Mondelez CFO redirecting travel, real estate funds to marketing

Dive Brief:

Mondelez CFO Luca Zaramella said Mondelez International, the Chicago, Illinois-based snack food manufacturer, is reallocating funds towards marketing. And for the first time, the company is spending the bulk of its advertising dollars on digital channels instead of television commercials.
Mondelez, which owns Triscuit, Cadbury, Chips Ahoy and Ritz, hopes the renewed focus on marketing will help them retain their recent sales gains in North America and stimulate demand in other markets, Zaramella told The Wall Street Journal.
Mondelez wants to retain the new customers it attracted in the second quarter. "We want to invest more in our communication to consumers," Zaramella said.

Dive Insight:

"The first question I ask is 'Where is the money coming from?'" Zaramella said, declining to offer a figure on how much will be dedicated to advertising, but saying it would be "more than ever."

As part of the revamp, the company's travel, consulting and real estate funds will be reallocated to marketing and advertising efforts.

In 2019, the corporation spent $1.21 billion on advertising, a $400 million increase from 2018, it shared in a January annual report. The company in 2018 told investors it planned on increasing marketing spending through 2022, the Journal wrote.

Other food manufacturers, including Nestle and Kraft-Heinz, are opting to revitalize its marketing and advertising budgets after slashing them at the pandemic's onset, Food Dive reported.

"Virtually all food and restaurant companies ... reduced advertising spending in the beginning of the pandemic," David Palmer, senior managing director in the research unit of Evercore investment bank, told the Journal.

Snack food sales in North America jumped 17.3% in the second quarter from a year earlier, to $2.02 billion, Mondelez shared in its July earnings report.

Revenue in developed markets grew 5.4% from the same time last year, but emerging market sales dropped 15.6%. Though headquartered in Chicago, Mondelez generates most of its sales in non-U.S. markets.