Mondelez International said its recently-acquired Clif Bar business continued to improve profitability in the second quarter with the help of higher prices amid “robust” sales growth and as Clif Bar recently overhauled its management team, including the exit of CEO Sally Grimes.
At the close of February, Alexandre Zigliara was hired as president of Clif Bar, succeeding Grimes, who had been CEO of the company since May 2020.
Zigliara has led the global integration of Clif Bar since Mondelez acquired the company for $2.9 billion in August 2022. Earlier, he spent a year as SVP and general manager of strategic growth channels at Mondelez. Before joining Mondelez in 2021, he spent 17 years at Coca-Cola.
On Mondelez’s second-quarter analyst call, Dirk Van de PutDirk, Mondelez’s chairman and CEO, said the company continues “to accelerate both top and bottom-line performance in Clif Bar.”
Luca Zaramella, CFO, added that Clif Bar “posted robust growth and delivered another operating margin increase of double-digit percentage points in Q2 versus last year.” He said about Clif Bar, “Now profitability is approaching the level of total North America, but we still have to generate material synergies both on revenue and cost line.”
Asked by an analyst for an update on Clif Bar’s transition and progress, Van de PutDirk said the business in the first half had “very strong double-digit revenue growth,” with margins improving more than 1,000 basis points, with a boost from higher prices. He said, “We’ve increased prices more aggressively than Clif Bar would have done historically. We increased prices in August, in January and another one later in Q1. And, so, we see low elasticity. So that’s having a big impact.”
Clif Bar has also benefitted from improved service by reducing SKUs and improving efficiencies at its manufacturing facilities, said Van de PutDirk. The improvement also reflects updates to its promotional plan and a shift to Mondelez’s more efficient media buying platform.
“The integration is taking place in a number of steps. A big one is the systems integration later in the year,” said Van de PutDirk. “But, so far, where we have streamlined the teams, and we’ve brought more clarity on how we want to operate the business, that is all going well. But, as we said in the prepared remarks, the real benefit of the cost synergies is still largely to come. We’ve already seen some benefits, but in the second half of this year and the beginning of next year, we will get the real benefit from it.”
Mondelez’s portfolio includes Oreo, Ritz, LU, Clif Bar, and Tate’s Bake Shop biscuits and baked snacks, as well as Cadbury Dairy Milk, Milka and Toblerone chocolate.
Photo courtesy Clif Bar
