CHICAGO – Moving on from Hershey's rejection of its recent overtures, Oreo-maker Mondelez International announced Wednesday its plan B to expand into the U.S. chocolate market: Oreo chocolate bars.
Calling it a "big splash" into the U.S. chocolate market, Mondelez executives announced the move at the Barclays 2016 Consumer Staples Conference. The global snacking and confectionery company, headquartered in suburban Chicago, will begin selling Oreo-branded chocolate bars made with the company's Milka chocolate; it also will sell a new line of premium chocolate bars under its Green & Black's brand. The new bars will be made in Europe.
Last week, Mondelez announced it was ending its efforts to acquire Hershey, the dominant chocolate-maker in the U.S.
"We have a very small presence in the U.S. (chocolate market), so entering this category represents significant white space opportunity for us," said Tim Cofer, Mondelez chief growth officer, in a presentation at the Barclays conference.
The U.S. chocolate market is about $14 billion, though per capita consumption of chocolate lags behind that of some European markets, Cofer said.
A merger with Hershey would have given Mondelez access to American consumers with already established chocolate products. Mondelez, which sells Cadbury and Milka chocolate abroad, is already the second largest chocolate company globally with about $13.4 billion in sales, but only the eighth largest in the U.S. with about $326 million, according to combined sales and part-year projections for 2016 from Euromonitor International.
Instead, Mondelez is hoping its new products will help stateside sales. The Oreo chocolate bars, which are made with Milka chocolate — a brand better-known in European markets — are already sold in more than 20 countries globally. The new Green & Black's line is intended to appeal to shoppers who prefer more "premium" dark chocolate that is made from sustainably sourced cocoa and free from artificial colors, flavors or preservatives.
Mondelez, which came into existence when Kraft Foods split into two publicly traded companies in 2012, has been under pressure from shareholders to cut costs and improve profit margins.
Despite the Hershey rejection, Mondelez will continue to focus on "bolt-on" acquisitions and consider more strategic opportunities like Hershey "in a disciplined way," said Brian Gladden, Mondelez executive vice president and chief financial officer, on Wednesday.
At the Barclays event, Mondelez executives highlighted gains made in expanding profit margins and reducing costs, primarily through overhauling the supply network.
And while the company's ramping up its focus on "well-being snacks," as a way of appealing to today's health-conscious consumers, cookie monsters need not worry. Mondelez executive Daniel Myers cited Oreo Thins and Chips Ahoy Thins as recent examples of "well-being" innovation, along with products like BelVita breakfast biscuits and Good Thins.
For the foreseeable future, cookies and chocolate remain critical to the Mondelez plan.