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Speaker 1: While many industries have seen business suffer during the COVID pandemic,

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Speaker 1: the snack food sector has soared. We all remember that

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Speaker 1: time at the middle of March of where the world changed,

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Speaker 1: and for packaged food in general, that was a great

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Speaker 1: thing for packaged food broadly, anything you could stock up

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Speaker 1: for a meal time. It was an incredible run to

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Speaker 1: the grocery store. The kind of volumes no one really

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Speaker 1: ever expected anything that is center store shelf stable, and

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Speaker 1: the supply chain could keep up with it boomed. Consumers

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Speaker 1: stuck at home or finding comfort in comfort food, and

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Speaker 1: they're stalking up on snacks As new COVID variants threatened

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Speaker 1: to create new supply disruptions. Mondolie, the maker of Oreos,

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Speaker 1: Cadbury and many other iconic brands, has been keeping a

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Speaker 1: close eye on these developing trends. As we went through

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Speaker 1: the pandemic, we started to realize in our categories biscuits

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Speaker 1: and Charlotte, the consumption is going up. There is the

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Speaker 1: need for physical and mental well being, and chocolate and

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Speaker 1: biscuits provide um some sort of relief to these tends. Days,

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Speaker 1: a few companies are better positioned to provide that relief

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Speaker 1: than Mandolas, with the portfolio of more than sixty brands,

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Speaker 1: led by nine global powerhouses ranging from chocolate to crackers

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Speaker 1: to cheese, and few snack food companies have a broader

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Speaker 1: consumer base. Mandels draws more than two thirds of its

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Speaker 1: revenue from sales outside the United States. But for the

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Speaker 1: company to make the most of its opportunities, CEO Dirk

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Speaker 1: Vanderput depends on CFO Lucas Romella to cut through the

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Speaker 1: clutter and keep this huge ship on course. When the

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Speaker 1: pandemic started and when we started to realize that this

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Speaker 1: was going to take on a global nature, look at

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Speaker 1: the CFO start to play a key role, make sure

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Speaker 1: it was clear for everybody in the organization what the

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Speaker 1: expectation was. I mean, this is the most recent performance

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Speaker 1: of the company. As you see, most of the business

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Speaker 1: is doing quite well. Like every CFO, INO RmlA faces

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Speaker 1: some headwinds global supply chain challenges, inflation and ongoing and

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Speaker 1: certainties around the pandemic, just to name a few. But

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Speaker 1: he brings experience in savvy that gives Mandels executives and

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Speaker 1: investors confidence in their chief future officer. He is like

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Speaker 1: a walking encyclop Encyclopedia of knowledge. He doesn't forget anything.

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Speaker 1: He has an understanding of the details of a business

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Speaker 1: that I've very rarely seen in any person. Defining the

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Speaker 1: CFO role as only finance, he is very limited. I

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Speaker 1: think the key differentiator is about understanding the business, knowing

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Speaker 1: the business, making decisions, and be selective about what you do,

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Speaker 1: how you do it, and when you do it. When

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Speaker 1: I talk about countries, it is because I visited them,

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Speaker 1: I spent time on them, and I know our products,

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Speaker 1: I know our people, I know our customers. Lucas Rmela

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Speaker 1: has been at Mondole since joining the company in his

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Speaker 1: native Italy. Over the ensuing two decades, he worked in

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Speaker 1: Latin America, Europe and North America. I tell my daughters

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Speaker 1: I had three daughters. I always tell them that when

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Speaker 1: they asked me, what is your job? I study. I

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Speaker 1: have a lot of studying in my role. I want

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Speaker 1: to know what's going on in the countries, et cetera.

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Speaker 1: And so it is about different products, different consumers. We

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Speaker 1: tend to believe that all consumers are equal. They are not.

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Speaker 1: The issues to deal with the US are very different

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Speaker 1: with issues in Latin America or in Europe, and so

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Speaker 1: I think it's a it's a huge benefit to have

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Speaker 1: sort of grown up in the company. I came from

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Speaker 1: the outside. So the combination of the two us that

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Speaker 1: gives a huge strength to our business and the way

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Speaker 1: we look at things. CEO Dirt Vanderput arrived at Mondols

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Speaker 1: in seventeen and a year later Chap Zaramella to lead

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Speaker 1: the finance team. Well, I entered the company as new

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Speaker 1: and and you start to look for somebody that can

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Speaker 1: really be your sounding board on what you're thinking. You

