Mondelez splashes £10m to grow savoury snacks business as it looks to balance its portfolio

Mondelez is investing £10m into the launch of “Ritz Crisp and Thin” and a new campaign for the Ritz masterbrand as it looks to balance out a “disproportionate” investment favouring its sweet products in order to grow its savoury snacks business.

The company is hoping to create a new segment in the crisps and snacks category with the launch of “Ritz Crisp and Thin” at the end of May, a crisp alternative with a “fine dough” texture that answers the growing demand for savoury snacks in the UK, according to the brand.

The UK is the biggest consumer of savoury snacks in Europe, with the crisp and snacks category currently worth £2.3bn according to Mondelez. However, while a wider segment exists in the US, the brand says the UK category is currently dominated by tortilla or potato chip brands such as Kettle Chips and Tyrell’s.

The launch will be marked by a Mother-created masterbrand campaign for Ritz in July, which will feature a new recording of “Putting on the Ritz” and will look at using “innovative marketing techniques” such as vloggers, artists and media partnerships as well as TV, OOH, sampling and in-store.

The campaign involves “significantly more investment” than previous campaigns such as Marvellous Creations or last year’s £3m Ritz Breaks launch, which put the brand back on TV for the first time in 30 years.

It is an effort to convert the brand’s 93% consumer awareness into more recent appraisal and remind consumers “why they love it”, according to the brand.

Ritz is currently worth £19m in the UK and is the world’s number one savoury biscuit brand, according to Nielsen data cited by Mondelez.

However, Rick Lawrence, biscuit and savoury snacks category lead of UK and Ireland for Mondelez International, told Marketing Week the company currently has a “disproportionate investment” favouring its sweet biscuits, something it is looking to change through the new launch and campaign.

“As we look to grow our snacking business we will build Ritz into a savoury snacking masterbrand through innovation and investment,” he says. “I’m like a kid in a sweet shop looking at the opportunities.”

Mondelez to become a “snacks business” as it hands off coffee segment

Lawrence adds that the move is part of the company’s focus on being a “snacks business” over the next six months as its coffee segment embarks on a joint venture with Douwe Egberts to become a separate business.

Last year the company launched its Ritz Breaks variant, which it said “fuelled growth in the savoury snacking category” and resulted in 33% year on year growth for the brand.

Now, Lawrence says the company hopes to replicate the success it has seen with its sweet category through the likes of Bellvita and Oreo in order to drive savoury category growth by creating new occasions, bringing in new consumers and driving category value.

While its Bellvita and Ritz Breaks brands have created new biscuit occasions according to Lawrence, Oreo, Chips Ahoy and Cadbury Dairy Milk Marvellous Creations have been effective in bringing in new consumers.

“A lot of biscuit eating is habitual, but with an ageing population we need to make sure we’re bring in younger people,” he says.

“This is a big bet for us. Growing sales in savoury snacks is a key priority for the business.”

Mondelez won’t push nutritional content of new product

Lawrence says the Ritz Crisp and Thin product, which will launch in “foodie” flavours Cream Cheese & Onion, Sea Salt & Vinegar, Sweet Red Chilli and Sea Salt & Vinegar, is also in line with nutritional pledges set out by the company to reduce sodium and saturated fats by 10% and put calories on the front of packaging globally by the end of 2016.

However, the new packaging, which is a move away from Ritz’ classic red into a “premium and modern” gray, doesn’t feature nutritional call-outs.

“If you allude to healthiness too strongly, consumers associate it with not being tasty,” Lawrence said.

“The primary thing is that the product is taster than anything else in the category, with consumer testing showing that many prefer it to a number of key competitors in the market.

“Retailers will still put it front of store due to its nutritional content, but it’s better to have the health information on the pack of the pack.”

“We’re absolutely not spending less on working media”

Mondelez holds the number one position globally in biscuits, chocolate and candy according to 2014 Nielsen data cited by the brand.

It delivered global net revenue of $34bn in 2014, with 34% of its business in biscuit sales, the biggest category, followed by chocolate at 27%.

However, profit fell in its latest quarter, and in February Mondelez vowed to continue pushing more money into what it sees as more cost-efficient channels, such as digital, in order to improve returns.

In a call with investors, Brian Gladden, chief financial officer for Mondelez said: “We expanded margins by driving efficiencies in the non-working elements of our media spend, including significantly consolidating suppliers. We also reduced production costs as we shifted more advertising to media outlets.”

However, Lawrence says the company is “absolutely not spending less on working media” and is still flexible in its budget plans, instead “streamlining and localising efforts”.

“We’re moving to a place where we decide if a brand is a local, regional or global priority and adjust spend accordingly,” he says.

“It’s not about levels of media investment, it’s about not re-creating the wheel every time. It’s thinking and strategy spending as opposed to consumer spending.”

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