KUALA LUMPUR (May 20): Mondelēz International, manufacturer of Cadbury Dairy Milk chocolate and OREO biscuits, has taken various measures to mitigate the effects of global cost-push inflation to ensure that its products remain affordable and of the same high quality, said managing director for Malaysia and Singapore Narmeen Khan.
This is particularly with respect to transportation, packaging, edible oils, and dairy, as well as supply-chain bottlenecks, she told Bernama .
Narmeen, who assumed the position in February 2022, said Mondelēz is not excluded from experiencing inflation across markets, including in Malaysia.
“Due to the steep increase in costs across the entire value chain, particularly in commodities, logistics, and packaging, product repricing is one of the considerations, but as previously disclosed, we are taking proactive measures in 2022 to reshape our portfolio, with a focus on core products and best-selling items.
“Other considerations include enhancing existing distribution and expanding into channels with rapid growth to minimise cost effects to guarantee our products remain affordable,” she said.
On Mondelez's investment in Malaysia, Narmeen said the fast-moving consumer goods maker would continue to invest in its current facilities in Shah Alam, Selangor, and Prai, Penang, to increase capacity to meet demand, while simultaneously innovating to reduce energy, water and carbon emissions to foster a sustainable production process.
Narmeen said the two facilities play a critical role in the overall supply chain, serving local and export markets across Southeast Asia.
“Although we are not planning any expansion in the near future, our manufacturing plants are vital to the overall supply chain, and the pandemic has caused numerous disruptions. However, we have a clear strategic plan to help us maintain agility, execution, and continuity.
“Most importantly, it strengthens our commitment to our core values, one of which is doing the right thing for our employees, consumers, customers, and community,” she said.
Narmeen said Mondelez’s growth has been consistent with market trends, and despite challenging times, the company has maintained its leadership positions in different categories.
“We ranked first in the chocolates segment, dominating around 30% of the market share with Cadbury Dairy Milk being the largest contributor; we also topped the biscuits category with brands like OREO, Jacob's, Chipsmore and Tiger.
Narmeen said these categories continue to be key growth drivers, contributing over 80% of revenue in Malaysia. Historically, both segments have been durable in both developed and emerging markets, with substantial room to expand per capita consumption.
Globally, Mondelēz International said in a May 10, 2022 release that the Nasdaq-listed company is reshaping its portfolio with the long-term goal to accelerate growth to generate 90% of its revenue from chocolate, biscuits, and baked snacks.
Core categories would be strengthened in major markets by leveraging iconic brands to establish multi-category leadership positions and by expanding its distribution in high-growth channels, the release said.
Additionally, after concluding a strategic review over the past year, it aims to sell its (chewing) gum business in developed markets but retain the emerging market gum business. It will also divest its global cough-drops Halls business.
Meanwhile, on palm oil usage, Narmeen said that Mondelēz accounts for only about 0.5% of global consumption, and that 98% of its palm oil consumption is sourced from suppliers aligned to Mondelēz 2020 Palm Oil Action Plan; Mondelez is striving to hit 100% by 2025.
“Apart from ensuring our suppliers adhere to our principles, we continuously engage the industry with an interest in environmental and social aspects. The road to sustainable sources and fair trade in palm oil production requires close collaboration with all actors in the supply chain, from growers to suppliers and buyers, as well as governments and non-governmental organizations,” she added.
On the global anti-palm oil lobby, she said the company is actively working with suppliers to ensure the commodity is produced in an environmentally-friendly manner.
“Our Palm Oil Action Plan outlines a set of principles on direct suppliers to escalate the transition to sustainable practices across the sector and we take this matter seriously and have in fact excluded 12 companies from our supply chain due to breaches,” she said, declining to elaborate further.
She added that the company is unable to share the specifics of the companies excluded but assured that it is buying from suppliers whose production principles are at one with Mondelez.
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