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Speaker 1: can play ping pong, I call it with him about

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Speaker 1: ideas and so on. That started very early, and and

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Speaker 1: it sort of grew over time. Our CEO particularly and

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Speaker 1: our board. They are looking for someone that can understand

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Speaker 1: the business, can drive decisions that are sound from a

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Speaker 1: business standpoint, especially for a company that has such strength

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Speaker 1: in its local market management. It's that's CFO role effectively

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Speaker 1: gets reframed. When everything's less decision making is inherently a

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Speaker 1: little bit less centralized. If you're going to keep a

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Speaker 1: p and L, whether it's a formal pan L or

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Speaker 1: it's a marketing p and L, you're gonna measure something

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Speaker 1: and you're gonna do it on a local market area

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Speaker 1: as opposed to a business syle of globally that inherently

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Speaker 1: creates a challenge that Love has been able to solve.

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Speaker 1: It requires more capabilities that maybe you wouldn't think of

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Speaker 1: a traditional CFO role where you'll oversee a finance function.

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Speaker 1: The ability to drive decisions became critical in when the

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Speaker 1: jolt from the pandemic suddenly disrupted the company's traditional patterns

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Speaker 1: of performance. At the beginning of the pandemic, I didn't

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Speaker 1: really know what going on with the business, because you

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Speaker 1: can imagine in places like India, for instance, the business

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Speaker 1: came to a complete stop. We business India for US

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Speaker 1: is an operation that sells more than one billion dollar

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Speaker 1: a year, and all of a sudden, we went to

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Speaker 1: zero sales, and I didn't know what was going on,

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Speaker 1: not only with our people, but with the business itself.

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Speaker 1: I didn't know if we had cash and for how

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Speaker 1: long that cash would support the operation a boosting consumption

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Speaker 1: in the ureas. But then India closed certainly and our

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Speaker 1: sales went went to almost to zero. And so dealing

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Speaker 1: with this variation around the world and how to make

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Speaker 1: sure that as a global company, as a total company,

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Speaker 1: we got through this In a way that would allow

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Speaker 1: the best for every single country around the world. That

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Speaker 1: required a lot of attention, as you can imagine from

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Speaker 1: from the CFO, I have to say we bounced back

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Speaker 1: tremendously well. I have to say if I look back

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Speaker 1: at the a couple of years and they look at

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Speaker 1: the numbers, it seems like the pandemic didn't happen to

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Speaker 1: our business at all. Mondale revenues have him used to

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Speaker 1: be rising year over year in both and one. The

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Speaker 1: company projects even stronger top line growth in the next

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Speaker 1: two years, but maintaining margins may be challenging with supply

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Speaker 1: chain still under pressure and the cost of labor and

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Speaker 1: materials rising. I've never seen physical supply chain disruption like this. Sure,

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Speaker 1: normally you get cycles, you have to take some pricing

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Speaker 1: to cover the cost inflation, but it's not like you

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Speaker 1: can't get the products to the shelf. I think it

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Speaker 1: starts with labor shortages around the world. That's causing knock

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Speaker 1: on impacts on freight costs, on ingredient costs, on physical

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Speaker 1: movement of plants. I'm not necessarily worried about supply at

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Speaker 1: this point. I'm more worried about prices and prices, particularly

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Speaker 1: around logistics, UH and the round transportation, have been going

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Speaker 1: up worldwide. Are they heading your margins? Are you passing

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Speaker 1: those onto the consumers? In the US, for instance, we

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Speaker 1: just announced pricing of six percent across the portfolio. That

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Speaker 1: is a vote and effectively saying this is not transitory,

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Speaker 1: that the if you're passing on those prices of the

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Speaker 1: consumer that's here to stay. Are you not expecting some

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Speaker 1: of those input costs to go down then anytime soon.

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Speaker 1: I don't expect them to go down anytime So I

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Speaker 1: think transportation, for instance, has been quite high in terms

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Speaker 1: of inflation for the last three years. I also know

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Speaker 1: that packaging costs and costs related to some of our

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Speaker 1: commodities are going up, and they have been going up

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Speaker 1: so far despite the highest food inflation in decades. Leading

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Speaker 1: producers have been able to pass on costs to customers mandols,

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Speaker 1: so US retail sales take a healthy jump in December

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Speaker 1: versus the previous year. When you pass those costs onto

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Speaker 1: the consumer, you are confident that they can accept as

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Speaker 1: higher prices. I am UH, and I also would like

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Speaker 1: to say that it is not necessarily straight price increase.

