Mondelēz International, the world’s largest snack food company, is planning to expand further into Saudi Arabia and has signed a distribution joint venture in the kingdom with Olayan Group and Khalifa Algosaibi Group, it was announced on Tuesday.
Chicago-based Mondelēz International was founded in October 2012 and comprises the global snacking and food brands of the former Kraft Foods Inc. Some of its best known brands include Dairy Milk, Oreo, Halls, Toblerone, Milka, Tuc, Cadbury’s Crème Egg, Carte Noire, Jacobs, Kenco coffee and Ritz.
Available in 170 countries, its annual revenue is around $36bn, of which 44 percent comes from developing markets outside Europe and North America.
Some of the brands have already been available in Saudi Arabia for more than 100 years but the new joint venture with the Olayan Group and Khalifa Algosaibi Group, which will be called Mondelez Arabia for Trading, will manage Mondelēz International's plans to expand of its sales and distribution operations in the kingdom.
The Mondelēz Arabia management team will be based in Dhahran in the Eastern Province, while the company plans to establish 11 branches in major cities throughout the kingdom.
“This is a major step for Mondelēz International that demonstrates our long-term commitment to KSA, a very important and strategic market for us in the Middle East and Africa. The KSA offers significant growth opportunity with strong GDP expansion. We intend to grow with it by investing in product innovation, sales techniques, new-sales systems, and by developing a talented workforce,” said John Stephenson, Director of Sales Mondelēz International GCC said in a press conference in Riyadh today.
“This transaction further illustrates the increased level of M&A activity we are seeing in the consumer goods & retail sector in the region, where we continue to advise local and global brands," said Mohammed Al-Shukairy, M&A partner at Clifford Chance, who advised on the deal along with Al-Jadaan & Partners Law Firm.
Saudi conglomerate Olayan Group already has agreements with a number of food and beverage brands, including Coca-Cola, Burger King and Texas Chicken.
“We are very pleased to join forces with Mondelēz International once again to strengthen the position of their brands and products that we first began supporting more than 50 years ago when we undertook the distribution of products of General Foods (later Kraft Foods),” said Khaled S. Olayan, Chairman, The Olayan Group.