Mondelez looks at cookies market to return to high growth
The new biscuit based on the taste of Bournvita will be available on shelves from 1 May onwards in two packs`10 and `25
New Delhi: Eight months after Irene Rosenfeld, chief executive of one of world’s largest snacks companies Mondelez International Inc., expressed concern over slow growth in India in an investor call, the local arm on Tuesday launched a new biscuit brand that will be an extension of its popular health drink Bournvita.
With Cadbury Bournvita biscuits, Mondelez India Foods Pvt. Ltd will try to capture a slice of the morning cookies market and return to the double digit growth rate in India. The launch comes five years after its entry into the category with Oreo cookies, a premium biscuit, in 2011.
Mondelez India, formerly known as Cadbury India Ltd, which will be competing with Britannia Industries Ltd, Parle Products Ltd and ITC Ltd at a national level, plans to push Bournvita biscuits in the “mainstream segment”, said Chandramouli Venkatesan, managing director, Mondelez India Foods Ltd.
“Mondelēz International is the world’s leading biscuits company and India is among the top five markets for us. The opportunity is huge because India’s biscuit market is fragmented, and format driven. We don’t want to be in the ‘me too’ segment. We need to differentiate and trade up. This would be a significant revenue contributor for Mondelez in India,” said the MD.
Mondelez sells chocolates, beverages, biscuits, gum and candy. Among its top brands are Cadbury Dairy Milk, Bournville, 5Star, Perk, Gems and Glow. In beverages, it boasts of Bournvita and Tang. It also owns Oreo, Halls and Chocolairs.
“India is a long-term story. We are looking at sustained growth over the next 5-10 years. To maintain growth, we would not need to have fundamental changes. We’ll adopt necessary changes as per the market demand,” said Venkatesan.
He said Mondelez would invest heavily on distribution and promoting Bournvita biscuits. The company has tied up with e-commerce marketplace Snapdeal to exclusively pre-launch the biscuits for a week before they hit retail stores on 1 May.
The new biscuit based on the taste of Bournvita, a health drink the company has been selling in India for about seven decades, will be available on shelves from 1 May onwards in two packs— ₹ 10 and ₹ 25 aiming to cater to wide number of consumers.
According to the company, the new biscuit brand will be one of the top five biscuit brand in terms of advertising and promotions spend over the next one year. Besides advertisements on print, television, hoardings and social media, the company plans to undertake sampling of 10 million packets over the next few months.
“It won’t be easy for Mondelez. It would depend on differentiation. It’ll have to fight against strong national players like Britannia, Parle and ITC, and there are a bunch of regional players equally strong in respective regions. On the other hand, brand extensions may not be successful without strong differentiation, and heavy marketing push. For instance, Horlicks’ biscuits might have had some success in pockets, but could not win over competition,” said Abneesh Roy, analyst with Edelweiss Securities.
The biscuits and cookies industry in India was estimated at ₹ 14,500 crore in FY 2014 and is projected to touch ₹ 27,900 crore by FY 2019, according to a study by market research firm ValueNotes.
Meanwhile, the Central Bureau of Investigation (CBI) has been conducting an investigation into allegations that Mondelez India paid bribes to government officials and politicians to save about £60 million ( ₹ 580 crore) in taxes by showing a phantom factory in Himachal Pradesh, Economic Times reported on 4 March.
The CBI initiated a probe a month after American stock market regulator the Securities and Exchange Commission, on 11 February, sent a notice to Mondelez for alleged bribery in India. Venkatesan declined to comment on the issue.
Sapna Agarwal contributed to this story.
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First Published:20 Apr 2016, 11:21 AM IST
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