The Evolution of Mondelez International: A Merger of Giants

In the competitive world of the food and beverage industry, few events have had as significant an impact as the merger that occurred in 2010. This year marked the union of three major entities: Kraft Foods, Lu Biscuits, and Cadbury, leading to the formation of Mondelez International. This strategic move not only reshaped the landscape of the industry but also set the stage for a new era of innovation and market leadership.

 

The Strategic Merger

The merger of Kraft Foods, Lu Biscuits, and Cadbury was a strategic decision aimed at combining the strengths of these three companies to create a powerhouse in FMCG. The merger was driven by a vision to leverage the complementary strengths of each entity: Kraft’s extensive distribution network and product diversity, Lu’s expertise in biscuits, and Cadbury’s leadership in confectionery –  in Belgium mainly chewing gum.

Operational Challenges

One of the immediate consequences of this merger was the creation of a large field force comprising 50 sales representatives. These representatives were tasked with selling over 250 products spanning more than 10 brands at several retail retailers. While the merger brought about a diverse and extensive product portfolio, it also introduced significant operational challenges.

The huge diversity in the retail environment and the large product portfolio proved to be extremely difficult to manage for each sales representative. The sheer volume of products and the variety of brands required a deep understanding of different market segments, tailored sales strategies, and meticulous coordination. This complexity often led to logistical inefficiencies and strained the capacity of the sales force.

Numerical Distribution Issues

Further compounding these challenges, Nielsen data demonstrated a numerical distribution of 82%. This statistic revealed that 18% of the products were not even available on the shelves. The unavailability of nearly one-fifth of their products highlighted significant distribution and inventory management issues, indicating that Mondelez International was not fully capitalizing on its expansive product range.

Innovative Shelf Audit Approach

To address these distribution and availability challenges, a proposal was made to develop an approach to audit the shelves using image recognition technology. The goal was to accurately track product placement and availability in real-time, ensuring better shelf management and improved product distribution.

Leading this initiative, the team conducted a Request for Information (RFI) and a Request for Quotation (RFQ) process with various solution providers. After thorough evaluation, Planorama was selected to pilot the image recognition technology. This innovative approach aimed to provide detailed insights into shelf conditions, enabling more efficient inventory management and better fulfillment of product availability.

Successful Pilot Confirmation

The pilot with Planorama confirmed the expectations: the business opportunity was real, the tool was reliable, and the implementation could significantly improve operational efficiency. The image recognition technology accurately tracked product placement and availability, providing valuable data that allowed for better inventory management and optimized shelf space.

Using the tool was easy and timesaving compared to the traditional manual audits on paper. The results produced a rich database of key performance indicators (KPIs) such as presence, out-of-stock rates, brand block, visibility, and more. This data proved to be immensely useful for various stakeholders, including the field force, key accounts, category managers, and others within the organization.

Global Endorsement and Implementation

Endorsed by the Belgian management team, these conclusions were presented to the Mondelez global management team. The presentation highlighted the effectiveness and potential of the image recognition solution. The global management team, recognizing the value and opportunity, gave the green light to invest and pioneer this solution on a larger scale.

With this endorsement, a two-year journey commenced, focusing on developing the database of product images, creating listings at each retailer, and ensuring seamless integration of the technology into daily operations. This comprehensive approach ensured that the tool was fully equipped to handle the diverse and extensive product portfolio of Mondelez International.

Leading Teams Through Change

A special focus was necessary to lead the teams through the transition from manual audits to this innovative technology. Switching from paper-based methods to advanced image recognition was a significant step that required careful change management. Training sessions and workshops were organized to familiarize the sales representatives and other stakeholders with the new system, emphasizing the ease of use and the benefits of the technology. Continuous support and feedback mechanisms were put in place to ensure a smooth transition and address any concerns promptly.

Some sales representatives were initially skeptical and opposed the idea, believing that taking pictures in the stores would be very time-consuming and a waste of time. However, in reality, taking pictures, sending them to the software, and receiving the list of missing products took only 20% of the time compared to the former manual approach. This provided the sales representatives with correct and useful insights, such as the list of missing products. Consequently, they had 80% of their time left to focus on their real mission: negotiating the listing of these products with retailers.

Impact on Performance Metrics

At the management level, the impact of the tool was tracked by analyzing the KPIs generated by the new system. This data provided insights into product presence, out-of-stock rates, brand visibility, and more.  During these two years, specific targets were set and realized, often the sales team exceeded their goals. Incentives were awarded to recognize and reward their achievements, fostering a competitive and motivated work environment.

Over the two-year period, the Nielsen Numerical Distribution % improved significantly, growing from 82% to 98%. This substantial increase indicated that the availability of products on shelves had improved dramatically, directly contributing to better market penetration and sales performance.

Strategic Adaptations

In addition to the successful pilot, Mondelez International implemented several strategic adaptations. The company invested in advanced sales management technologies to streamline operations and enhance the efficiency of the sales force. Training programs were developed to equip sales representatives with the necessary skills and knowledge to handle the diverse product range effectively.

Mondelez also restructured its category & sales teams to focus on specific product categories and market segments. This specialization allowed sales representatives to develop expertise in particular areas, thereby improving their ability to meet the needs of retailers and consumers more effectively. Efforts were also made to improve distribution processes and inventory management to ensure better product availability across retail locations.

Post-Merger Success

Despite the initial challenges, Mondelez International’s strategic adaptations, including the innovative shelf audit approach, led to improved operational efficiency and market performance.

The merger proved to be a success, with Mondelez International experiencing significant growth in both revenue and market share. The company’s products reached millions of consumers around the world, solidifying its position as a leader in the food and beverage industry. The global appreciation and rollout in markets such as France and Russia further highlighted the success and potential of this innovative solution.

Read more about the journey in the article published in Gondola.