Mondelez International has struck a cakes and pastries deal in China, a category CEO Dirk Van de Put had previously flagged as a potential M&A opportunity.
The Cadbury chocolate and Oreo biscuits brand owner has taken a “significant majority stake” in Evirth, which produces the French-style desserts mille crepe cakes, Swiss rolls, mooncakes and cookies.
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Mondelez said it already held a minority interest in Evirth to “develop, manufacture and supply frozen-to-chilled cakes and pastries in China” encompassing its brands Oreo and Philadelphia.
Neither financial terms nor the size of the stake were revealed by Mondelez, a deal it described as part of a “strategy to accelerate growth in the cakes and pastries category – a core focus for the company, alongside chocolate and biscuits”.
“We’re excited about the opportunity to accelerate our growth in cakes and pastries through continuous innovation, leveraging our high-value brands to create more premium tastes and formats,” Van de Put said in a statement.
Set up in 2013, Evirth has three manufacturing facilities located in Shanghai, Shenzhen and Dongguan.
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By GlobalDataThe business operates in a category that Mondelez estimates is valued at $3bn in China, with an annual CAGR of 15%.
Evirth builds on the US-headquartered company’s presence in cakes and pastries through Give & Go and Chipita.
Mondelez acquired a majority interest in Canada-based Give & Go in 2020. Two years later it finalised the purchase of Chipita.
Its latest deal for Evirth, which supplies the retail and catering channels, is subject to regulatory approval in China.
Linfeng Xu, the founder, chairman, and general manager of the Chinese company, said: “We are excited that Mondelez International is increasing its investment in Evirth, and this is a historic moment for us.
“By bringing in Mondelez’s brand experience, technical strength, and international network, Evirth can be better positioned to provide premium products for our customers and consumers.”
Speaking at the Barclays Global Consumer Conference event earlier this month, Van de Put had emphasised an interest to expand Mondelez’s presence in the cakes and pastries category, particularly in markets where it has reached scale in biscuits, chocolate and baked snacks.
“It’s a natural extension of the biscuit space. It’s a space that’s very fragmented. It’s about an $80bn market globally, slightly smaller, but not a lot, than chocolate and biscuits,” he explained.
“But in certain markets like China, chocolate is $4bn, biscuits is $8bn and cakes and pastries is $30bn. The other reason why it’s interesting for us is that the brands we have in chocolate or biscuits have a natural right to play in that space.”
Also in Asia this year, Mondelez inked a deal with Belgium-headquartered Lotus Bakeries in June to manufacture biscuits for the Indian market. The collaboration will also extend into new products incorporating the US company’s confectionery brands such as Cadbury and Milka.
Closer to home, Mondelez struck a $2.9bn deal in 2022 to acquired US energy bar business Clif Bar. The previous year it took a majority interest in UK-based Grenade following a similar deal in 2019 for Perfect Snacks.
