Banking on a taste for sweets

Oreo cookies on the shelves of a supermarket in Nantong, Jiangsu province. [Photo / Provided to China Daily]

Reducing costs, product variety will mean success over long term

Irene Rosenfeld hardly has the air of being one of the world's 50 most powerful women. Watching her rolling a suitcase to the boardroom one could easily mistake her as one of the several executives getting ready to pop in for a quick meeting or a conference call at the Mondelez International Inc office in Shanghai.

But beneath her soft demeanor, Rosenfeld is the no-nonsense and straight-talking chairwoman and chief executive officer of global foods giant Mondelez International that owns global brands like Oreo cookies, Trident gum and Cadbury chocolates. She can charm one and all with her immense industry knowledge and gentle voice.

Known as someone who likes to shake things up, Rosenfeld wants Mondelez to be a leaner, more focused and nimble global snacking company. She said the company is well on track to achieve its goal, as it has been able to cut costs significantly with its new organization model and five other initiatives.

According to Rosenfeld, the Chinese market, with annual revenues of about $1.1 billion, is already the third-largest emerging market for Mondelez and a key player in the global transformation.

She said that her belief in sustained growth stems from the company's strategic focus on snack foods. In May, Mondelez and D.E Master Blenders announced their intention to combine their coffee businesses to create the world's leading pure-play coffee company, with annual revenues of more than $7 billion. "This will allow Mondelez to focus more on snack foods," she said, adding that about 90 percent of its estimated revenue from China will come from snack foods.

The second plan hinges on reinventing the supply chain to make it more efficient so that it can lower costs, Rosenfeld said.

Last June, Mondelez announced plans to expand its biscuit plant in Suzhou, Jiangsu province. The company plans to invest $85 million and complete the expansion by the end of the fourth quarter. "Making these kinds of investments will help Mondelez to produce high-quality products for consumers in China at lower costs."

In addition, Rosenfeld said the company is also rolling out plans to transform operations. "We are introducing a new model by which we want to run the company, using categories rather than by country," she said. "The benefit of such an approach is that we can quickly adopt the learning from one part of the world to other markets."

Citing an example, she said that when Mondelez launched its Stride Gum in China this year, it incorporated experiences of making the gum and the bottle from other markets.

"The display unit for Stride, developed in China, is now exported to other markets. We call it to capture the power of big and small," said Rosenfeld. "It is our opportunity to use the power of the fact that we are a global company and we can also operate as a small company and get the best of both of that."

Rosenfeld said sports had always been a big influence in her life. Her father taught her all kinds of sports and encouraged her to be a tough competitor. "The competitive instinct that I developed in sports has stood me in good stead in the corporate world," she said. "It gave me confidence, taught me teamwork, discipline and perseverance."

She considers athletics a good equalizer. Early on in her career, not many women were business leaders. The men usually had either military experience or had played sports. "Sports allowed them to acknowledge me and allowed me to compete side-by-side," she said.

Holding a doctorate in marketing and statistics, a master's degree in business administration and a bachelor's degree in psychology, all from Cornell University, Rosenfeld recalled that she had always been fascinated by human behavior and what makes people tick.

Later on in her career, Rosenfeld taught a course on the psychology of advertising as a teaching assistant. "That really captivated my interest and enabled me to meet a lot of people in the field," she said.

The teaching stint also prompted her to pursue a career in advertising. Her first job was in the consumer research division of General Foods, which later became part of Kraft Foods. Rosenfeld served on the team that spearheaded the company's initial public offering in 2001, and successfully integrated the Nabisco, LU and Cadbury businesses.

Since returning to Kraft Foods, the predecessor to Mondelez, in June 2006 as CEO and then chairwoman, Rosenfeld led the spin-off of the company's North American grocery operations in 2012.

Under her leadership, Mondelez has to date become a world leader in chocolate, biscuits, gum, candy, coffee and powdered beverages with a record revenue of $35.3 billion in 2013.

Though the company has tasted success with its biscuit and gum units, Rosenfeld wants to introduce more new categories in China, but cautiously.

It is important to develop products with flavors and tastes that are suited to local palates, she said. Mondelez has already expanded its research center in Suzhou set up five years ago, by doubling the size of the staff to 60 at present. The center is designed to serve customers in the entire Asia-Pacific region, said Rosenfeld.

The chairwoman was not hesitant to admit the slowdown in its power brand Oreo and Chips Ahoy in China since last year, a big step back from its peak time since their launch in 1996. The country has become its second-largest market for these brands globally after the United States.

According to its second-quarter financial report released in August, Asia-Pacific was down 8.3 percent due to continued weakness in China and a more intense retail and competitive environment in Australia and New Zealand.

"During the last two years, we did not do a good job with the new products," she said. But the new Oreo products are designed to meet the needs of Chinese consumers and are lighter and thinner. The different packaging formats will help consumers to eat Oreo cookie at different occasions, Rosenfeld said, offering up a pack of Oreo Thin for sampling.

Though the company faces strong competition from rivals, including products from Nestle SA, Want Want Holdings Ltd as well as Ting Hsin International Group, Rosenfeld said her strategy to counter this is by expanding the distribution network and making Mondelez products visible across China.

"We want to expand our distribution to third-tier and fourth-tier-cities," she said.