Mondelez Sees Significant Profit Increase in the UK

Posted by Stelios on 5th Oct 2023

Mondelez UK, responsible for the beloved Cadbury brand, experienced a pronounced profit rise last year. The firm more than doubled its pre-tax earnings, attributing the surge to easing Covid-19 restrictions and changing consumer habits. According to data filed at Companies House, Mondelez UK's pre-tax profit jumped from £62.3 million to a commendable £131.4 million in 2022. Concurrently, revenue increased from £1.89 billion to £1.95 billion.

Mohammed Moosa from UK, CC BY 2.0, via Wikimedia Commons

In 2010, Kraft Foods acquired Cadbury in a £11.5 billion deal. Just two years later, Kraft segregated its snack brands, creating Mondelez International. Now, this Chicago-based giant operates in over 80 nations, managing a portfolio of renowned brands such as Oreo, Ritz, Milka, and Toblerone and providing employment to approximately 91,000 individuals globally.

Mondelez's influence in the UK is substantial, employing over 4,000 personnel. Its significant operations include a commercial base in Uxbridge, west London, and an iconic manufacturing site in Bournville, southwest of Birmingham. This Bournville facility has been the cradle for Cadbury products since 1879. It remains a significant attraction with the adjacent "model village" for its workforce. Mondelez UK proudly produces an astounding 47 million Easter eggs, 300 million Dairy Milk bars, and an equal number of Creme Eggs every year.

In its statements, the company noted, “We delivered strong results, volume growth and momentum in 2022 following the lifting of Covid-19 restrictions and shifts in consumer behaviour.” It also mentioned, “Share gains of the snacking market was the primary driver in turnover growth of 3.5 per cent... This was seen across our key brands, channels and customers, while our marketing activity also drove strong customer loyalty.”

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Compared with 2021, Mondelez UK had achieved a sales growth of 3%. Their gross margin also improved, from 7.5% to nearly 9.7%.

While the pandemic persisted in influencing its operations and workforce in 2022, Mondelez observed that the impact "was to a much lesser extent" than in 2021, the peak year of the pandemic's disruption.

In financial intricacies, the Cadbury Mondelez pension fund showcased an impressive surplus of £248.2 million. Mondelez UK increased its dividend payments to Kraft Foods Schweiz Holding, its direct Swiss parent company, escalating from £274.1 million to a robust £454.8 million.

The acquisition of Cadbury, however, was not without its controversies.

Various stakeholders, including unions, politicians, and certain investors, had reservations. These concerns intensified when the American successors swiftly closed a Cadbury facility in Bristol, contradicting promises made during the takeover. Addressing these past apprehensions, Dirk Van de Put, CEO of Mondelez International, recently remarked to The Sunday Times, “It’s like you’re sick and you need to take some medicine. We took some medicine, but the business is in a much better position than it was when we took it over.”

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Van de Put remains bullish about Cadbury's UK trajectory. He refuted claims of Cadbury becoming “downmarket” and drew a comparison with Starbucks: "When Starbucks came to the market, it was considered expensive ... these days it is more middle of the road." He continued, "Consumers are seeing more expensive chocolate offerings in the market, so the relative perception of where Cadbury fits in might have changed a little bit over time. The objective of Cadbury is to be a chocolate for the masses.”

Under Mondelez's guidance, the UK has seen persistent investment, notably in R&D, with 250 scientists and food engineers being part of their team. With a 30% rise in Cadbury brand sales since 2014, Van de Put hopes that in hindsight, "Hopefully in the UK, people can look back and say: ‘In the end, those Americans didn’t do such a bad job.’”

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Article Image Source: Mike Mitchell, CC BY-SA 3.0, via Wikimedia Commons

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