Mondelez Acquires Grupo Bimbo's Ricolino

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Welcome to your weekly food & beverage report, where we cover everything you’ll need to know for the week ahead. This week, Mondelez International goes on a shopping spree, earnings reports reflect the impacts of world events, and most companies’ strategies of passing increased off to consumers proves to be successful. 

Mondelez International expands its portfolio and geographic presence with acquisition of Grupo Bimbo’s Ricolino confectionary business

Mondelez International (MDLZ) will acquire Grupo Bimbo SAB de CV’s (GRBMF) Ricolino confectionery business for $1.3 billion dollars, as announced in a news release. Ricolino has four manufacturing facilities that employ nearly 6,000 workers, generating around $500 million in annual sales. The acquisition will double the size of Mondelez’s business in Mexico, offering a strategic point-of-entry into the chocolate category while also expanding the company’s snacks portfolio. 

• Silk road of snacks… “This acquisition will provide a step change for our business in Mexico, an important growth market for us, more than tripling our routes to market and growing our position in core snacking categories,” said Dirk Van de Put, chairman and CEO of Mondelez International.
• Mr. Worldwide… Mondelez’s acquisition is another step in the company’s strategy of acquiring fast-growing snacking segments across important geographies. Earlier this year, Mondelez acquired Chipita, a snack-size cake and pastry leader in Central and Eastern Europe. In 2021, Mondelez acquired three other brands based in three different countries.

Earnings reports are out, and are struggling to answer the age-old question: Coke or Pepsi? 

Also announcing earnings last week, PepsiCo (PEP)  impressed Wall Street analysts with its earnings and revenue reported for Q1. With the strong showing came an increase in PepsiCo’s full-year forecast for organic revenue growth. However the company was not free from a sanctioned slap on the wrist, as 

PepsiCo also reported a $193 million impairment charge post-taxes as it tries to halt or reposition its juice and dairy brands in Russia. The company generates roughly 4% of its annual revenue in Russia (making Russia one of the few countries where Pepsi has a larger presence than Coca-Cola (KO)). 

• Consumer-carried costs… PepsiCo’s net sales jumped 9.3%, up to $16.2 billion, far surpassing expectations of $15.5 billion. Organic revenue also climbed over the reported quarter, thanks to higher prices consumers are paying at the grocery store.
• Innocuous impairment… PepsiCo reported $1.29 adjusted earnings per share, compared to $1.23 expected by Refinitiv analysts. The impairment charge reportedly dragged down the company’s earnings by 14 cents per share; an additional impairment charge of $241 million after taxes (also related to the Russia-Ukraine war) resulted in a further drop of 17 cents per share.

Never one to be left out of the party, Coca-Cola’s earnings were reported last week Monday and also topped analysts’ expectations. High demand for drinks like Powerade and Coke Zero Sugar fueled Coke’s unit case volume, driving the figure up 8% during Q1.  

• Sharing is caring…  Earnings per share for Coca-Cola came in at 64 cents, as opposed to Refinitiv analysts’ expectations of 58 cents. Coke also reported revenue of $10.5 billion, surpassing expectations of $9.83 billion.
• Branching out… The company’s pricing and mix, which includes price increases across its portfolio, grew 7% over the quarter, propelled along by strategies such as bottling drinks in smaller packaging. Inflation is putting pressure on companies’ profit margins and shoppers’ wallets alike; Coke said it’s been expanding its lineup of single-serving offerings at “affordable” prices.

Other stories…

• Filtered out of the competition… After less than 3 months on shelves, Chobani will be ending the production of its Ultra-Filtered Milk line, at least partially due to inflation.
• Plant-ent wars… The plant-based patent lawsuit between Beyond Meat (BYND) and startup Motif FoodWorks is starting to get tense, with both sides making petty comments about the other.
• Taco-bout tricky… Like many other restaurants, Chipotle Mexican Grill (CMG) faced higher food costs that cut into restaurant-level margins in Q1. Price increases and new menu additions helped balance out inflation.

That’s all we have for you this week, do you have anything for us? We’d love to hear from you with stories or recommendations for new sections to include! Drop us a line at news@barchart.com with any feedback or input.