Mondelēz reactivates ‘COVID playbook’ to address low inventory

Dive Brief:

• Mondelēz is reactivating part of its “COVID playbook” and simplifying operations as the snack food giant works to rebuild inventory following a weekslong labor strike last fall, CEO Dirk Van de Put said in an earnings call Thursday.
• The snacks giant expects on-shelf availability at retailers to remain spotty in the upcoming quarter. Van de Put added replenishment efforts are taking longer than expected due to high rates of omicron-related “absenteeism” and other supply chain disruptions.
• The Oreo cookie maker, which has made efforts in recent years to expand its snack offerings through minority investments in startup brands, also plans to simplify its portfolio and will be “careful to invest in those brands where we have good supply,” Van de Put said.

Dive Insight:

Early in the pandemic, Mondelēz focused on simplifying operations and cutting SKUs to ensure shelf availability. Now, with high demand, rising coronavirus cases and the lingering effects of a six-week strike, the CPG is reviving some of those same strategies.

“By applying the lessons learned from earlier waves of the pandemic and maintaining our focus on execution, we are confident that we remain well positioned to deliver our growth targets,” said Van de Put.

SEC filings show the company sold shares of Keurig Dr Pepper and divested itself of an Australian packaged seafood business last fall. The owner of Trident and Bubblicious is also conducting a strategic review of its gum business as COVID-19 disrupts sales of on-the-go products, according to Van de Put.

The renewed focus on simplifying operations comes after a six-week strike at Nabisco factories left the company entering 2022 with low inventory levels.

Mondelēz took steps to add stock prior to the strike, and ensured key lines remained running after workers walked off the job, Van de Put said at the the Barclays Consumer Staples Conference in September. But even with those steps, the company struggled to maintain inventory as high demand met labor constraints.

The CPG industry only added 1,590 jobs in December, according to a Consumer Brands Association analysis of data from the Bureau of Labor and Statistics. Meanwhile,118,000 positions remain open.

“We are working to rebuild inventory levels, which takes time in this environment, particularly as demand continues to be strong,” Mondelēz CFO Luca Zaramella told analysts. “We expect a gradual improvement of the situation as the year progresses.”