Mondelez International, Inc. (MDLZ - Analyst Report) recently announced a global strategic partnership with Facebook, Inc. (FB - Analyst Report) to strengthen its social and mobile brand building initiatives to drive business growth and especially, turn around its top line.
The agreement covers 52 countries, including the U.K., the United States, France, Brazil, India, Indonesia and the Gulf States. Moreover, the partnership will entail a joint commitment to innovation and access to research and capability building.
The global snacks company has been under pressure and reported disappointingtop-line results ever since its separation from Kraft Foods Group, Inc. (KRFT - Analyst Report) in Oct 2012. Weak biscuit sales in China, continued headwinds from coffee pricing and slower global category growth hurt Mondelez’s revenues in the second half of 2013. In fact, Chief Executive Officer (CEO) Irene Rosenfeld, admitted at the Consumer Analyst Group of New York (CAGNY) conference last month that Mondelez’s “margins were lower than peers”.
Also, the Zacks Rank #3 (Hold) company has been criticized for its profits/margins by activist investor Nelson Peltz in the past. Peltz joined Mondelez’s board of directors in Jan 2014, putting an end to his agenda of pushing the food and beverage giant, PepsiCo, Inc. (PEP - Analyst Report) to take over Mondelez.
Partnerships like the present one will allow Mondelez to engage directly with consumers as most people spend a significant time on mobile and Facebook every day. Such deals will add a personal touch to Mondelez’s marketing efforts and boost the growth of its iconic brands like Oreo, Cadbury, Trident and many more.
Despite slower category growth, Mondelez continues to make brand-building and advertising investments to capitalize when growth resumes. The company is refreshing its brand portfolio through product innovation and extending its brands to new geographies and platforms. Mondelez’s advertisement spend is biased toward the high-margin Power Brands.