Bloomberg — Mondelez International Inc. (MDLZ) is increasing production in Venezuela and bringing back some iconic brands that it stopped making years ago during a period of economic chaos that forced many of its competitors to abandon the country.
One of the largest snack makers left in the country, Chicago-based Mondelez plans to spend $5 million to $8 million next year as it aims to capitalize on an increase in consumption, said general manager Rubén Echeverri in an interview in Caracas. While the investment would be small for most markets, it’s significant in Venezuela, where multinationals have been cutting back or shuttering.
“Our strategy has always been long term,” said Echeverri, a self-described stubborn optimist. “When you review the history of Latin America, companies that left countries, like Peru or Brazil, haven’t been able to regain the position they had in those markets.”
The investment is the company’s largest in the country in at least three years and it comes amid a surprising economic rebound — GDP is forecast to expand 7.6% this year, according to economists surveyed by Bloomberg. Thanks largely to the widespread use of the US dollar, consumers helped pull the nation out of a seven-year recession that chased away multinationals and dried up foreign investment.
Latin America’s highest inflation rates and an uncertain business environment are still concerns. But the company sees signs of optimism, including the Biden administration’s easing of some sanctions on the oil industry and a multibillion-dollar deal President Nicolás Maduro’s government reached with the political opposition.
“We are betting on that translating into more consumption, employment,” Echeverri said. “We have to wait for it to materialize. But, at the end of the day, it’s a sign things are going in a positive direction.”
Tang’s Return
Mondelez’s operation emerged from a spin-off of Kraft Foods Venezuela a decade ago. It took over production of some decades-old brands, including a version of Kraft mayo and a light-brown Oreo that only sell in Venezuela.
The economic crisis and chronically high inflation forced the company to cut some products from its portfolio. Other multinationals left the country or suspended operations, including Kellogg Co (K), Kimberly-Clark Corp. (KMB), Colgate-Palmolive Co. (CL), General Motors Co. (GM), and at least half a dozen international airlines.
But Mondelez never abandoned its two factories. Today, it employs 1,167 people. It has brought back some of its favored treats, like Oreo Fudge cookies for the Christmas season, the powdered drink mix Tang and four other products.
“Our work has been to reconnect our brands,” Echeverri said. “That’s the agenda.”
Re-introducing well-known brands instead of bringing in new ones gives Mondelez an advantage over Colombian products that are expected to fill Venezuelan shelves once trade between the two countries is normalized, Echeverri said.
He sees a scenario in which the company’s Venezuela facilities could eventually export products to foreign markets with a high concentration of Venezuelan immigrants. More than 7 million residents have left the country during the economic crisis, according to estimates from the United Nations. But in the short term, the focus is on the domestic market.
“We are seeing a more positive consumer,” Echeverri said. “It’s a consumer that is aware of the price dynamics but also wants to buy quality products.”
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