Mondelez International, Inc. MDLZ has installed a new production line in in Casablanca, Morocco which wil make its popular Oreo biscuits locally.
The new state-of-the-art production line is worth $11 million and operates under Mondelez Maroc, Mondelez’ subsidiary in Morocco. Mondelez Maroc already operates three plants in Casablanca. Mondelez Maroc is a leading biscuit marker and offers popular brands such as Tonik and Merendina.
Meanwhile, Oreo is one of the nine “Power Brands” of Mondelez International besides Nabisco and LU biscuits; Milka, Cadbury Dairy Milk and Cadbury chocolates; Trident gum; Jacobs coffee and Tang powdered beverage. The “Power Brands” have been growing at a higher rate than the company average. These brands generate revenues in excess of $1 billion and constitute almost 60% of the company’s revenues. The latest Oreo production facility in Morocco will further boost the company’s revenues in the near term.
Mondelez generates more than 80% of its revenues from outside the U.S. with more than 40% coming from the emerging markets like Brazil, China, India, Mexico, Russia and Southeast Asia.
Food/beverage companies are increasingly investing in developing and emerging markets like India, China and Brazil which boast significant growth potential due to relatively low per-capita consumption. Another reason is the burgeoning middle-class population with rising income levels, which in turn is increasing the demand for convenience food and beverages.
Mondelez International carries a Zacks Rank #4 (Sell).
However, better-ranked consumer staples stocks include Flower Foods Inc. FLO, Danone DANOY and SUPERVALU Inc. SVU. All three food companies hold a Zacks Rank #2 (Buy).
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