Mondelez International has made headlines by forging a significant deal in the Chinese cakes and pastries market. According to renowned CEO Dirk Van de Put, this sector is ripe for mergers and acquisitions, highlighting its potential for growth and expansion.
The parent company of popular brands such as Cadbury chocolate and Oreo biscuits has successfully acquired a “significant majority stake” in Evirth, a company acclaimed for its exquisite French-style desserts, including mille crepe cakes, Swiss rolls, mooncakes, and a variety of cookies.
Notably, Mondelez previously held a minority interest in Evirth, allowing for collaboration in the development, manufacturing, and supply of frozen-to-chilled cakes and pastries in China, integrating brands like Oreo and Philadelphia. This acquisition represents a strategic move to enhance Mondelez’s presence in the cakes and pastries sector, which is a core focus alongside chocolate and biscuits.
“We’re excited about the opportunity to accelerate our growth in cakes and pastries through continuous innovation, leveraging our high-value brands to create more premium tastes and formats,” stated Van de Put.
Founded in 2013, Evirth boasts three manufacturing sites located in key cities: Shanghai, Shenzhen, and Dongguan. This infrastructure positions Evirth uniquely in the competitive landscape of the Chinese bakery market.
According to Mondelez’s estimations, the cakes and pastries market in China is valued at an impressive $3 billion, with an anticipated annual compound growth rate (CAGR) of 15%. This substantial potential aligns with Mondelez’s ambitions to expand its footprint in this lucrative category.
The acquisition of Evirth complements Mondelez’s existing operations in cakes and pastries, a sector bolstered by previous strategic acquisitions like Give & Go and Chipita. In 2020, Mondelez acquired a majority interest in the Canadian company Give & Go. Subsequently, in 2022, it finalized the purchase of Chipita, further enhancing its product offerings.
The latest acquisition of Evirth, which caters to both retail and catering channels, is currently pending regulatory approval in China, which is a standard procedure for such transactions.
Linfeng Xu, the founder, chairman, and general manager of Evirth, expressed enthusiasm about this partnership, stating, “We are excited that Mondelez International is increasing its investment in Evirth, and this is a historic moment for us.”
Xu further emphasized, “By bringing in Mondelez’s brand experience, technical strength, and international network, Evirth can be better positioned to provide premium products for our customers and consumers.”
At a recent Barclays Global Consumer Conference, Van de Put reiterated the company’s interest in expanding its operations in the cakes and pastries segment. This sector is characterized by its fragmented nature and represents a significant market opportunity, totaling approximately $80 billion globally.
With specific market insights in China, Van de Put articulated, “It’s a natural extension of the biscuit space. It’s a space that’s very fragmented. It’s about an $80 billion market globally, slightly smaller, but not a lot, than chocolate and biscuits.”
He pointed out that “in certain markets like China, chocolate is $4 billion, biscuits is $8 billion, and cakes and pastries is $30 billion.” This strategic focus is supported by Mondelez’s established brands, which are inherently positioned to compete effectively in this space.
Earlier this year, Mondelez also cultivated a business relationship with Belgium-headquartered Lotus Bakeries, aimed at manufacturing biscuits for the Indian market. The collaboration promises to innovate new products that integrate Mondelez’s iconic confectionery brands such as Cadbury and Milka.
Additionally, in 2022, Mondelez completed a $2.9 billion acquisition of the US energy bar company Clif Bar, and previously took a majority interest in the UK-based Grenade after a similar deal in 2019 for Perfect Snacks.
