With a major push into the $71 billion global cake and pastry category, Mondelēz International looks to tap into the popularity of its snacking brands.
“Cakes and pastries is a segment where our brands can be,” said Martin Renaud, executive vice president and chief marketing and sales officer at Mondelēz, at the annual Consumer Analyst Group of New York conference in Florida. “We can build a very strong leadership position quickly.”
Renaud added that the category lacks “a very big, strong player.”
The fragmentation could provide Mondelēz with an opening to use its well-known brands, such as Oreo, with more than $4 billion in annual sales, along with more recently acquired ones, such as Give & Go, a maker of brownies, cupcakes and other items, to further its reach in the cakes and pastries segment.
Mondelēz, a global snacking giant with $31 billion in revenue in 2022, has carved out a dominant position in chocolate where it is the No. 2 player with 12.7% ownership of the $120 billion category.
The company is even stronger in biscuits with brands, such as Oreo, belVita and Triscuit, where its 17.2% share of the $111 billion segment makes it the market leader.
Despite growing revenue in cakes and pastries from $500 million in 2018 to $1.6 billion last year, Mondelēz remains a distant third with a 3.2% share in the $80 billion space. A major pillar of its future growth has come through acquisitions, Give & Go in the U.S. in 2020 and Chipita, a croissant and baked snacks player in Central and Eastern Europe, a year later.
Brittany Quatrochi, an analyst at Edward Jones, said moving into cakes and pastries is another way for Mondelēz to innovate and maximize the valuable equity it has built up with many of its snacking brands. The new offerings also provide a way for the snack maker to keep its products fresh and relevant with consumers.
“Take the powerful brands you have that are familiar with consumers,” Quatrochi said. “They don’t need to be creating wild brands, leverage what you have.”
It’s not hard to see the benefits Mondelēz could reap by going deeper into cakes and pastries. The category is large across all global markets where the snacking giant has a presence, and the space has posted a compound annual growth rate of 4% during the past three years, the Chicago-based company said.
It also covers different occasions, such as birthday parties and school lunches, that are well suited for new concepts and leveraging of well-established brands. Mondelēz currently sells Oreo Cakesters soft snack cakes in the U.S. and China, and Cadbury Chocobakes – cookies and layered cakes filled with the chocolate – in India.
The company is exploring opportunities to feature Oreo in more fresh bakery items, such as cupcakes and donuts, on the Give&Go platform in North America, while evaluating opportunities to bring its chocolate brands into Chipita’s 7Days family of croissants and other pastries in Europe.
Mondelēz’s presence in cakes and pastries also brings its established brands into new categories, such as moving Oreo beyond cookies and Cadbury from chocolate. These kinds of pushes could increase consumer awareness throughout the store and increase the likelihood that if shoppers buy an Oreo cupcake, they might be willing to toss in a package of cookies into their cart as well.
Renaud said before Mondelēz brings a brand into another category, the company determines if the new offering has enough in common with the core product in the first place, and whether it would be embraced by consumers or confuse them. Mondelēz wants to do more than simply place one of its valuable brand logos on a new product; it wants to make sure the product maintains the texture and taste people expect from the original item.
“It’s where marketing and the understanding of our brands are absolutely critical,” Renaud said. “We are really trying to bring all [of] what a brand means to different segments.”