ORLANDO, FLA. — Mondelez International, Inc. holds the No. 3 position in the global market for cakes and pastries and is intent on improving that position through expansion, innovation and support from the company’s iconic Oreo, Cadbury and Milka brands.

“Over the past few years, we've built a $2 billion cakes and pastries business by accelerating growth of our strong legacy brands, complemented with strategic bolt-on M&A,” said Dirk Van de Put, chairman and chief executive officer, during the company’s Feb. 18 presentation at the Consumer Analyst Group of New York (CAGNY) conference. “About a third of our cakes and pastries business comes from extending our legacy brands like Oreo, Milka and the French favorite Lu into products we call ‘chocobakery,’ including soft cakes, brownies and similar treats.”

Key to the company’s plans in the category have been the acquisitions of Chipita SA in Europe, Give and Go in the United States and Evirth in China. The acquired businesses make up approximately two-thirds of the company’s cakes and pastries sales.

“Our key developed markets, which include the US, Canada, France, Germany and Greece represents about 55% of the business, and the key emerging markets, including China, Vietnam, Poland, Romania and Brazil represent about 45%,” Van de Put said.

In an interview with Food Business News prior to the company’s presentation at CAGNY, Van de Put gave an update on each acquired business.

“With Chipita, the beginning was a bit rough, because we bought it before the inflationary period and they hadn’t hedged their costs,” he said. “We were obliged to raise prices 30%, which had a volume effect. Now volumes are growing again, we’re finding our rhythm and are in the middle of planning our global expansion. The bottom line is it’s close to where we want it to be.”

Mondelez followed the acquisition of Chipita with the purchase of Give and Go, a supplier of ready-to-thaw products for in-store bakeries.

“Give and Go has really done well for us,” Van de Put said. “We've done innovations and launched products, built new lines and the business has almost doubled in the four years we’ve owned it. It’s a really big success and has more room to grow as in-store bakeries are becoming bigger in the retail landscape.

“Retailers like it (in-store bakeries) because it’s unique to their store, a better shopping experience, it’s considered fresh, and their margins are better. So, retailers want to devote more space to their in-store bakeries, and we like to be there.”

Evirth gives Mondelez a foothold in the premium baked foods market in China with room to grow globally.

“Evirth is really premium cakes that consumers have at home for special occasions,” Van de Put said. “Once again, it’s freeze/thaw and a much higher level of experience.

“Evirth has a technology that is well advanced so they can make a fresh tasting product from a frozen format, and we can bring that to the rest of the world, in my opinion.”

Of the three acquired businesses, Van de Put predicted Chipita will have the largest short-term impact while Give and Go will have the largest long-term impact.

“Croissants are like pizza,” Van de Put said of Chipita’s main product line. “Most of the world knows it. You get quite a quantity for the price point and it’s an eating occasion that competes with bars. So, I think that will go fast.”

With Give and Go, Mondelez is counting on the growth of in-store bakeries around the world being significant.

“I think that will be the second one,” Van de Put said. “It will be slower, but it will be big.”

Van de Put is hoping for a time when retailers around the world feature in-store bakeries as well as aisles devoted to cakes and pastries. Such formats exist in some European markets and Mondelez plans to lead the way in bringing the formats to the United States.

“The US doesn’t have that aisle, but many European markets do,” he said. “I think once you get a more sophisticated, more premium range of products in the category it will grow, and I think there are opportunities in the US, and they (retailers) will have that separate shelf.”

Van de Put also sees the convenience channel as ripe for growth in cakes and pastries as well, citing how well they go with coffee, a traffic driver for some chains.

Diving deeper into the strategy

The global market for cakes and pastries generated approximately $97 billion in sales in 2024 and is forecast to have a compound annual growth rate (CAGR) of 4.4% to reach estimated sales of $125 billion by 2030, according to Mondelez. The company trails Grupo Bimbo SAB de CV and Yamazaki Baking Co., Ltd. in the global cakes and pastries market and is ahead of the No. 4 competitor Hostess Brands, which is owned by the J.M. Smucker Co.

Catching Bimbo and Yamazaki will require Mondelez to balance growth in emerging markets with the opportunity presented in developed markets.

“In the countries we call novice, where cakes and pastries are only beginning to grow, we focus on offering superior products,” Van de Put said during the CAGNY presentation. “As growth accelerates, we work to establish new occasions. As the markets move toward greater maturity, we focus on premiumization, including new flavors and designs that appeal to increasingly discerning taste.”

Mondelez is employing a three-prong strategy to accomplish its global growth goals. The first prong has involved the development of Oreo cake products like Cakesters, the second was the development of what the company calls “chocobakery” and the third has included expanding into new segments.

“Oreo cake led by Cakesters are performing quite well,” Van de Put said. “They … (delivered) $125 million in revenue last year, and they are reaching a household penetration of about 6% in the US and in China. Our ambition is to grow Oreo cakes and pastries revenue 4 times larger than last year.”

The company’s chocolate branded cakes and pastries have delivered a high-single digit CAGR during the past three years, according to Mondelez.

“These premium innovations generate significantly more revenue per kilo than core cakes and pastries,” Van de Put said. “We have exciting plans to accelerate the launch of our hero brands into new geographies and our ambition is to double last year's growth.”

The expansion pillar of the company’s strategy will include growing its packaged croissant business by moving into new markets.

“Moving forward, we are doubling down on croissant and big rolls growth with plans to expand into the United States and other emerging markets,” Van de Put said. “We expect to roughly double the size of this business by 2030.”

The packaged croissant business currently generates approximately $500 million in Europe, according to the company.

Acquisitions have been integral to Mondelez’s growth in cakes and pastries and Van de Put did not rule out future acquisitions, but did say the M&A market is currently “competitive” and that “prices are getting a little bit out of hand.”

“I think there is a little bit of desperation to find new angles of growth,” he said. “So, people tend to overpay. We try to be very disciplined.