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Mondelēz International invests $5 million in Pakistan

The leader in food, snacking, and confectionery is putting $5 million into its Pakistan subsidiary, an emerging market in Asia, to grow its localisation and exports.

In a year when Mondelēz International has experienced currency challenges, the food giant has spotted the opportunity to localise 50% of its raw materials. The only exception is cocoa beans, which are not locally harvested.

The company defines raw materials as the essential ingredients and production components used to make food, snacks, and confectionery items. These raw materials include cocoa, dairy ingredients, sugar, flour, nuts, and packaging materials.

“Despite facing a challenging and dynamic operating environment, our teams remained focused and agile in executing against our long-term growth strategy,” said Dirk Van de Put, chair and chief executive officer of Mondelēz International.

Localising ingredients

Mondelēz International will inject $5 million (€4.6 mn) in capital to boost its production in Pakistan, growing its presence and operations in the Asian country. “The $5 million investment will prioritise localisation efforts, enhancing production capacity while maintaining high-quality standards,” a spokesperson for Mondelēz International told Ingredients Network.

Mondelēz Pakistan, a subsidiary of Mondelēz International, is the local producer of Cadbury’s chocolate, another subsidiary of the company. Cadbury aims to localise 50% of its production in Pakistan, and in turn, Mondelēz Pakistan plans to increase its current localisation from 22% to 50%, amounting to half of its total operations.

“We aim to reduce reliance on imported raw materials by increasing local sourcing to 50% by 2025, thereby strengthening our supply chain,” Mondelēz’s spokesperson said.

The multi-million cash injection will be in addition to the existing 55% of local materials that Mondelēz has sourced for over three decades, since it set up these supply chain operations in Pakistan in 1992. Moving forward on its localisation plans, as of March 2024, the company had localised 22% of its Pakistan raw material imports. With the investment, Mondelēz also aims to support local industries, generate employment, and contribute to economic development.

Pakistan is a key emerging market

Achieving continued momentum in emerging markets is one of Mondelēz’s first-quarter 2024 milestones, as reported by the company in a 2024 report. “We posted solid top-line results coupled with robust earnings and free cash flow generation in the first quarter driven by strong pricing execution, effective cost management, and emerging market momentum,” added Van de Put.

Pakistan is one of these emerging markets, and the company’s investment in the country is part of its broader ongoing plan to invest in emerging markets throughout the globe. Emerging markets made up 39% of Mondelēz’s total revenue in the first, second, and third quarters of 2023.

Enhancing export opportunities

Mondelēz Pakistan’s two manufacturing plants in Hub, Baluchistan, produce 100% of their products locally, generating employment opportunities for around 3,000 individuals in the surrounding region. The company exports some of these to Gulf Cooperation Countries (GCC), such as Qatar and Saudi Arabia, intending to expand its global reach.

“This investment provides opportunities to enhance supply chain resilience through increased local sourcing, support the growth of local industries, and expand our export capabilities,” the spokesperson for Mondelēz said.

Mondelēz Pakistan plans to double its export volume to GCC countries by 2025 and explore new international markets. The company hopes its investment will create jobs and boost local businesses, contributing to Pakistan’s economic growth and stability.

Building sustainable brands and operations

The food giant’s localisation investment comes alongside its efforts to improve the sustainability of its operations in Pakistan. To overcome the currency challenges Mondelēz has experienced over the past year and bolster its export potential, Mondelēz is also capitalising on the country’s strong manufacturing capabilities.

Today, Mondelēz Pakistan manufactures around 12 of its branded products in the local market. The subsidiary’s popular snacking and confectionery brands include Cadbury and biscuit brands such as Oreo, Tuck and Lu.

Mondelēz Pakistan has a global turnover of $36 billion (€33 bn) and is investing in new and cross-industry collaborations to appeal to more international consumers and markets. In June 2024, Mondelēz teamed up with Lotus Bakeries to elevate brand awareness of Lotus Bakeries’ leading Biscoff cookie brand in India and produce new co-branded chocolate products in Europe.