Mondelez to funnel rising ad budgets into ‘local brands’ after internal reshuffle
Mondelez upped its marketing spend by more than $150m last year. It plans to maintain this level of investment over the coming year, but bosses have revealed it will be directed towards “local brands at the detriment of global brands”.
On a call with analysts this week, chief financial officer Luca Zaramella outlined the company's investment in 2018, saying it had increased by about $150m (which included product R&D) as it pushed further into Russia, China, and India – emerging markets which represent 80% of the growth potential in snacking around the world.
Though its global brands generated about $11bn in revenue, it has around 65 “local jewels” that generate between $100m and $1bn each (nearly half of Mondelez's total annual revenue).
These brands include Côte d'Or, Triscuit and Kinh Do, a leading biscuit brand in Vietnam.
Looking ahead, the company has earmarked ‘local brands’ in emerging and established markets as the priority of its $1.5bn+ ad spend.
“We’re going to touch more local brands […] we’re now going to spend more on local brands at the detriment of global brands," said Zaramella. "There will be a bigger increase in local brands, but we will keep momentum in global brands that we see [in the likes of] in China or Russia. We will keep on investing."
The shift to focus less on its global brands – which range from Belvita and Oreo to Cadbury and Philadelphia – comes after the snack-maker overhauled its internal marketing team last year.
On the call, Mondelez also revealed the fruits of a marketing strategy overhaul for one of its biggest global brands – Cadbury.
In early 2018 it began working against a “new marketing playbook”, which positioned the chocolate around what it calls its “generosity purpose”.
The resulting £12m campaign saw the brand permanently shed its ‘Free the Joy’ tagline to instead highlight moments of “kindness and generosity” in creative executions.
At the time of the launch campaign, data from YouGov's BrandIndex, which takes into consideration factors such as the quality and customer perception, revealed that Cadbury’s score among consumers dropped from just over 43 in 2012 to just 25.6 in 2017.
However, Mondelez chief executive Dirk Van de Put said the approach has “connected really well with our consumers” and led to a six-point increase in brand consideration by its own estimates.