It will now compete with US chocolate leader Hershey, which owns Cadbury licensing rights from Mondelēz, the company announced during the Barclays Global Consumer Staples Conference in Boston, Massachusetts.
Mondelēz's $23bn bid for Hershey was rejected in July and market analysts predicted the Oreo manufacturer would either try to acquire a smaller-scale, yet still important chocolate brand, such as Ferrero, to increase its chocolate business in the US, or eventually rejoin Kraft Heinz.
But the firm hopes to expand its footprint into the US chocolate market, where it has “only a small presence today,” via its own brands.
Expanding premium chocolate range; strengthening e-commerce
The company will also introduce new varieties of premium chocolate bars under its Green & Black’s brand.
The Green & Black’s brand, Mondelēz’s spokesperson Kimberly Fontes told ConfectioneryNews, is currently in the US through traditional retail channels, including Walmart, Food stores, drug stores and Whole Foods.
“The new Green & Black’s range will feature 70% dark chocolate in tablets as well as sharing and gift packs. The recipe sustainably sources cocoa through the Cocoa Life program, and contains no artificial colors, flavors or preservatives,” Mondelēz said in a statement.
“Pricing [of Green & Black’s chocolate] varies by channel,” Fontes added.
Milka Oreo has already been in the European market for a number of years. Mondelēz launched Cadbury Dairy Milk Oreo in the UK in 2012, but is blocked from selling Cadbury chocolate in the US as Hershey owns the license for the brand. Mondelēz acquired the license to produce Cadbury-branded biscuits globally from Burton's Biscuit Co in August.
Mondelēz’s chief growth officer Tim Cofer said at the Barclay's conference: "With our strong brands and global expertise in chocolate, we see enormous potential to grow our U.S. business and expand the category."
"The US is the world's largest chocolate market, valued at $14bn. However, per capita consumption is only about half that of many developed European chocolate markets."
Mondelēz also reemphasized its e-commerce strategy, especially in emerging markets.
“A key part of this strategy is to build an industry-leading e-commerce snacks business, targeting at least $1bn in revenue by 2020,” the company said.
Rated ‘positive’ by financial group, yet still a likely take-over target
Financial group, SIG, rated Mondelēz positive with a $55 price target per share by the end of 2016. Its current value is around $43.61 per share.
During the conference, Mondelēz underscored gains made to expand profit margins through a cost-saving strategy. The US biscuits market leader last year laid off 600 of 1,200 employees working at its Nabisco plant in the south side of Chicago after it announced plans to move the facility to Mexico. The company said the move could save around $46m a year.
“We give Mondelēz credit for its top line and profit margin initiatives, even though recent trends (2Q) seem to raise questions about the company’s ability to deliver long-term targets,” SIG’s analyst Pablo Zuanic said in a statement.
Mondelēz’s Q2 results show a 17.7% drop in net revenues compared to the last-year period.
Zuanic added that SIG continues to think Mondelēz is a likely take-over target for Kraft Heinz.