BackCadbury maker Mondelez bets big on Andhra plant
Mondelez plans to make the 134-acre plant a vital supply hub in Asia
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Sri City: Mondelez International Inc, maker of Cadbury chocolates and Oreo biscuits, has started production at its $190 million factory in Andhra Pradesh, its largest plant in the Asia-Pacific region, a top company executive said. The first batch of products from the plant was despatched on Sunday.
The company plans to make the 134-acre plant a vital supply hub in Asia. It will help Mondelez bring down distribution costs.
“This manufacturing site is our site of the future and marks an important milestone in the critical journey to reinvent ourselves," said Maurizio Brusadelli, head of Mondelez’s Asia-Pacific arm. “This plant allows (us) to expand capacity and add flexibility in meeting consumer needs."
The company has started making Cadbury chocolates on two lines of the seven-line facility and will gradually add other brands as well. It will have annual production capacity of 60,000 tonnes in the first phase and eventually make as much as 250,000 tonnes at the end of the third phase in 2020.
“India is an important market for us and (we) see huge opportunity here, and it would also be a possible hub for Asia," Brusadelli said.
Mondelez has already invested in 40 ‘lines of the future’ sites with an eye on boosting its global supply chain.
“It becomes easier (to) get things done and attract partnerships to promote local investments and growth," said Daniel Myers, executive vice president of global integrated supply chain at Mondelez.
Some of Mondelez’s key products in India include chocolates such as Dairy Milk, 5 Star, Perk, Bournville, beverage mixes such as Tang and Bournvita, and Oreo premium biscuits.
The company, which brought Oreo to India in 2011, launched a new biscuit based on the taste of Bournvita last week in a bid to capture a slice of the cookies market and return to a double-digit growth rate in India.
“It took four to five years for us to establish the Oreo brand and we are sure Bournvita biscuits will do well too and we are ready to give it time," said Chandramouli Venkatesan, the head of Mondelez India.
The Indian chocolate market, which was worth 5,800 crore in 2014, is expected to reach 12,200 crore by 2019, according to market research firm ValueNotes. Cadbury has a 60% share of that market.
An average Indian shopper currently buys around 100g of chocolate a year, while a typical UK shopper buys as much as 10kg, Brusadelli estimated. “This implies there is huge opportunity here."
Industry analysts said it won’t be easy for Mondelez to grow in India.
“Chocolate is the only category that the company has been doing really well in," said Abneesh Roy, associate director, Edelweiss Capital. “The company does need more growth drivers, beyond chocolate."
“If you look at it, Oreo biscuits, although it is a well-established brand, it has not penetrated well and competes with Sunfeast’s Dark Fantasy. Bournvita too competes with Horlicks and Boost," Roy said.
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