Mondelēz to sell gum business in line with strategy to focus more on chocolate and biscuits

USA – Mondelēz International has announced plans to sell its gum business as part of its long-term goal to accelerate growth and generate 90% of revenue in chocolate and biscuits, including baked snacks.  

Gum is 5% of Mondelez’s total revenue. With Mondelez posting sales of US$26.6 billion in 2020, an increase of 2.8% from 2019, gum would have posted revenue of roughly US$1.3 billion.

The decision to sell the business which includes brands such as Trident, and Dentyne, comes after completing a strategic review of the division during the past year.

The sale will allow it to accelerate growth in chocolate and biscuits which the company says are attractive and historically durable categories in both developed and emerging markets.

Only the developed segment of the gum business is under consideration. Mondelēz will continue to operate other brands and products within its candy business, as well as its emerging market gum business.

Company CFO Luc Zaramella however revealed that the snack giant is focused on restoring the segment to pre-COVID-19 levels before it decides to “potentially assess whether there are other avenues for us to create more value for Mondelez shareholders”. 

Gum has been one of the hardest-hit segments during the pandemic as consumers spend less time on the go where much of the consumption in the category takes place.

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Candy Industry noted the whole gum category generated US$2.88 billion in the year ended June 14, 2020, down 8.2% from the prior year, citing data from IRI. Unit sales dropped 14.6% to 1.52 billion during the same period.

According to Nielsen data, the gum segment saw the largest sales decrease amid the pandemic during the 31-week period ending Oct. 3 compared to the same time period in 2019.

The company’s strategy to double down on snacks has made its gum business, which also includes Bubblicious and Stride, somewhat of an out-of-place category at the Chicago-based company.

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While Mondelez hasn’t definitively decided what it will do after the review — it could ultimately decide to keep gum.

A sale would however be the most likely option given the position in its portfolio and the cash a sale could generate which could be spent on innovation or to purchase other snacking brands.

Mondelez has not been shy in the past to stoke growth by acquiring brands. Last year, it acquired Hu, a maker of premium snacks and chocolates made from simple ingredients.

It also bought a majority stake in Perfect Snacks, the manufacturer of organic, non-GMO, nut butter-based protein bars and bites and recently snapped up Chipita, a Greek company that makes croissants and baked snacks.

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