Case Analysis Of Mondelez International

dominant positions of the Big Three: Kellogg, General Mills, and Philip Morris. The 1993 year-end

The soft drink industry is one of the most highly profitable industries in the USA. Also, the competitive market is a very large market. Americans consumed about 53 gallons of soft drinks per person a year in 2000 by $ 60.3 billion!! Comparing with the market in 1990, since it was 47 gallons. In recent years, the market growth has slowed.

This results from the fact that it is a mature segment with many well established companies vying for market share. The industry is highly consolidated and very fragmented. To grow their businesses, companies rely heavily on mergers and acquisitions to capture additional market share. Historically, the grocery industry has been characterized by slow growth which results in strong price competition and the development of aggressive marketing campaigns between existing firms. Perceived product quality and strong brand recognition by consumers are the basis of competition among firms in the industry. The source of General Mills’ competitive advantage lies in its ability to develop innovative products and highly reputable brands. As a result, they hold cost leadership positions across a number of grocery categories. Exhibit 1 shows the top US companies according to their sale of packaged foods globally. Market leaders include Kraft Foods, PepsiCo, Nestle, Mars, Kellogg, and General Mills, however, neither company possess an overwhelming share of global sales. This is in part due to the large degree of product diversity throughout the industry and the strong brand rivalry of each competitor’s labels.

Hershey’s and Cadburys are moving towards the premium chocolate market through the acquisition or upmarket launches (Zietsma, 2007). The profit potential present in this sector supported by its 20% annual growth rate make it very attractive for large organizations to come forward and avail this opportunity. There is a low threat of new entrants prevailing in this chocolate industry because of the high capital requirements and expected retaliation by current manufacturers. Current players in the industry also possess some barriers to entry for new entrants by maintaining economies of scales with their large production capacity and keeping their product differentiation with their specialized and novelty chocolate products. Even though there are low switching costs and easy access to distribution channels, but still the brand loyalty of the customers including the Rogers’ Chocolate itself make it harder for new firms to come into the competition.

This changed in 2012 when Kraft teamed up with Mondelez International Inc. “Mondelez International’s strategy was directed at exploiting its powerful brands of snack foods across the 165 country markets where its products were sold.” (Gamble, 2016) The company aimed to fulfill their strategy by expanding the company’s product line to include cookies, chocolates, candy, gum, and

e) Maintenance contracts - Maintenance costs should be included as incremental cash flows because they could change the NPV of the project if the maintenance costs are significantly different for each of the different projects.

The chocolate industry operates in an oligopoly market. An oligopoly is when a small number of firms dominate the market. While not a quite a monopoly, an oligopoly market is still controlled by a select number of companies and the market can be directly impacted by one or two major firms (Oligopoly Investopedia). Hershey’s has control of the largest market share, holding 44.4% (U.S Market Share). Mars Incorporated follows behind in second by holding 28.9%. While these two companies hold much of the control and power within the industry, LIndt/Ghirardelli and Nestlé maintain a combined share of 15.1% of the industry’s market. This means that four companies hold a combined 88.4% of the market, with two of them holding a combined 73.3%. The market was not always this way however. Up through the 1960s many candy suppliers were regional.

The soft drink industry in the United States is a highly profitably, but competitive market. In 2000 alone, consumers on average drank 53 gallons of soft drinks per person a year. There are three major companies that hold the majority of sales in the carbonated soft drink industry in the United States. They are the Coca Cola Company with 44.1% market share, followed by The Pepsi-Cola Company with 31.4% market share, and Dr. Pepper/Seven Up, Inc. with 14.7% market share. Each company respectively has numerous brands that it sales. These top brands account for almost 73% of soft drink sales in the United States. Dr. Pepper/Seven Up, Inc. owns two of the top ten

M&M’s biggest competitor is Hershey’s brand like M&M candies. The competition is fierce among the chocolate industry. Hershey and Mars are rivals and want the opportunity to gain more of the market share. In 1954, Hershey-ettes were introduced to compete against the similar M&M’s. However, they were not successful and are generally only available for consumers around the Holiday season. By the millennium, Hershey extended the popular Hershey Kisses brand in creating the Kissables. Hershey intended for direct competition to M&M small candy coated round tablet of chocolate in multitude of colors. The candy factories started in standard size packs and by the 70’s moved into standard size candy boxes. In the current year and season, you will find M&M’s in candy canes to small snack sizes and inside ornamental objects. The chocolate world becomes difficult to present as it becomes difficult to come up with new ideas in the candy business. As more companies release products similar to the M&M’s, it will become increasingly difficult for Mars to continue to command the level of market share in the chocolate candy industry and the product has a potential to get lost in the supermarket aisle.

The Kraft Heinz Company successfully merged on July 2, 2015 when Heinz owned by Berkshire Hathaway and 3G Capital teamed up with Kraft Foods Group. The deal is considered one of the top most mergers in the food and beverage industry worldwide. Currently the company has its strong presence worldwide. Moreover both 3G Capital-a Brazilian Equity Firm and Warren Buffet together contributed by investing $10 billion in the deal making the company worth about $46 billion.

Nestle: Nestle is also one of the company that competes with Coca-Cola. Nestle is considered the world’s number one drinks and food organisation in terms of sales. (https://www.nestleprofessional.us/ ).

Answer: Based on the case study, Kellogg’s main competitors in the ready-to-eat cereals market are General Mills and Kraft Foods and PepsiCo. In the convenience foods market, the main competitors are Frito-Lay unit of PepsiCo which is the largest maker of salty snacks while the Nabisco unit of Kraft Foods which is the largest maker of cookies and crackers. Except from these competitors, Kellogg also has been facing competition with the new entrants or the improved store brand products which intent to get some shares of these two markets. Also, Kellogg’s brand

ACALORIECOUNTER. (2013, October 16). Candy & Chocolate Bars Compared Hershey 's, Nestle and Mars Nutrition Facts. Retrieved March 16, 2014, from

Nestle is a swiss multinational food and beverages company. Its headquarters is located at vevey, Switzerland. In terms of revenue it is largest food company in world. Nestle produces the portified products such as baby food ,bottled water ,breakfast cereals ,coffee ,tea ,dairy products ,ice cream ,frozen food ,pet foods ,and snacks .Nestle provided 167 billion servings of fortified products .Among them 29 brands of Nestle are getting turnover of $US1.1 billions. Nestle is one of main shareholders of L’OREAL company, the worlds largest cosmetic company.

McDonald as being ninth most valuable brand in the world which has replaced the US army as the Nation’s largest job training organization &Controls the market share of more than 3 food chains taken together in America started in 1940. McDonald 's