community: Modelez has built a strong distributor and dealer community over the years and hence dealers invest in training their sales executives to pitch different customers in unique ways. The executives promote the products of Mondelez and play a vital part in value chain of the company.
1. Decline in net revenue: The revenue in 2016 has declined to $25,923 million from $29,636 million which means about 12.5% decline. In the previous year, the decline was 13.5% from $34,244million to $29,636 million. Similarly, operating income has declined by 71% in 2016 as compared to 2015. The main reasons for this are attributed to deconsolidation of the coffee business, unfavourable currency and deconsolidation of Venezuelan operations.
2. Fluctuating earnings per share: The earnings per share (EPS) decreased 76.4% to $1.05 in 2016 and had increased 246.9% to $4.44 in 2015. This indicates uneven execution of strategies. The company seems to find difficulty in maintaining its earnings over past few years and this may be a reason of concern for the investors.
1. Reduction in Biscuit sales in Latin America: Biscuits constitute more than 40% of the net revenue of Mondelez International and hence is the most important segment. However, in 2016 the revenue of biscuits in Latin America has reduced from $1,605 million to $734 million which is around 54% reduction. There is a need for increase the sales in Latin America.
2. Markets in developing countries: Mondelez has been receiving more than 70% of its income from Europe and North America over the past years. The markets in developing countries have a huge potential which needs to be focused. As of 2016, only 24.9% of total income has come from Latin America and AMEA region. There are many parts of the developing economies that need to be tapped by Mondelez International to increase its revenue and income.
The unpublished sections of the entire SWOT analysis is available in the 'Complete Report' on purchase.
|1. Political risk in European markets||1. Volatility in Global markets
2. Effect of Brexit
|1. Demographic and consumer trends|
2. Seasonality of demand
|1. Emergence of E-commerce
2. Automation of activities
|1. Evolution in accounting standards|
2. Intellectual property rights
3. Regulations of region of operation
|1. Environmental regulations
2. Sustainability goals
1. Political risk in European markets: Mondelez generates more than 40% of its revenue from the European region. Events like Brexit tend to disturb the stability of the region leading to political risks. Brexit has also motivated other countries like France and Germany to think of leaving European union. This will result in change in strategies of operations for Mondelez. Some rules and regulations are not uniform across countries in the European Union which tends to make it difficult for Mondelez to operate.
1. Volatility in Global markets: As a global corporation, Mondelez generates around 75.6% of its revenues outside the United States. Volatility exists in many emerging markets like Brazil, Russia, China, the Middle East and Nigeria concerning labor and infrastructure disruption, sensitivity to oil prices, etc. To address these issues, Mondelez has to devise strategies to operate their business in these regions constantly.
2. Effect of Brexit: There was significant volatility in global stock market and currency exchange rate after the Brexit announcement. The exchange rate of British Pound relative to US Dollar dropped by 9% within a day leading to a negative effect on translated results in US Dollars. The uncertainty of future operations in the UK still exits as all the terms and conditions of Brexit have not been clarified.
1. Demographic and consumer trends: The consumption of snack food is highly correlated to urbanization and rising income levels of middle class, particularly in emerging markets. Over the long term, the trends are going to move towards smaller meals and snacks and increase in consumption of convenience food. This will rise in the sales and hence the revenue of confectioneries.
2. Seasonality of demand: The demand for products of Mondelez International are seasonal as it is fairly distributed in first three quarters and increases in last quarter due to holidays and other events. The inventory needs to be maintained accordingly to meet the expected consumer needs.
The unpublished sections of the entire PESTLE / PESTEL analysis is available in the 'Complete Report' on purchase.
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Chipotle Mexican Grill SWOT analysis has been conducted by Prerna Pathre and reviewed by senior analysts from Barakaat Consulting.