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Mondelez (MDLZ) Inks E-Commerce Deal with Alibaba Group

Mondelez International, Inc. MDLZ has formed an e-commerce partnership with China’s leading online and mobile commerce company, Alibaba Group Holding Limited BABA. The strategic deal is in line with the company’s plans to expand its e-Commerce platforms and generate more online sales.

Mondelez’ snacks like Oreo, Chips Ahoy!, belVita, Toblerone, Cadbury and Trident will be available at Alibaba’s Tmall.com site to Chinese consumers. Mondelez will also make exclusive products like Oreo Colorfilled – enables consumers to design their very own packaging or Oreo - for Tmall.com. Oreo Colorfilled, which was initially piloted in the U.S. in November last year, is expected to be available on Tmall.com in May

In China’s e-commerce market, snacking is a fast growing sector. As such, a partnership with the country’s largest e-commerce company will help Mondelez capitalize on this online snacking growth.

Mondelez believes that e-Commerce, its fastest growing platform, can generate $1 billion in annual revenues by 2020 as against $100 million garnered presently. The partnership with Alibaba further advances this goal.

In order to strengthen its brand presence across digital media, Mondelez formed a global strategic partnership with Facebook, Inc. FB in Jan 2013 and Google, a segment of Alphabet Inc. GOOG in Oct 2014.

Other than expanding online sales, Mondelez plans to offer more good-for-you snacks and expects 50% of its product portfolio to comprise “well-being” items by 2020 instead of the current one-third. Apart from simplifying the ingredients and improving nutritional benefits of the existing products, the company will develop products to meet the growing consumer demand for healthier and natural items.

Mondelez, like many other U.S. food producers, has struggled due to shifting consumer’s preference toward natural and organic ingredients over packaged and processed food.

Mondelez has a Zacks Rank #3 (Hold).

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