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Speaker 1: We use what we call revenue growth management. That is

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Speaker 1: optimizing the size of the packs, that is providing multiple choices.

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Speaker 1: For instance, based on consumer occasions, you might realize that

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Speaker 1: you don't necessarily carry with you all the time a

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Speaker 1: pack of Orel, a big pack of Orel. But so

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Speaker 1: making the product available in smaller sizes is critical. We

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Speaker 1: optimize promotional spending and so making sure that promotions in

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Speaker 1: terms of that which means the price benefit that you

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Speaker 1: give to the consumers, and in terms of frequency, they

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Speaker 1: are optimized. And so it is a full array of

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Speaker 1: things that we're trying to leverage to make sure that

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Speaker 1: there is the least amount of elasticity. Reality is, if

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Speaker 1: you look at the market, you see prices going up

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Speaker 1: and volume going up. So the old concept of elasticity

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Speaker 1: higher price, lower volume is not necessarily there anymore. Mondols

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Speaker 1: at a long term target of three percent organic net

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Speaker 1: revenue growth in when it launched a new consumer centric

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Speaker 1: growth strategy, and the company is not backing off that goal.

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Speaker 1: Reality is, I believe the three percent plus algorithm is

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Speaker 1: achievable for this company. Also, we have been making acquisitions.

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Speaker 1: We have been adding around about a couple of billion

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Speaker 1: dollars of revenue of platforms that are high growth, single

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Speaker 1: digit in terms of of the revenue potential. I think

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Speaker 1: going forward, we now have a recipe. We we are

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Speaker 1: growing our global brands. We have developed local brands that

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Speaker 1: play on the needs of the local consumers. We have

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Speaker 1: found a financial algorithm that allows us to constantly increase

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Speaker 1: the investment in our brand. Mandolese is a young company

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Speaker 1: with old roots. It was created in in a split

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Speaker 1: with Craft Foods, which dates all the way back to

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Speaker 1: nineteen thirty two. In its early years, Mandalise was a

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Speaker 1: takeover target, attracting the attention of billionaire activist investors Bill

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Speaker 1: Ackman and Nelson Palps. Helps pushed for a merger with PepsiCo,

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Speaker 1: and when that failed, he later joined the board to

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Speaker 1: oversee a cost cutting push. He'd taken a chunk of shares,

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Speaker 1: put pressure on the company, eventually took a board seat

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Speaker 1: from fourteen onwards and really just said, don't worry about

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Speaker 1: the top line. You know, if your margins, if you're

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Speaker 1: operating margins only twelve percent, why you worried about the

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Speaker 1: top line. You've got to focus on improving those in

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Speaker 1: order to create long term value for the company. UM,

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Speaker 1: so you know, that in mind. They did exactly that

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Speaker 1: and for three or four years from twenty thirteen to

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Speaker 1: twenty seventeen eighteen, we saw monstressed margin improvements. So when

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Speaker 1: Dirk Vanderpool came in, his remate was to get the

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Speaker 1: top line and he did. It's because of the work

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Speaker 1: that was done before I arrived that we were able

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Speaker 1: to focus on growth after my arrival. So let's now

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Speaker 1: focus on what drives our growth. Building our brands, investing

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Speaker 1: more in our brands, getting distribution in the channels where

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Speaker 1: we were under development, building our geographical presidence and so on.

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Speaker 1: Mondoles is also building through acquisition. Since eighteen, the company

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Speaker 1: has added about one and a half billion dollars in

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Speaker 1: revenue and deals across a number of consumer segments and

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Speaker 1: geographic markets. If you think about the latest acquisition of Jupiter,

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Speaker 1: that is a platform that allows us to start competing

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Speaker 1: in crossant with a seven day brand. We can apply

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Speaker 1: our brands to those portfolios that we acquired. It is about, yes,

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Speaker 1: Philly geographical gaps, but it is also about ensuring that

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Speaker 1: we filled gaps in our portfolio. And particularly in the

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Speaker 1: case of Bake Snacks, we are very keen because it

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Speaker 1: is a category that is massive. There is no consolidation

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Speaker 1: in that category at in terms of manufacturers around the world.

