Mondelez International Inc (MDLZ), Kraft Foods Group Inc (KRFT), Hershey Co (HSY): 1 Huge Reason to Diversify and Buy This Global Giant

The confectionery category is typically less threatened by private-label competition because loyal consumers are willing to pay up for their favorite sweet treats. Higher-margin confectionery also enjoys faster growth rates. Mondelez primarily competes with big-branded leaders Hershey and Switzerland-based Nestle (OTCBB:NSRGY) in this segment.

While Nestle boasts a great deal of presence internationally and presents a big threat to Mondelez’s European business, Hershey Co (NYSE:HSY) doesn’t even come close to its geographic diversity. The more than century-old candymaker derives only 16% of its revenues internationally. But Hershey has recently ramped up spending to boost its international presence. The maker of Kit Kat and Reese’s enjoyed a very successful 2012, with sales up more than 9%. It did so by raising prices and suffering a very small hit to volumes.

On the other hand, Mondelez International Inc (NASDAQ:MDLZ)’s cookie and cracker brands, which include Nabisco and Oreo, are more susceptible to private-label competition, particularly within Europe, where consumer acceptance of private labels is particularly high. Aside from private-label threats, Kellogg Company (NYSE:K) is a major competitor in these divisions with its Famous Amos, Keebler, and Cheez-It brands. Even though Kellogg derives only one-third of its sales internationally, look for the company to experience continued growth in its established Latin American, European, and Asian markets, while likely pursuing acquisitions in other emerging markets.

Foolish bottom line
Without a doubt, Mondelez faces challenges. But its global diversification, ample international growth opportunities, and desirable product mix offer it plenty of opportunities. And give its competitors a lot to chew on.

The article 1 Huge Reason to Diversify and Buy This Global Giant originally appeared on Fool.com.

Fool contributor Nicole Seghetti owns shares of Mondelez International. The Motley Fool recommends Coca-Cola and H.J. Heinz.

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