Mondelez Sets Marketing Department Changes Amid Cost-Cutting Push
Mondelez International is planning organizational changes in its marketing department in North America that may include significant job cuts, a move that comes as the snack maker faces pressure to improve its margins.
The moves, which will go into effect at the beginning of 2016, are focused on improving effectiveness and efficiency, Mondelez confirmed to Ad Age. The company said some details were shared with employees on Thursday, but specific roles have not yet been assigned. The company is based in the Chicago suburb of Deerfield, Illinois, while the North American marketing unit primarily works out of East Hanover, N.J. and Toronto.
The company said it expects "some impact to roles" in its North American marketing team, but would not say how many layoffs could be involved. The company said it aims to have its new organizational structure in place at the beginning of 2016.
Mondelez, known for brands such as Oreo and Ritz, has already been focused on cost cutting and other restructuring efforts following its separation from the Kraft Foods business in 2012. Mondelez aims to cut its annual operating costs by at least $1.5 billion by the end of 2018 under a restructuring plan laid out in May 2014. It had about 104,000 employees globally at the end of 2014, down from roughly 107,000 a year earlier.
Lately, Mondelez has been under more public pressure to find savings, due in part to investments from activists Nelson Peltz and more recently Bill Ackman, as well as slowing growth in emerging markets, which has led to sluggish sales growth.
The company last year moved to zero-based-budgeting, in which expenses must be justified every single year. The marketer has also put plans in place to cut costs on travel, consulting and information technology. Policies include restrictions in the use of business class airfare and eliminating airline club memberships, executives told Wall Street analysts earlier this year.
Mondelez is one of a number of companies trying to find ways to eliminate costs in a sluggish environment for traditional packaged food makers. Kraft, which held onto North American brands such as Oscar Mayer when it was spun off from Mondelez in 2012, was acquired by H.J. Heinz in July. This month, Kraft Heinz Co. announced plans to cut about 2,500 jobs, or more than 5% of that company's combined workforce. Campbell Soup is in the first year of a major restructuring and in July said the effort was ahead of schedule and should lead to annual savings of $250 million by the end of fiscal 2018. Kellogg and General Mills are among other packaged food companies that have been cutting costs.
Mondelez's top global marketing executive is Dana Anderson, who was promoted to senior VP and chief marketing officer in September 2014 after former CMO Mary Beth West left the company. Ms. West's departure came as part of a C-suite reorganization that included a promotion of Mark Clouse, former North American president, to a newly created role of chief growth officer.
In early 2015, the company named Roberto Marques, a former Johnson & Johnson executive, as its new executive VP and president for North America, putting him in charge of the company's $7 billion business in the United States and Canada.
In June, the company kicked off a review of its global media buying and planning business in an effort to consolidate its roster. Two incumbent global media agency networks, Dentsu Aegis Media and Starcom MediaVest, are pitching for business across five regions and multiple snack categories. Two incumbent regional agencies -- PHD for UK and Madison in India -- were not invited to the review.
For 2014, the company reported worldwide ad costs of $1.6 billion, or about 4.5% of sales. Mondelez spent $278 million on advertising in the U.S. last year, according to the Ad Age Datacenter.