Snack maker Mondelez has posted a 1.9 per cent drop in revenue in Europe in the second quarter after engaging in a price row with retailers over its chocolate business.
Speaking on a call with investors, Irene Rosenfeld, chairman and chief executive blamed the pricing increase on climbing cocoa prices, which have risen to around 20 percent, and remarked: “The speed with which we resolve these disputes is not something I want to predict”.
Year to date, net revenues were $17.1bn, down 1.5 per cent, which Rosenfeld admitted fell below expectations, sparking further decisions to lead on pricing.
In North America revenue increased 2.7 per cent, driven by mid-single digit growth and continued share gains in biscuits and sweets, credited to innovations in Mondelez’s Belvita and Oreo brands and Sour Patch Kids gum.
Rosenfeld added that the company’s soft revenue growth share performance would be temporary and that the snacking giant would be able to revert the trend over the coming months. “In the past year we have been rigorously driving productivity and reducing overheads to set the stage for profitable growth for 2015 and beyond,” she said.
In Europe, pricing increases in cheese and chocolate were slightly offset by the pass-through of lower green coffee costs.
Speaking about pricing and advertising spend, Rosenfeld said that the company’s fundamental media spend is “exactly where we need it to be to protect our market position”.
Mondelez recently restructured its marketing team, introducing a new category-led model and a newly created chief growth officer title, something Rosenfeld believes is a strategic initiative to continue advancement at the company and push forward its power brands.
“We are simplifying and standardising ways of working. We announced the appointment of Mark Clouse to ensure that growth remains at the forefront of our strategy and we bring the same discipline to drive growth.”
Clouse will oversee the company’s corporate strategy, global category, innovation and quality units and allow Mondelez to improve its capabilities and “ensure that we are making the right invests in long term technology”.
Rosenfeld added that the “single biggest opportunity” of the new structure, which will be implemented by January 2015, will lie in the ability to expand its ideas across all its markets globally.