Cadbury and Milka brand owner Mondelēz International has significantly expanded its reach in China with the purchase of Evirth, a frozen cakes and pastries behemoth in the country.
Subject to the country’s regulatory approval, the buyout will be a big step in the business’s Asia market growth strategy, as well as in cakes and pastries.
Mondelēz International expands in China
Mondelēz International already held a minority stake in Evirth, where some of its brands including Oreo and Philadelphia were incorporated into production.
Cakes and pastries are expected to see annual growth of 15% in China, driven by domestic consumers seeking fresh and premium options with innovative and sophisticated taste profiles.
China is one of several growth markets being targeted by Mondelēz, where bosses said there were big sales opportunities. Other markets for growth included Brazil, India and Mexico.
Cakes and pastries was a category the business would seek to bolster across many of its trading territories as “it’s a natural extension of the biscuit space and a fragmented billion dollar market globally”, said Mondelēz CEO Dirk Van de Put at a business briefing earlier this month. “We have a natural right to play in this space.”
The business last year pumped €30m into its Herentals bakery in Belgium, where products including TUC and Prince are made.
Untapped potential in bakery market
Mondelēz’s focus on cakes and pastries was made more viable following the “reframing” of the business’s biscuits arm to bakery, said Snackfutures Ventures boss, Richie Gray.
“It’s adjacent to biscuits and chocolate. When we reframed biscuits as bakery, one of the big acquisitions we made was the Chipita business. That was our first big step into Europe’s pastries market. There’s so much untapped potential [in this category for Mondelēz International].”
Meanwhile, Van de Put and CFO Luca Zaramella hinted at potentially stabilising cocoa prices following months of highs due to bad harvests caused by poor weather conditions.