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Mondelez, Retail News, ET Retail

Disruption of supply chains may lead to inflation: MondelezMondelez, the maker of Cadbury Dairy Milk and Oreo biscuits, fears inflationary pressures to worsen with commodity supply chains of wheat to oil likely getting disrupted, as the Russia-Ukraine crisis escalates.

Chairman Dirk Van de Put said the impact would depend on where the crisis is headed, but nervousness across the world could lead to higher inflation. “There are a number of commodities that Russia and Ukraine play a big role in. Oil is an obvious one. Ukraine supplies about 30% of the grains in the world. So, you can expect just because of that reason, if that gets interrupted, the demand still will be there in the rest of the world but the supply will be severely interrupted. You can expect costs to go up,” Van de Put told ET in a media round table.

Last week, several consumer goods companies red-flagged further inflation and supply disruptions as Russia launched a military assault on Ukraine and crude oil prices topped $100 a barrel. A steep surge in crude oil prices would impact household budgets. In India, crude oil-related products have a share of close to 10% in the Wholesale Price Index basket, and oil price impacts everything from manufacturing home care products to packaging and distribution.

“The worldwide flow of the supply chain might get disrupted which leads to (price) increases. Nervousness in general can lead to more inflation. So, it certainly is not going to help and it might make the current inflation we are seeing even worse because of very specific reasons or the fact that everybody’s taking precautions and being careful,” he added.

The American snacking major said the company could reach a $2 billion sales mark in India by 2030, nearly doubling in size from now in a market where it dominates in the chocolates segment and has the second highest share in malted food drinks. In 2021, the Indian unit posted sales of $1.2 billion, an expansion of 21% from the previous year, driven by accelerated penetration especially in villages and new product launches across segments. In 2020, it had grown 3%.

The company said it would significantly scale up its cookies business from a fast-growing challenger position to a market leader in the premium segment. At present, Oreo has just a 2% market share in the biscuits category with annual sales of $100 million.

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