Mondelez India to hike capacity at ₹4,000 cr
2 min read 22 Mar 2023, 12:07 AM ISTSpending planned over four years in company’s largest investment yet
PremiumNEW DELHI : Mondelez India is set to invest ₹4,000 crore over four years to expand its manufacturing capacity and build more warehouses and cold-chain facilities to ensure its chocolates and cookies reach more households.
This will be the largest investment by the Dairy Milk chocolate maker. Between 2019 and 2022, the company had invested an estimated ₹1,500 crore.
“We are really proud and happy on this occasion to announce an investment of approximately ₹4,000 crore starting from 2023 to 2026. This is in addition to the significant investment we made of ₹1,500 crore over the last four years, that were impacted by covid; even then we continued to invest in our business. This is a significant investment for us to support the surge in the consumption of our products that we’re seeing," Deepak Iyer, president, India, Mondelez International, said during an interview on Tuesday.
India is a priority market for the maker of Oreo cookies, Cadbury Dairy Milk and Toblerone chocolates, Iyer said. “Hence we will continue to not just invest but actually accelerate our investment."
The investments will go into expanding capacity at existing factories, warehousing and logistics, and augmenting its route-to-market, including cold chains to cater to rural markets via refrigerators and chillers. “This investment will help transform our manufacturing footprint by augmenting the capacity in existing facilities. This is in addition to any investment we continue to make on our brands, advertising and media. As and when the need arises, we will obviously look at greenfield expansion," Iyer added.
In February 2022, the company’s global chief, Dirk Van de Put, had said the India business could touch $2 billion in revenue by 2030, up from $1.2 billion back then.
The company draws a majority of its business from chocolate brands Cadbury Dairy Milk, Cadbury 5Star and Perk. The rest comes from powdered beverages such as Tang and Bournvita, apart from biscuits Cadbury Oreo and Bournvita.
At the company’s fourth quarter 2022 and full-year global earnings conference call held in January, the top management said that the India business grew in strong double-digit for the year, driven by both chocolates and biscuits. In FY22, the company reported a 16% jump in revenue from a year ago to ₹9,296 crore, according to data from Tofler. Iyer said investments will be diverted toward ramping up production for all categories.
“We are seeing healthy double-digit growth across categories—whether it is chocolates, biscuits or baked snacks. We are growing consumption across these three categories, a lot of this investment will be across all the categories." The announcement comes when demand for packaged foods is on an upswing, albeit impacted by high inflation that is eating into household budgets. Mondelez remains “cautiously optimistic" about India’s prospects for near-term growth, Iyer said. “Overall we believe snacking is growing. Some of it is used as meal replacement. We are cautious, because we’re not behind some of the inflationary headwinds—in dairy and coco we are seeing a fair bit of inflation. However, we are fairly confident that inflation will ease with all the efforts being done on monetary policy. That’s why we are calling for such a big investment."