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Speaker 1: It is high growth and we can apply our brands

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Speaker 1: and our know how to deliver cost synergies. I think

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Speaker 1: what Montelis has done it's very smart. They targeted areas

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Speaker 1: that are still quite fragmented but growing and profitable, so

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Speaker 1: areas like snack bars, areas like cakes and pastries, and

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Speaker 1: I think the deals that they've made are pretty smart.

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Speaker 1: With a growing lineup of brands and a widening global footprint,

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Speaker 1: portfolio optimization is a priority for Montelis. Portfolio optimization is

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Speaker 1: really ongoing. Reality is, as a company, we have a

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Speaker 1: lot of brands and a lot of local brands that

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Speaker 1: mean a lot to a local consumers. So the Indian

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Speaker 1: consumer and the way you reach them and target them

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Speaker 1: is very different than the way you would reach and

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Speaker 1: target an American consumer, for example. Yes, it is. Having

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Speaker 1: said that, one of the biggest success stories in India

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Speaker 1: is Oreo, and we have been able to sell quite

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Speaker 1: a bit of Oreos in the last couple of years.

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Speaker 1: I think we crossed the one on the million dollar

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Speaker 1: mark for that brand in India, and so there are

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Speaker 1: a lot of nuances, but there are also a lot

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Speaker 1: of similarities. Our brands still have a huge runway of growth.

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Speaker 1: For instance, Oreo, one of our biggest brands, is growing

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Speaker 1: double digit or close to double digit for a three

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Speaker 1: billion dollar brand. That's pretty impressive. In MONDOLS opened its

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Speaker 1: new global headquarters in Chicago. One of the places Lucas

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Speaker 1: Armella spends a lot of time is this conference room

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Speaker 1: where teams can display and discuss data, stay informed, and

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Speaker 1: stay connected. And here we can track and monitor the

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Speaker 1: performance of our company throughout the world of our competitors.

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Speaker 1: We can measure and take a look at balance it,

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Speaker 1: cash flow, et cetera. And every month we spent three

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Speaker 1: hours with the CEO in this room where we go

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Speaker 1: through a Q and A session and where we analyze data.

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Speaker 1: We point to things that are working very well where

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Speaker 1: we need to make further investments, but we also talk

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Speaker 1: about things that don't work that well, and so we

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Speaker 1: have follow ups with the segments and regions and the

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Speaker 1: business units about it. When Lucas Rmela isn't crunching numbers

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Speaker 1: are working with his team to solve strategic problems, you

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Speaker 1: can often find him on his bicycle it's the past

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Speaker 1: time he tries to pursue every day. It is about

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Speaker 1: performing well but also having a strategy on how you

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Speaker 1: compete with others. It is an individual sport, but it

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Speaker 1: is also a team sport, and it gives me the

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Speaker 1: opportunity to talk to a lot of people and see

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Speaker 1: an always moving environment. Always on the stationary bike or

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Speaker 1: do you have an outdoor bike? I also go outdoor

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Speaker 1: and we are in Chicago. Um, the temperature outside is

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Speaker 1: round about ten degrees these days, and I have to say,

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Speaker 1: yesterday I went out with my bike a freezing temperature,

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Speaker 1: and UM, yeah, I prefer going outside if I can.

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Speaker 1: They say the physical toughness makes you mentally stronger as well.

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Speaker 1: Maybe that's part of it. Yeah, I think call this

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Speaker 1: just a perception. If you don't think about it, you

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Speaker 1: can go and exercise outdoor in Montolie moved its global

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Speaker 1: headquarters from suburban Chicago to a building in the city's

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Speaker 1: booming Full teen Market neighborhood. The roots of the company

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Speaker 1: have been in Chicago. I think when I thought about

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Speaker 1: the opening a new headquarters, the main thing we were

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Speaker 1: looking for was to make sure that we were in

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Speaker 1: the middle of the consumers, and Fulton Market, where we

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Speaker 1: are is one of the areas in the US with

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Speaker 1: the highest number of millennials and generations as a percentage

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Speaker 1: of the population. About four employees are slated to occupy

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Speaker 1: these new offices, which were designed with productivity and community

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Speaker 1: in mind. We wanted to have a lot of common

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Speaker 1: areas and make working easier for people, and so we

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Speaker 1: have a lot of light. As you can tell, we

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Speaker 1: have a lot of shared areas. The meeting rooms you

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Speaker 1: literally walk in and the computer who cups on on

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Speaker 1: the screen almost automatically, and so we wanted to make

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Speaker 1: these a contemporary, fashionable place um and something that is

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Speaker 1: easy for people to use as a space. But over

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Speaker 1: the past year the new space has been largely empty.

