CHINA - Mondelēz International, Inc. has entered into an agreement to acquire a majority stake in Evirth, a Chinese manufacturer of cakes and pastries. 

The transaction is contingent upon customary closing conditions, including regulatory approval, and aligns with Mondelēz’s strategic focus on enhancing its portfolio in the cakes and pastries category, a key area of growth alongside chocolate and biscuits.

Evirth, established in 2013, specializes in frozen-to-chilled cakes and pastries. The market for these products in China is currently valued at approximately US$3 billion and is projected to grow at a compound annual growth rate of about 15%. 

This growth is driven by increasing consumer demand for fresh, premium products that offer innovative taste experiences suitable for various snacking occasions.

Leveraging existing investments
Mondelēz has previously invested in Evirth, which has allowed the company to develop and supply frozen-to-chilled cakes and pastries featuring popular brands such as Oreo and Philadelphia. 

According to Mondelēz, Evirth’s rapid growth can be attributed to its robust distribution network in club stores across China, as well as its research and development capabilities.

“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,” Dirk Van de Put, chair and CEO of Mondelēz, expressed enthusiasm about the acquisition.

Linfeng Xu, chairman and founder of Evirth, highlighted the significance of this partnership.

“By bringing in Mondelēz's brand experience, technical strength, and international network, Evirth can be better positioned to provide premium products for our customers and consumers,” he remarked.

Mondelēz's commitment to expanding its baked goods offerings is evident through previous acquisitions, including the purchase of Give & Go in April 2020, which specializes in frozen-to-fresh brownies, cookies, and cupcakes in North America. 

The acquisition of Chipita Global SA in January 2022, known for its croissants and baked rolls, further underscores Mondelēz's strategy to enhance its footprint in Central and Eastern Europe.

Investing in AI for future marketing initiatives
In a separate initiative, Mondelēz is developing an in-house generative AI content creation platform in collaboration with Accenture and Publicis Groupe. 

While financial details remain undisclosed, AI-generated marketing campaigns are expected to debut as early as the first quarter of the next year across several markets, including the U.S., U.K., Germany, India, and Latin America. 

“Mondelez is going to build a proprietary platform that we own... that system essentially will be a main generator of content for us in the future,” Jon Halvorson, Senior Vice President of consumer experiences and digital commerce at Mondelēz, stated.

This move aims to streamline content production processes, initially focusing on performance marketing before expanding to larger-scale campaigns such as television ads. 

To date, Mondelēz has conducted approximately 40 campaigns utilizing generative AI as part of its exploratory efforts before establishing its internal processes. 

Although specific cost-saving metrics were not disclosed, Halvorson emphasized that personalized marketing efforts have historically yielded a 20%-30% increase in return on investment compared to non-personalized strategies. 

With over 60% of its advertising expenditures allocated to creative development and production, Mondelēz aims to leverage AI to enhance efficiency in its creative outputs.