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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. We're joined by Dirk

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Speaker 1: van Deputt. He is Mondali's international CEO. Dirk, it's great

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Speaker 1: to have you with me. And as we were just

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Speaker 1: talking about you think about in January, Mondally said that

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Speaker 1: it's going to be raising prices on some of your products.

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Speaker 1: Of course, the price of cocoa absolutely skyrocketing. The price

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Speaker 1: increases that you're putting in place now to deal with that.

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Speaker 1: How does that compare to previous price hikes. What kind

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Speaker 1: of magnitude are we talking about here?

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Speaker 2: Well, if we talk about our global range all our products,

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Speaker 2: which includes fifty percent of biscuits, it is lower than

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Speaker 2: it was in previous years. But if you look at

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Speaker 2: the chocolate price increase, that's going to be high single

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Speaker 2: digit in some cases double digit. That is in line

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Speaker 2: with what we had to do in previous years. So unfortunately,

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Speaker 2: I wish it was different. Our input costs keeps from

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Speaker 2: going up. Some are flats coming down, but goc sugar

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Speaker 2: in fact also and hazelnuts are the ones that are

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Speaker 2: going quite high and they're important in our products.

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Speaker 3: So we unfortunately have to increase prices again.

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Speaker 1: And how willing and able our consumers to take on

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Speaker 1: those price hikes, because I mean, I love oreos, but

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Speaker 1: you probably can't live off of oreos, So how much

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Speaker 1: pricing power do you actually have left.

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Speaker 2: Well, up to now, we have really not seen any

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Speaker 2: effect from the price increases on our volumes. Our volumes

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Speaker 2: have been solid. We've had volume increases that were the

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Speaker 2: same as before the inflationary period, so price elasticity wise,

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Speaker 2: the consumer has accepted what we have to do so far.

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Speaker 2: Going forward, I assume they can deal with another round

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Speaker 2: of price increases, particularly if you talk about our major brands,

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Speaker 2: and I've talked about our chocolate brands here, Milk, a Cadbury,

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Speaker 2: a Doubler Rome. They're so close to the heart of

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Speaker 2: consumers that I believe they will be prepared to see

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Speaker 2: through this next price increase. It's going to be the

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Speaker 2: same for all chocolate, so it's not that just going

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Speaker 2: to be our brand, It's going.

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Speaker 3: To be all brands. So I think that that will help.

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Speaker 2: But hopefully anytime soon this inflationary period of our cost

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Speaker 2: increases will stop and we will go back to a

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Speaker 2: more normalist situation.

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Speaker 1: And it's a good point there. The brand loyalty, the

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Speaker 1: brand recognition for some of your companies is definitely strong.

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Speaker 1: I do want to talk about distribution a bit because

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Speaker 1: it appears that monthly as you're focusing on convenience stores

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Speaker 1: warehouse clubs. Are those the types of channels that you're

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Speaker 1: pursuing and how do you plan to succeed there?

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Speaker 2: Yes, if you look around the world, we are not

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Speaker 2: distributed or represented in all channels in the same way,

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Speaker 2: or if you look at the geographical spread of a country,

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Speaker 2: it might be that we are not in our stores.

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Speaker 2: So a big driver of our growth is to optimize

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Speaker 2: our presence in the channels where we're underrepresented or increase

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Speaker 2: our reach geographically of presence in different stores. If I

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Speaker 2: go to the first one, the two big opportunities for

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Speaker 2: US are convenience stores in the US where we're underrepresented,

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Speaker 2: and the bigger warehouses, the discounters.

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Speaker 3: In the US and in Europe.

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Speaker 2: Is the other big opportunity for US geographically speaking, it's

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Speaker 2: in emerging markets. For instance, in India, we believe that we

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Speaker 2: can still go to another three million stores in the

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Speaker 2: country to have.

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Speaker 3: Our products present.

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Speaker 2: I will add a third opportunity for US, which is

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Speaker 2: in the store where we are already present, we can improve,

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Speaker 2: increase our presence, we can have a better quality presence.

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Speaker 2: All that to point out that for us, the opportunity

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Speaker 2: to keep growing as a company is quite big, right.

