Mondelez CEO: Pandemic changed how the consumer 'looks at their spending'
On Thursday, the Bureau of Labor Statistics reported an 8.2% surge in inflation during September compared to the same month last year. In tandem, the food index jumped 11.2%.
But surging prices aren’t likely to stop Americans from purchasing snacks, says one food industry CEO. On a recent episode of "Influencers with Andy Serwer" Mondelez International CEO Dirk Van de Put explained how the pandemic increased Americans’ appetite for snacks.
“The pandemic has changed the way the consumer looks at their spending, and certainly taking care of themselves, indulging a little bit — having a biscuit, having a chocolate, living more or being more at home, enjoying home life that truly has changed the consumption and what people are prepared to pay for it,” Van de Put told Yahoo Finance.
Some surveys show that when COVID-19 emerged, snacking spiked. Nearly 90% of global adults surveyed in October 2020 said they were snacking more than before the pandemic, according to the 2020 State of Snacking report conducted by the Harris Poll on behalf of Mondelez. In April of this year, nearly three-quarters of adults surveyed said they snack at least once a day, up 15% in just one year, according to a report released by the Food Information Council.
The increase in snacking comes as food prices shoot up due to global conflict and inflation that's at a 40-year high. For instance, together, Ukraine and Russia account for over a quarter of the world's exports, according to the Observatory of Economic Complexity, a data visualization site created by the MIT Media Lab. Consequently, Russia’s invasion of Ukraine has driven a sharp increase in the price of wheat. On Oct. 10, the day of an aggressive military offensive, Chicago SRW Wheat Futures leapt to $9.40 per bushel. That’s in contrast to roughly $7.00 per bushel in January before the invasion.
“Even very small ingredients that we might normally buy $50 million of suddenly go up 100%. And now suddenly, there's a cost of $50 million that suddenly appears somewhere that you didn't even know it was going to be a problem for you,” Van de Put said. “So, you get constantly surprised by what's going on the inflation in input costs.”
Mondelez has passed some of those prices on to consumers — the company began 2022 by announcing a 7% price increase in the US on CNBC. Still, Van de Put insists price increases won't curb snacking.
“Even if prices have gone up quite significantly around the world, consumption has not been affected. So far, that's a bit of a surprise, you would normally expect that your consumption would suffer a little bit,” Van de Put said. “And so people tend to sort of continue to buy our products. But we don't see, in fact, we see an acceleration of the volumes of our products, which is very strange, I would say.”
Headquartered in Chicago, Mondelez International is a multinational food and snack company that operates in over 80 countries. Its global net revenues totaled $28.7 billion in 2021 and some of its subsidiaries include Oreo, Sour Patch Kids candy, Clif Bar & Company, and Toblerone.
Dirk Van de Put became CEO of Mondelez International in 2017 and Chairman in 2018. Previously, he was CEO of McCain Foods, a frozen food company and worked for Coca-Cola and Mars. Inc. He is a Belgium native.
Dylan Croll is a reporter and researcher at Yahoo Finance. Follow him on Twitter at @CrollonPatrol.
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