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Mondelez (MDLZ) Expands Snacking Unit, Invests in Uplift Food

Zacks Equity Research

Mondelez International, Inc. MDLZ has announced minority investments in Uplift Food. The move forms part of the company’s expansion plans under the SnackFutures platform. Uplift Food is essentially a start-up engaged in developing prebiotic functional foods. Let’s take a closer look at this development.

Expansion Efforts in the Snacking Category Bode Well

Mondelez has long been striving to expand in the snacking category. In fact, the company’s SnackFutures innovation hub is aimed toward exploring growth prospects in snacking, an area which is growing rapidly on a global basis. Markedly, the investment in Uplift Food is Mondelez’s first venture as part of the SnackFutures platform. Management expects to develop healthy and enjoyable snacking options through the collaboration. Apart from launching new products and engaging in strategic partnerships, the SnackFutures initiative aims to provide support in areas such as marketing, sourcing and distribution. The program also strives to enhance digital capabilities.

We expect the company’s efforts to expand snacking portfolio will boost performance. Moreover, the company plans to augment good-for-you snacks and expects 50% of its product portfolio to comprise “well-being” items by 2020.

Other Growth-Oriented Moves

Mondelez is always keen on expanding business through acquisitions. In July 2018, the company completed the acquisition of 13.8% ownership in the Keurig Dr Pepper business. Prior to this, in June 2018, Mondelez concluded the buyout of Tate’s Bake Shop. Tate’s has been one of the fastest growing biscuit brands in the United States and complements Mondelez’s portfolio. The buyout has been driving revenues for a while. Also, in January 2018, the company teamed up with Post Consumer Brands, a business unit of Post Holdings POST, to create two new cookie-inspired breakfast cereals.

Additionally, the company is extending brands to newer geographies and platforms. Further, it is increasing investment toward in-store execution and advertising to support Power Brands. Moreover, to strengthen presence across digital media, the company has formed strategic partnerships with biggies like Facebook FB and Amazon AMZN. Further, the company is improving presence in high-growth channels like e-commerce, discounters, convenience stores and traditional trade. Mondelez is also undertaking major steps to enhance productivity savings that are fueling margins, cash flow and returns on invested capital. Such savings initiatives have supported Mondelez’s profitability in the fourth quarter of 2018

Such well-chalked efforts to boost revenues and profitability are raising investors’ optimism in the Zacks Rank #3 (Hold) stock, which. has improved 7.3% in the past three months, against the industry’s decline of 4.6%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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