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Mondelez (MDLZ) to Divest Developed-Market Gum Business
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Mondelez International, Inc. (MDLZ - Free Report) is committed to reshaping its portfolio to focus on areas with greater growth potential, such as its chocolate, biscuits and baked snacks categories. Moving on these lines, the company inked a deal to divest its developed-market gum business (in the United States, Canada and Europe, excluding France) to Perfetti Van Melle Group, a renowned European maker of gum and confectionery products.
The deal is anticipated to conclude in the fourth quarter of 2023. It includes the sale of manufacturing facilities in Rockford, IL, and Skarbimierz, Poland, as well as the Trident, Dentyne, Stimorol, Hollywood, V6, Chiclets, Bubbaloo and Bubblicious gum brands in the United States, Canada and Europe. It also includes the sale of European candy brands — Cachou Lajaunie, Negro and La Vosgienne.
Mondelez will continue to operate its gum business outside the United States, Canada and Europe, along with all its other candy brands and products. MDLZ is progressing well with its Vision 2030 strategy, which is aimed at doubling down the company’s core snacking categories. The strategy also aims at generating 90% of the company’s revenues from chocolates and biscuits (including baked snacks).
Mondelez has been keen on expanding its snacking category in particular. As consumers prefer snacking over traditional meals, the company’s core categories — chocolates and biscuits — have historically depicted resilience to economic downturns and pricing actions. Consumers in developed countries consider chocolates and biscuits as affordable indulgences and one of the most-valued snacking products.
What Else to Know?
Apart from undertaking divestitures, Mondelez has been enhancing its business through meaningful acquisitions. In its third-quarter 2022 earnings release, the company noted that it closed the Ricolino buyout, which is expected to double the size of its Mexico business. In August 2022, it closed the buyout of Clif Bar.
Management announced incremental investments in the Cocoa Life program and expanded its target to source all cocoa volumes from Cocoa Life by 2030. Mondelez concluded the integration of Chipita S.A. business, which was acquired in January 2022 and is a major producer of sweet and salty snacks in Central and Eastern Europe. Contributions from this acquisition boosted net revenues in the third quarter.
In 2021, Mondelez took over a renowned sports performance and active nutrition brand — Grenade. Further, the company acquired the Australia-based food company — Gourmet Food Holdings — which operates in the premium biscuit and cracker category.
Moreover, Mondelez completed the acquisition of Hu Master Holdings, the parent company of Hu Products, on Jan 4, 2021. Earlier, the company acquired the majority interest in Give & Go (in April 2020), which is a pioneer in fully finished sweet baked goods.
Thus, MDLZ’s focus on refining the portfolio through prudent acquisitions and divestitures bodes well. This Zacks Rank #3 (Hold) company’s shares have rallied 10% in the past three months compared with the industry’s growth of 8%.
The Chef's Warehouse, which distributes specialty food products, currently sports a Zacks Rank #1 (Strong Buy). The Chef's Warehouse has a trailing four-quarter earnings surprise of 93.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CHEF’s current financial-year sales suggests an increase of 46.5% from the year-ago reported number, while earnings indicate significant growth.
Conagra Brands, which operates as a consumer-packaged goods food company, currently carries a Zacks Rank of 2 (Buy). CAG has a trailing four-quarter earnings surprise of 1.8%, on average.
The Zacks Consensus Estimate for Conagra Brands’ current financial-year sales and earnings suggests growth of 5.2% and 3.4%, respectively, from the corresponding year-ago reported figures.
McCormick, a manufacturer, marketer and distributor of spices, seasoning mixes and condiments, currently carries a Zacks Rank #2. MKC delivered an earnings surprise of 6.2% in the last reported quarter.
The Zacks Consensus Estimate for McCormick’s current financial-year sales suggests growth of 1.8% from the year-ago reported figure.
