Global snack maker Mondelez is intending to cut down a quarter of its products to streamline manufacturing as part of its overall plan to ride out the COVID-19 pandemic.
Coronavirus has gripped the world, and has changed people’s living patterns to such a degree that enterprises worldwide are compelled to set out responsive strategies.
Mondelez, the maker of Oreo cookies and Ritz crackers, decided to curtail diversity of its products and center on manufacturing particular ‘hot’ products, cutting down its manufacturing costs and enhancing profitability.
“That’s always a discussion in a company like ours, that we have too many flavors, too many sizes and so on,” Chief Executive Dirk Van De Put said. “This is the moment to drive that.”
During the pandemic, people have been confined at home to avoid being infected.
And those stuck-at-home consumers have stocked their pantries, contributing to a surge in the demand for packaged food.
This growing demand brings with it great potential in growth of sales for manufacturers, but also exposes the challenges of maintaining a healthy product mix as well.
Although the snack food giant announced it will trim part of its products, Mondelez clearly stated that it won’t eliminate any brands. Instead, it will target on particular stock keeping units (SKU).
The details of which items could be on the list have not been disclosed, and prior to making any final decisions, Mondelez will carry out evaluations on the popularity of its products before eliminating some of products’ flavors or sizes.
In fact, Mondelez has spotted a trend in demand for comfort foods such as chocolate and cookies, while a blow to ‘on-the-go’ products such as chewing gum is emerging.
Dirk Van De pointed out that Nutter Butter is now the hottest product in their range.
Furthermore, Mondelez is not alone in the process of SKU rationalization which is essentially the practice of optimizing a given company’s inventory based on historical data.
General Mills is also going to pare its soup offerings down to nearly half of current levels.