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Speaker 1: It's grand opening postponed as Mandols, like so many companies,

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Speaker 1: complies with public health guidelines and many employees work from home.

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Speaker 1: How are you dealing with a still remote workforce, a

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Speaker 1: labor force that is demanding flexibility. We want to give

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Speaker 1: our people flexibility and if anything, what we have learned

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Speaker 1: over the last couple of years is that we can

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Speaker 1: run the company effectively from from remote. I still believe

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Speaker 1: there is a lot of value, particularly for young people

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Speaker 1: to come into the office and absorb a little bit

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Speaker 1: the culture of the company. And I know for sure

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Speaker 1: that many people that work for me, they would like

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Speaker 1: to come to the office and have that social aspect

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Speaker 1: of working that is somewhat missed. Do you think this

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Speaker 1: flexible work from the office work from home is with

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Speaker 1: us to stay? I think it is with us to stay.

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Speaker 1: I know for sure that many people don't like spending

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Speaker 1: how it's commuting, and I know for sure that it

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Speaker 1: might be more productive if they spend that time doing

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Speaker 1: something else, working or spending time with their families. So

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Speaker 1: as a company, we embrace flexibility. If the future offers

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Speaker 1: flexibility to workers, it also offers opportunity to businesses to

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Speaker 1: assess their need for office space and potentially redirect some resources.

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Speaker 1: It has been different country by country, and so there

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Speaker 1: have been some countries where we have reduced the office

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Speaker 1: space and we are putting that money back into the business,

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Speaker 1: either by giving more opportunities for people to operate as

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Speaker 1: they like and giving them the tools that they need,

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Speaker 1: but also investing in our brands. It's all about investment.

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Speaker 1: For Lucas Romella, and he realizes that patient long term

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Speaker 1: planning yields the best returns. What's the biggest challenge in

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Speaker 1: the next ten years for you? The biggest challenge is

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Speaker 1: about managing um you know, costs in a way that

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Speaker 1: is sustainable because as a company, I don't think we

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Speaker 1: can shift away from from growth and so that good

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Speaker 1: balance between costs management and investing is something that is

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Speaker 1: that is required and sometimes I have to say it is.

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Speaker 1: It is challenging to cut costs in a context where

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Speaker 1: as a company we're pursuing growth. Mondo Lis is also

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Speaker 1: pursuing growth in a sustainable framework. The company targets ten

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Speaker 1: percent reduction in emissions across operations and one recyclable packaging

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Speaker 1: by I smella. If these goals are achievable just three

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Speaker 1: years away, I think they are a lot of companies

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Speaker 1: are talking about it, but I can tell you there

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Speaker 1: is a lot of belief in the management team, specifically

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Speaker 1: that these are the right things and we have to

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Speaker 1: do them because not only are were consumers, because it

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Speaker 1: is right for the planet, it is right for our children,

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Speaker 1: it is right for future generations. What's the biggest change

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Speaker 1: that a CFO role will undergo in the next ten years.

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Speaker 1: I think it will be about how we as CFO

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Speaker 1: CFOs round the company. It is the role of the CFO,

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Speaker 1: as I said, the information availability is is quite extensive

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Speaker 1: these days. I think as as leaders, we will keep

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Speaker 1: on thinking about how we can make the company go better.

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Speaker 1: But I also believe it is important that we spend

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Speaker 1: time grooming our successors. And the role of of a

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Speaker 1: leader today is about thinking about what is needed for

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Speaker 1: our people in the next five to ten years and

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Speaker 1: making sure we equip them to be successful in five

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Speaker 1: ten years. And it is completely different than than what

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Speaker 1: it used to be. What then would be the biggest

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Speaker 1: piece of advice you'd give your successor. I think to

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Speaker 1: be successful in a role like these, it is not

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Speaker 1: only technical knowledge. It is about passion. It is about caring.

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Speaker 1: It is about making sure that the future generations have

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Speaker 1: something in their hands that was built over time by

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Speaker 1: people like us. They have to laboreos right they do.

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Speaker 1: Lucas Aromella clearly loves what he does. He believes in

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Speaker 1: his company's products, and he's using that passion along with

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Speaker 1: a whole lot of data to better it's financial prospects.

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Speaker 1: That's what makes Lucas Aromela a Chief Future Officer. I'm

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Speaker 1: Taylor Regg's This is Bloomberg