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Mondelez (MDLZ) to Divest Developed-Market Gum Business
Mondelez International, Inc. (MDLZ - Free Report) is committed to reshaping its portfolio to focus on areas with greater growth potential, such as its chocolate, biscuits and baked snacks categories. Moving on these lines, the company inked a deal to divest its developed-market gum business (in the United States, Canada and Europe, excluding France) to Perfetti Van Melle Group, a renowned European maker of gum and confectionery products.
The deal is anticipated to conclude in the fourth quarter of 2023. It includes the sale of manufacturing facilities in Rockford, IL, and Skarbimierz, Poland, as well as the Trident, Dentyne, Stimorol, Hollywood, V6, Chiclets, Bubbaloo and Bubblicious gum brands in the United States, Canada and Europe. It also includes the sale of European candy brands — Cachou Lajaunie, Negro and La Vosgienne.
Mondelez will continue to operate its gum business outside the United States, Canada and Europe, along with all its other candy brands and products. MDLZ is progressing well with its Vision 2030 strategy, which is aimed at doubling down the company’s core snacking categories. The strategy also aims at generating 90% of the company’s revenues from chocolates and biscuits (including baked snacks).
Mondelez has been keen on expanding its snacking category in particular. As consumers prefer snacking over traditional meals, the company’s core categories — chocolates and biscuits — have historically depicted resilience to economic downturns and pricing actions. Consumers in developed countries consider chocolates and biscuits as affordable indulgences and one of the most-valued snacking products.
What Else to Know?
Apart from undertaking divestitures, Mondelez has been enhancing its business through meaningful acquisitions. In its third-quarter 2022 earnings release, the company noted that it closed the Ricolino buyout, which is expected to double the size of its Mexico business. In August 2022, it closed the buyout of Clif Bar.
Management announced incremental investments in the Cocoa Life program and expanded its target to source all cocoa volumes from Cocoa Life by 2030. Mondelez concluded the integration of Chipita S.A. business, which was acquired in January 2022 and is a major producer of sweet and salty snacks in Central and Eastern Europe. Contributions from this acquisition boosted net revenues in the third quarter.
In 2021, Mondelez took over a renowned sports performance and active nutrition brand — Grenade. Further, the company acquired the Australia-based food company — Gourmet Food Holdings — which operates in the premium biscuit and cracker category.
Moreover, Mondelez completed the acquisition of Hu Master Holdings, the parent company of Hu Products, on Jan 4, 2021. Earlier, the company acquired the majority interest in Give & Go (in April 2020), which is a pioneer in fully finished sweet baked goods.
Thus, MDLZ’s focus on refining the portfolio through prudent acquisitions and divestitures bodes well. This Zacks Rank #3 (Hold) company’s shares have rallied 10% in the past three months compared with the industry’s growth of 8%.
Looking for Consumer Staple Stocks? Check These
Some better-ranked stocks are The Chef's Warehouse (CHEF - Free Report) , Conagra Brands (CAG - Free Report) and McCormick & Company (MKC - Free Report) .
The Chef's Warehouse, which distributes specialty food products, currently sports a Zacks Rank #1 (Strong Buy). The Chef's Warehouse has a trailing four-quarter earnings surprise of 93.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CHEF’s current financial-year sales suggests an increase of 46.5% from the year-ago reported number, while earnings indicate significant growth.
Conagra Brands, which operates as a consumer-packaged goods food company, currently carries a Zacks Rank of 2 (Buy). CAG has a trailing four-quarter earnings surprise of 1.8%, on average.
The Zacks Consensus Estimate for Conagra Brands’ current financial-year sales and earnings suggests growth of 5.2% and 3.4%, respectively, from the corresponding year-ago reported figures.
McCormick, a manufacturer, marketer and distributor of spices, seasoning mixes and condiments, currently carries a Zacks Rank #2. MKC delivered an earnings surprise of 6.2% in the last reported quarter.
The Zacks Consensus Estimate for McCormick’s current financial-year sales suggests growth of 1.8% from the year-ago reported figure.