Mondelez eyes South African snacks, frozen convenience food maker AVI Limited

SOUTH AFRICA – American multinational snacking giant, Mondelez international is reportedly considering to make a bid for South African food and beverage company AVI Limited.

Bloomberg, quoting unnamed sources, said discussions are underway for a deal that would increase Mondelez’s presence in South Africa.

The Johannesburg-based AVI is a publicly-listed consumer goods group with interests also in personal care and fashion.

Its food brands are mainly centred around snacks with brands such as Provita crispbread, Flanagan’s crisps and Willards’ cheese curls. It also has a frozen convenience food offering under the I&J brand, alongside hot beverages.

In the year to 30 June 2021, it recorded revenue of ZAR13.26bn (US$843.5m), an increase year-on-year of 0.5%.

Mondelez already has a presence in South Africa where it sells local products such as Chappies bubble gum and chocolate bar Chomp as well as global brands such as Oreo biscuits and Cadbury Dairy Milk chocolate.

Bloomberg’s source said the confectionery firm may not want to acquire all of AVI’s assets as the non-food brands are not a natural fit with its existing portfolio.

Mondelez’s US peer PepsiCo extended its presence in South Africa in 2020 by buying Pioneer Foods Group for around $1.8bn.

The weight of Mondelez’s M&A activity since its formation in 2012 has focused on North America and Europe, indicates Just Food.

Its acquisitions in recent months include the purchases of Greece-based snacks maker Chipita, announced in May, and UK sports-nutrition firm Grenade, bought two months earlier.

Mondelez’s presence in emerging markets was central to the investment case in the business when it was spun off from the old Kraft Foods Inc. nine years ago.

In the nine months to the end of September, the company’s net revenue from emerging markets stood at $7.44bn, up 12.3% on a year earlier. Group net revenue was 9.2% higher at $21.06bn.

Mondelez does not break down revenues for Africa but has stated that, in the opening nine months of 2021, net revenue from its Asia, Middle East & Africa reporting unit grew 14.7% to US$4.83bn. The company did disclose it had seen “high-single-digit” growth in Africa during the third quarter.

The company CFO Luca Zaramella said, “Our emerging markets results include double-digit growth in Brazil, Mexico, and India, as well as high single-digit growth in China, Russia, and Africa. These markets are attractive growth engines for us.”

Meanwhile, the company has pledged to achieve net-zero greenhouse gas (GHG) emissions across its value chain by 2050 as its contribution to efforts to tame rising global temperatures.

As part of its commitment, Mondelēz signed the Science-Based Targets Initiative’s Business Ambition for 1.5 degrees celsius and joined the United Nations Race to Zero Campaign to build momentum toward a decarbonized economy.

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