Behind Mondelēz’s $65m R&D overhaul and why Asia Pacific is ‘fundamental to the growth engine’
Last month, confectionery colossus Mondelēz announced a US$65m overhaul to its research, development and quality (RDQ) business, putting focus on only nine global hubs to drive innovation in product and technology.
Oreo Thins: Mondelez's new R&D plans explained
Three will reside in the Americas; two in South America (Mexico City and Curitiba, Brazil) and one in North America (East Hanover, New Jersey). In Europe, the United Kingdom will have two, one in Bournville (the original Cadbury location) and Reading, while one centre will be in Wroclaw in Poland. In Asia Pacific, the three hubs will be in Suzhou in China, Thane in India and Jurong in Singapore.
The global strategy behind the nine R&D centres is simplification, which the business hopes will allow it to be more agile in bringing products to market and learning lessons from each local area faster at a global scale.
The positioning of the Asia Pacific R&D locations and the fact that they’ll have the biggest footprint overall, is in response to how the market is becoming more important to Mondelēz strategically.
Douglas Hughes, head of RDQ for Mondelēz APAC, told The Drum: “We see APAC as a fundamental part of the growth engine, it’s the region where we see most of our growth. Most of the world’s population is here and there’s a growing middle class with people looking to buy products.”
Oreo Thins, a recent product innovation from Mondelēz that created a lower calorie version of the snack, is an Asia innovation that has since been rolled out globally, with only minor changes to reflect local tastes. Hughes said it's an example of the speed of scaling product innovation and that ideas are being encouraged to travel from both East to West and West to East.
His opinion is shared by other major businesses. Google, for example, has built its first engineering team in Singapore to help it build better mobile experiences for its “next billion users”.
On the agency side, Dentsu Aegis has just set up its first R&D centre in Singapore. The group has also turned Asia Pacific into the lead market for its iProspect business, after appointing former Asia Pacific chief executive Ruth Stubbs to drive the business globally.
The theme of leading R&D form the region is no coincidence either. As Hughes explained, technical expertise and investment is a priority in key Asia Pacific countries, making it a sensible move for global businesses.
“You also have a huge amount of technical expertise coming out of the region. Some countries have education programmes, they want to invest in tech and we want to be a part of that. Tech innovation is a priority, as is giving our business stronger technical unity in our heartland markets.
It’s why we picked China to be a centre, we had one already but now we will grow it and centralise. India was a traditional old tech centre and we realised that with the population growth and the popularity of chocolate in India, we can centralise chocolate development. This puts us in a unique position, not just in India, but for the entire Southeast Asian chocolate market. Singapore is where our we are based for our regional head office, but it has educational and cultural diversity. The way that the country focuses on innovation and drives it through education we want to be a part of and support that. That’s why we chose that as the third market,” he explained.
Overall, the East Hanover location will be the first to launch this year, closely followed by Singapore and Poland in the first quarter of 2017. All of the centres should be completed by early 2018, with India being the last.