‘Indulgent’: Aussies will snack through a recession, says Cadbury maker CEO

Australians are expected to keep reaching for chocolates and biscuits despite cost-of-living pressures and a worsening economic outlook in a trend that is expected to lift sales and attract local manufacturing investment from the maker of Cadbury, Oreo and Toblerone.

Dirk Van de Put, the chief of US confectionery giant Mondelez International, which also makes Philadelphia cream, belVita, Ritz, Sour Patch Kids and The Natural Confectionery Co, said COVID’s lockdowns had triggered a permanent shift in Australians’ consumption habits that will only accelerate with recession concerns.

“Coming out of the pandemic, what we are seeing is that trend of being more indulgent is continuing,” said Van de Put.

Mondelez global CEO Dirk Van de Put, at the Cadbury factory in the Hobart.Credit: Peter Mathew

And though cost-of-living pressures and rising interest rates are expected to precipitate a slowdown in retail spending, the Chicago-headquartered company expects sales of its confectionery and sweets to increase in the coming months despite storm clouds hanging over the global economy.

“There are a number of categories where [consumers are] spending money on that are declining or less important for them. But it’s not food and it’s not snacking,” Van de Put said.

“To the contrary, we will have the best year in the history of the company this year, not only in absolute numbers, but also in the growth versus the previous year.”

Australians are a nation of chocoholics, with people eating more chocolate than consumers in other markets who tend to favour biscuits, he said. The company is celebrating its 100th year making Cadbury in Australia.

Mondelez global CEO Dirk Van de Put, at the Cadbury factory in the Hobart suburb.Credit: Peter Mathew

Ninety per cent of Mondelez International products sold in Australia are made locally, with the exception of some treats including Oreo and Switzerland-made chocolate Toblerone. The company, which employs more than 2700 Australians, has already invested $500 million in Australia over the past seven years and Van de Put said he intended to invest as much, or more.

The global supply chain knots and high shipping and freight rates that resulted from the pandemic demonstrated just how disadvantageous it was to be over-reliant on imports, he said.

“For sure we are planning to expand our capacity that we have in Australia ... that is certainly in the works,” he said.

“Our business in the past few years is growing faster than it has done in the previous years. So if that continues, we have to for sure repeat that $500 million in the next 10 years, potentially do more.”

Part of Prime Minister Anthony Albanese’s pitch to win government was a commitment to bring more manufacturing onshore.

“We need to make more things here in Australia, really, and have advanced manufacturing so that we can stand on our own two feet,” Albanese said on May 19. “That’s one of the lessons of the pandemic.”

Nasdaq-listed Mondelez International is also eager to prove its credentials as sustainable local manufacturer: as of this week, Cadbury Dairy Milk, Caramilk and Old Gold chocolate blocks will be wrapped in packaging made from 30 per cent recycled soft plastic. The move will divert 120 tonnes of plastic from going into landfill.

However, the recycled soft plastic must first be shipped from Europe as Australia lacks the facilities to recycle “flexible” plastic, which uses a chemical process, unlike rigid plastic, which uses a mechanical process. Roughly 90 per cent of Australian soft plastics go into landfill.

The initiative has been led by the confectionery giant’s Australia, New Zealand and Japan president, Darren O’Brien, who wants to demonstrate there is demand for local soft plastic recycling facilities by being a first mover.

“It sends a signal to the market that they should be investing in this capability, putting money into chemical recycling so that we can get an industry-wide solution,” said O’Brien.

“What we all want is not to need to call on virgin resources and materials, but to have a closed loop where you’re not getting any waste going to landfill.”

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