Dirk Van De Put Discusses Mondelez’s Outperformance

Updated on

CNBC Exclusive: CNBC Transcript: Mondelez Chairman and CEO Dirk Van de Put Speaks with CNBC’s Sara Eisen Today

WHEN: Today, Tuesday, February 19, 2019

WHERE: CNBC’s “Squawk on the Street

The following is the unofficial transcript of a CNBC EXCLUSIVE interview with Mondelez Chairman and CEO Dirk Van de Put and CNBC’s Sara Eisen on CNBC’s “Squawk on the Street” (M-F 9AM – 11AM) today, Tuesday, February 19. Video from the interview will be on CNBC.com later today.

Get The Full Series in PDF

Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

Q4 hedge fund letters, conference, scoops etc

All references must be sourced to CNBC.

SARA EISEN: Snack maker Mondelez reaffirming its financial outlook today, and will lay out its strategy going forward at the CAGNY Conference in Boca Raton, Florida – Consumer Analyst Group of New York. That’s where we find the Mondelez Chairman and CEO Dirk Van de Put joining us first here first on CNBC. Dark, welcome.

DIRK VAN DE PUT: Good morning. Thank you.

SARA EISEN: So we keep saying this is your first year on the job. You know, going back over the last 12 months, consumer staples are down 2%. Mondelez is up 8%, it’s up almost 20% so far this year. So what are you telling investors today at CAGNY, as far as how you’re going to keep that outperformance going?

DIRK VAN DE PUT: Well, we take them through the fact that we are a snacking company, and that snacking is different from food. It’s a good category to be in. And within that snacking world, we are the global leaders. We have presence in all the big markets around the world, we are either number one or number two in a lot of the categories. And we feel that we have structural advantages to keep on growing. And on top, we have a new strategy which we started about a year ago and that is working out for us. So we believe that we will outgrow the category in the years to come. And that’s going to be a mixture of entering into new wide spaces for us, gaining some market share and extending our brands into other snacking categories.

SARA EISEN: Yeah. You point to snacking as a way to outperform, certainly the broader package food industry. What’s working there? What are the consumer habits that are pointing to the growth of snacking versus other packaged food that we see in the supermarkets?

DIRK VAN DE PUT: Well, it has a lot to do with millennials and consumers in general. About 75% of consumers snack on a daily basis, and that is growing. And millennials will often snack up to four times a day. They will skip complete meals just to have a little snack. And so it’s probably a consequence also of our daily lives where we are on the run, moving -- sit-down meals become less and less normal. And so that’s what’s really driving the category. It’s not only in the U.S., it is happening all over the world. And particularly in emerging markets, as consumers there are also more on the go. Snacking is showing particular growth. In fact, in the next years, we expect that 80% of the growth in snacking will come from emerging markets.

SARA EISEN: And that certainly would be good for a company that gets 80% of its revenues overseas, Dirk. Walmart today though, in the U.S., put up its best comps in about a decade. I know you’re a big supplier. In the conference call, the executives talked a lot about their new strategies around digital, ordering online, picking up in store. What are you seeing when you work with a big customer or I guess their customer of Walmart with some of this experimentation and what they’re doing in grocery?

DIRK VAN DE PUT: Well, I think they’re doing it the right way. They are clearly moving. It is the way the consumer is going. And I think they have gone through initial years of experimenting and now they’re getting some traction there. It’s not only Walmart to be honest. It’s every retailer that’s in it now. And I think what we see in the U.S. is at the moment what we call the click and collect or the offline or the brick and mortar retailers’ sort of playing harder in online. That’s one of the big phenomenon in the U.S. these days.

SARA EISEN: You have also put in a strategy, since you’re there talking to investors about your business, focusing on local brands. What’s doing well in Russia and focusing on the snack category there. Which is a big distinction from your predecessor Irene Rosenfeld who really looked at the power brands like Oreos because they drove the growth. Are you going to continue to do that, and what do you hear from investors? Because it still is the big power brands that are responsible for the growth, isn’t it?

