Cadbury’s maker Mondelez India sees a bright festive season ahead as consumer appetite picks up after two years of pandemic-dulled celebrations. However, the consumer packaged goods manufacturer has a word of caution about the current inflationary spiral.
In a conversation with Moneycontrol, Mondelez India’s senior director for sales Desmond D’souza said that unlike the last two years that were marred by successive COVID-19 waves, this year’s festival season is expected to reflect the demand witnessed during the pre-pandemic era.
“Our festive season kicks off a little earlier than for the rest. It starts at Rakhi (Rakshabhandan festival), while for other companies it is usually around Diwali,” he said. “This year, we have already witnessed a healthy start to the season with our gifting portfolio showing signs of growth.”
Traditionally, the festive season in India is divided into two, with the first phase centred on Rakhi and Onam, and Dussehra and Diwali being the showcases of the next phase. It stretches from August till early November during which companies across sectors focus on new product launches to attract customers.
From fear to festivities
One of the key trends of the last couple of years has been the subdued festive season, D’souza said.
“Though the pent-up demand did accelerate growth on a low base, actual festive consumption did not pick up as fast as expected,” he explained. “People have been pretty much at home, unable to meet in the last two years. But this time they have been up and about meeting and celebrating in person.”
“The last two years were really hard on everyone. In this scenario indulgence becomes the first casualty. But our diverse portfolio has enabled us to have a volume led growth,” he added.
Notably, Mondelez India ended 2021 with a three-year compound annual growth rate of 11.3 percent. At present, its revenue from the entire portfolio stands at over $1 billion per annum.
“We’ve had strong performance over the last three years. We exited 2021 with the strong double-digit CAGR and not just in revenues but even on profit,” said D’souza.
The inflation threat
While optimistic about volume growth, D’souza added a note of caution on inflationary pressures.
“The macro environment and inflation is on everyone’s minds… We have been impacted too. But our approach is to manage inflation holistically, not just raise prices,” he said. “During the first two quarters, despite inflation, our revenue growth has been led by volumes. We are cautiously optimistic on the festive season. Till now, we have witnessed a healthy start, this should hold up till Diwali.”
Recent data showed that India’s retail inflation rose to 7 percent in August on a year-on-year basis. Similarly, consumer food price inflation rose to 7.62 percent.
According to D’souza, Mondelez India’s key strategy is to diversify into ‘adjacent’ categories of biscuits and cakes, among others, to ward off pressure on growth.
Presently, the largest portion of the company’s revenue is generated from chocolates. In this category, the Cadbury Dairy Milk brand leads the company’s portfolio with an approximate market share of 66 percent.
“Biscuits is a very important category and it is nascent for us. But we’ve been doing well. Oreo is a strong brand that we came with,” he said. He pointed out that the company is now expanding into other segments in the category with the Bournvita brand.
“The next segment that we are focusing on is candy and within candy, we have Choclairs. We have recently launched Cadbury lollipop,” he said. “Snacking continues to be our main area of expansion and focus and we will continue to drive snacking.”
Lately, the company is trying to introduce more Indian flavours via its Cadbury’s brand. The innovations programme known as Madbury was responsible for producing a ‘Paan’ flavoured chocolate last year.
In 2022, the company launched Cadbury Dairy Milk Crispy Rabdi and Crunchy Cola flavours. “These are both consumer-created flavours,” D’souza pointed out. “This part ensures that we are staying relevant to our consumers and their evolving palates. It is important for us to ensure that we keep on catering to the consumer’s ever-changing palates.”
At present, Mondelez India Foods, formerly Cadbury India, operates in the chocolates, beverages, biscuits and candy categories with brands such as Cadbury Dairy Milk, 5Star, Gems, Bournvita, Tang, Oreo and Choclairs, among others.It has manufacturing facilities in Maharashtra, Madhya Pradesh, Himachal Pradesh and Andhra Pradesh, in addition to a global research and development technical centre and global business hub in Maharashtra. Currently, 80 percent of its business comes from traditional trade with around 3 million stores.