Mondelez recovers ground in Jun after India lockdown disruption: Global CEO

Sales grew in mid single digits, momentum continues in July

Confectionery major Mondelez, owner of the Cadbury brand, said on Wednesday that it had recovered from disruptions caused by the Covid-19 pandemic and nationwide lockdown in India in April and May, reporting mid single-digit sales growth in June. 

The firm expected the second half of the calendar year to be stronger than the first half as lockdown restrictions eased, though it was watching the situation closely, chairman and chief executive officer Dirk Van de Put said. 

Mondelez is the largest chocolate maker in India, controlling 65 per cent of the Rs 12,000-crore domestic market. 

Van de Put said that the sales momentum seen in June had continued into July, with the company expecting between 6-8 per cent topline growth for the current calendar year as the second half showed signs of improvement. Mondelez follows a January-December accounting year. 

"India declined double-digit due to significant lockdowns and store closures in April and May before turning to mid single-digit growth in June. In July, it will be higher than that. But will India go back to double-digit growth in the coming months? Maybe not. But if India delivers us a 6-8 per cent topline growth, that is more than enough," Van de Put said. 

Apart from chocolates, Mondelez also has a presence in biscuits (Oreo), gums, candies and beverages (Bournvita/Tang) in India. Globally, it has a wide array of brands across  categories, which it is likely to get into India, based on its assessment of market potential and growth. 

Last month, the firm had forayed into the bakery segment, launching cakes under the Cadbury umbrella. The flagship brand has also been extended into cookies earlier, as the confectionary major finds new snacking options to entice consumers.

India is among Mondelez's key emerging markets, where it has invested significantly, both in urban and rural areas, to build distribution, grow its manufacturing and R&D capabilities and improve penetration of its brands. 

The company has a total reach of over 3 million outlets in India, with one million stores catered to directly by the firm. It has also increased its coverage of villages in India in the last few years, as it seeks to push its presence into the hinterlands. Over a fifth of Mondelez's India sales come from rural areas, which was half the number just three-four years ago. 

"We were planning to expand our distribution in India for the year in a 100,000 stores or more. We probably had to slow that down a little bit during the Covid-19 crisis, but we are planning to pick it right up where we left and keep growing," Van de Put said. 

In the last few years, the confectionary major has faced stiff competition from most global peers, who've either entered India or increased their investment here. Mondelez counts companies such as Nestlé, Mars, Ferrero and Hershey as key rivals. 

Despite being a nation that has a sweet tooth, the per capita consumption of chocolates in India is low. In the country, about 130 grams of chocolate is consumed per capita annually versus over 10 kg of chocolate consumed per capita annually in the UK. 

Mondelez, which has been in India for over 70 years, has been instrumental in raising awareness of chocolates in the country, using every occasion including moments with family, friends and festivals, to push the category. Cadbury Dairy Milk remains it's flagship product with an over 42 per cent market share.