Mondelez predicts online sales to hit $1bn by 2020

11/09/2015

Mondelez is planning a major push into ecommerce as the owner of food brands including Oreo, Cadbury’s and Kenco, embarks on a cost-cutting drive.

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The move comes as the FMCG giant announced several new targets Thursday including plans to increase spending on advertising and consumer support and shifting much more of its total media budget to digital.

Mondelez expects digital media to account for around 30% of its total media outlay, which is double that from the end of 2014.

The increase isn’t as radical as it sounds- equating to nly about 3% of the company’s annual sales but it rerpresents a major shift in thinking about how packaged food goods are sold.

Mondelez is under pressure to find savings and show improvement in its plans, due in part to investments from activists Nelson Peltz and Bill Ackman and slowing growth in emerging markets.

In a statement, Chief Financial Officer Brian Gladden said Mondelez expects to cut overhead expenses as a share of revenue by at least 2.5 percentage points between 2013 and 2016—partly from its adoption of a financial tool called zero-based budgeting that requires departments to justify costs anew annually.

Mondelez is also planning organizational changes in its North America marketing department that will go into effect at the beginning of 2016.

The company is simplifying about 150 back-office processes to save money, and has closed, sold or retooled 78 production facilities since 2012. It plans to have added 40 modern manufacturing lines by the end of this year.

Mark Clouse, chief growth officer at the Barclays Global Consumer Staples conference, said: "We estimate that e-commerce could become one of the fastest-growing platforms within our company, increasing from less than $100m in revenue today to as much as $1bn by 2020.”
Mondelez said it was on target to slash costs as a percentage of revenue by at least 250 basis points between 2013 and 2016.

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