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Speaker 1: And of course we are having this conversation against a

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Speaker 1: geopolitical backdrop as well. Of course, Mondalie still operates in Russia,

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Speaker 1: and let's talk about current events. I mean Alexei Navalne.

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Speaker 1: Of course his death has that led to renewed consideration

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Speaker 1: of Mondalize exiting from Russia.

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Speaker 2: Well, it's first of all, since the beginning of the war,

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Speaker 2: we have condemned the brutal aggression against the Ukraine.

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Speaker 3: So we are absolutely against the war.

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Speaker 2: But as it relates to operations in Russia, unfortunately there

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Speaker 2: is no real simple solution there.

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Speaker 3: It would be easy, or we could be clear to.

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Speaker 2: Say that if stopping our operations in Russia would stop

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Speaker 2: the war, we would definitely do that, but unfortunately that

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Speaker 2: is not so straightforward. So we believe that the vast

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Speaker 2: majority of our investors understand what we're trying to do,

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Speaker 2: and what we're trying to do is that we believe

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Speaker 2: that the risk of exiting Russia and what would happen

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Speaker 2: to our business and how it would be used is

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Speaker 2: much higher than staying continue to operate locally, scale back

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Speaker 2: our operations and make our business more standalone.

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Speaker 3: So it's a.

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Speaker 2: Very difficult balance. It's not easy. It's probably one of

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Speaker 2: the toughest issues that I faced as the CEO, but

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Speaker 2: we believe that this is the best solution for us

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Speaker 2: in Russia.

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Speaker 1: Well, when it comes to the Russian business, I see

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Speaker 1: that that contribute two point eight percent to your global

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Speaker 1: revenues in twenty twenty three. That is down from four

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Speaker 1: percent in twenty twenty two. So it's not as if

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Speaker 1: the Russian business adds that much to your bottom line.

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Speaker 2: No, it's not, and it will continue to decrease over

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Speaker 2: time because as I said, it's a standalone and we

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Speaker 2: have scaled back our investments. But we do believe that

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Speaker 2: continue to operate, take care of our employees, keep on

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Speaker 2: working with a ten thousand farmer we have, continue to

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Speaker 2: provide chocolate and biscuits to the Russian consumer is an

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Speaker 2: acceptable way of continuing our business there.

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Speaker 1: And I am curious about how you actually do KNDUCT

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Speaker 1: business in Russia. Are you able to actually take your

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Speaker 1: profits out of the country or how does that actually work.

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Speaker 2: Now that, of course remains a bit of a difficulty.

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Speaker 2: We can take some out, but we have to go

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Speaker 2: to go quite a bit of controls and approvals by

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Speaker 2: the Russian government.

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Speaker 3: So it's over time something that needs to be solved.

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Speaker 2: But we, as I said, we are not trying to

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Speaker 2: grow the business there, were trying to contain it, and

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Speaker 2: so the problem becomes smaller and smaller if I can

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Speaker 2: say it like that, and I do.

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Speaker 1: I am just curious about the employees that you have

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Speaker 1: in Russia. I understand you have thousands there. You take

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Speaker 1: a look at other examples, for example, Carlsberg executives facing

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Speaker 1: years of prison prison in Russia. Are you concerned about

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Speaker 1: the safety of your employees in Russia and what steps

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Speaker 1: are you taking there?

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Speaker 2: Yes, of course we are concerned about the safety of

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Speaker 2: our employees. We're also concerned about the fate of the

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Speaker 2: suppliers that we have, the farmers that work with us,

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Speaker 2: and so we are trying to be as reasonable and

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Speaker 2: as non conflntational as we possibly can. We want to

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Speaker 2: maintain a business there. We want to scale it back.

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Speaker 2: We don't want to do major investments, but we do

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Speaker 2: want to continue to provide employment and protect our employees.

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Speaker 2: And so far that's what we are able to do.

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Speaker 1: All right, Eric, got to leave it there, but really

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Speaker 1: appreciate your time today. I enjoyed this conversation. Hope to

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Speaker 1: speak against soon. That, of course, is Derek vander Putt

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Speaker 1: of Mondali's International