DIRK VAN DE PUT: No, no, we have growth now in our -- what we call our big global brands and local brands, which is new for us. And that has to see with the fact that we have started to reinvest in those local brands. The reason why it’s important to do both is that not one brand can sort of cover all the snacking needs of consumers. And also there are brands that people around the world have grown up with, which they really love and like, they don’t want to give up and we own a lot of those brands. And so I think it’s just normal that you need an assortment of brands to cover what consumers need. And we are clearly planning to keep going with that. What happened in Russia, is we have – for instance, in the chocolate market, we have a brand called Alpen Gold which is really what Russians would say ‘That’s how Russian chocolate should taste,’ and then we have another brand called Milka, which is a more international chocolate brand. By doing innovation, the same innovation on both brands at the same time, going into dark chocolate, for instance, or going into something we call choco-bakery there is more movement in the market and it captures more attention of people. And it’s led to quite a big market share gains. And we’ve become the number one packaged snack brands in Russia. We see it working and plan to keep doing it around the world.

SARA EISEN: Wanted to ask you, speaking of around the world, about the Coke guidance last week. Really surprised people, coming in very well below what analysts were looking for, and the number one reason cited was macroeconomic weakness. James Quincey he sees 2019 growing slower than 2018. As someone who operates around the world is that something you’re seeing as well, and is that going to hurt a company like Mondelez?

DIRK VAN DE PUT: No, we’re not seeing it. And, obviously, I cannot talk for Coke, I don’t know what they are seeing. But if I look around the world and look into the big markets, the U.S. really doing well. Our market, the snacking markets, are up more than they were in the previous years. China, there’s a lot of talk about China. We don’t see it. The markets are up. Our market share is up. Just talked about Russia. Europe is also going quite well. So we cannot detect in our world, in our snacking world, we don’t see it at the moment. And then again, it’s kind of known that in recession or economic downturns, a category like snacking is usually not that much affected as other categories.

SARA EISEN: And then my other big picture theme was inflation. I did a run through of some of the earnings calls where higher pricing was mentioned, whether it was freight costs increasing or the strong dollar hurting or tariffs, just leading to an overall theme of rising consumer prices. From your vantage point, are we in an inflationary environment in terms of what we the consumer are paying for consumer products?

DIRK VAN DE PUT: It’s -- I would say a little bit. What is going on as it relates to our input cost is that we always see inflation. We’ve seen inflation over the last years. This year, ’19, it’s a little more pronounced. It’s a bit higher, and so we have to increase our prices a little bit more than we normally should be. And so that’s the effect you’re going to see. Would I call that a heavy inflationary environment? No. But it’s a little more than we’ve seen in the last years. That’s for sure.

SARA EISEN: And finally, I know one question you’ll get a lot from investors today is on M&A. You purchased Tate’s, the cookie company. You haven’t done a lot of other big acquisitions. How do you feel about your portfolio in terms of looking to unload some of the brands or actually load up on more and how big?

DIRK VAN DE PUT: Well, we said we feel very good about the snacking space and we want to keep on going. At the moment, we’re a biscuit, chocolate, gum and candy company. We are not yet the leader in every category in every country around the world, so there’s certainly opportunities around the world to reinforce ourselves in our categories. So that is a focus. And then we also want to evolve in certain areas of snacking where we think there’s opportunity. Those areas would be health and wellness, clearly a big trend. Premium, there’s really a movement happening in towards premium snacking, and that’s why we bought the Tate’s brand, which is a premium cookie. And also digitally-enabled snacking solutions is something that is interesting us. So, yes, M&A is a clear part of our strategy going forward in a very thought-through and financially responsible way, but I think sometimes it’s better to buy than to build.

SARA EISEN: What’s a digital-enabled snacking solution?

DIRK VAN DE PUT: It’s a business model that goes straight to consumer that doesn’t use normal retail. The Shave Club would be an example -- not in snacking, but that would be a typical example of that but that exists also in snacking these days.

SARA EISEN: Snacking subscriptions. Dirk Van de Put, thank you for joining us from CAGNY in Boca today.

DIRK VAN DE PUT: Thank you for having me. It was a pleasure.

Leave a Comment

Signup to ValueWalk!

Get the latest posts on what's happening in the hedge fund and investing world sent straight to your inbox! 
This is information you won't get anywhere else!