How Mondelēz Snackfutures is investing in emerging snack brands

If that’s the case, Gray clearly didn’t get the memo.

Despite his power and ability to manage vast sums that could catapult any humble snack brand onto the global stage and generate millions in sales, Gray is humble and likable.

He laughs at the suggestion that his softened Scottish accent could be Scottish, when in fact he hails from St Andrews on the east coast. “I’ve lived away from Scotland for a long time and have been based in Zurich for the last eight years,” he says in a forgiving tone, to reassure the embarrassed caller.

Although it’s no wonder he’s earned a reputation as a powerhouse in the snacks space. After graduating in 1991 with a degree in business and accounting from Edinburgh University, and apart from a five-year stint in the whisky division of United Distillers (now Diageo), Gray’s career has been Allabout snacking – over 25 years.

He held various roles within Kraft Foods Group, including chief sales officer and category planning controller, before taking the helm as sales integration leader when Mondelēz International acquired the business in 2012. Since then, his roles at Mondelēz have focused primarily on M&A and growth.

“In my current role, the world of investing and raising money is not the easiest. We see that challenge with our DC partners and portfolio companies, but it’s less of a challenge for us because we’re not operating as a fund and we’re investing off our company’s balance sheet.”

While investing from the bank of an international company may seem easy, it’s not a matter of handing out rolls of cash to a company that looks interesting. “We have to carefully evaluate each investment to really make sure it’s going to work,” he says.

Better partnerships:

Richie Gray, Vice President and Global Head of Snackfutures Ventures at Mondelēz International, will be speaking at the upcoming Future Food Tech event in London. The full event programme and tickets are available now.

Gray will be one of the guests on an expert panel that will focus on building and strengthening partnerships in the food industry. On this topic, he says:

“The power of collaboration has always been my passion, even at the beginning of my sales career. Partnering with clients and distributors looking for win-win situations has always been close to my heart and is more important than ever. Together you are stronger than apart. Collaboration is incredibly important. There is always a win-win situation in this sector and if you look for it and look for something that meets the needs of your investment partners, people and customers in the market, that is where success lies. Sometimes it is hard to see, but you have to work hard to find the one and if you look hard enough and are willing to explore the possibilities and remain patient and persistent.”

What acquisitions will Mondelēz make next?

But more on which snack companies Mondelēz International wants to invest in later. Gray is currently operating in a market dominated by two years of runaway inflation, disrupted supply chains and rapidly changing consumer demands.

Much of the stress in the sector is coming from commodity price fluctuations—mostly upward—that Mondelēz executives say will stabilize, especially in cocoa. “The inflation challenge we continue to see across our business remains high, and we’re watching closely to see how that impacts consumption. The snacking world is quite flexible and inflation is resilient, but consumers have their limits.”

Sales, or at least stimulation, in a category can be boosted through innovation, which Mondelēz approaches in two ways: category innovation and core brand innovation. Both of these approaches are “the reason SnackFutures Ventures exists, to accelerate (innovation) and future-proof businesses.”

The company couldn’t do all the R&D it needed on its own, or generate the plethora of concepts that startups around the world are developing, which is one of the most interesting things about his role: “We see companies, concepts, and different entrepreneurs that excite us,” Gray adds.

Snackfutures has invested significantly in a number of ventures, including €1.87 billion in croissant and pastry maker Chipita, €2.6 billion in Clif Bar & Company and €1.1 billion in confectionery Ricolino.

“It’s the nature of the game, and it’s called risk-taking for a reason. We look at a lot of things and say, ‘This looks interesting,’ or ‘This doesn’t look interesting.’ Sometimes, for a relatively small investment, we can scale and see where it takes us.”

But Gray and his team aren’t looking for just any startup with a fresh idea unless they see it as “the right, growing business that we see early on as disruptive, and then we can get in on it.”

No, the food technology companies and startups that Mondelēz Internationals Snackfutures is looking for are typically “more established, profitable, cash flow positive businesses that are on track to greater success.”

Mondelēz often helps smaller F&B companies become big, providing them with assets as well as expertise through its own team to make the final leap to scale. “It’s a broad scope. In some cases, we may incubate, but we always work closely and make decisions (about the next steps) with the founder and the management team to understand their needs. We may even send a team of supply chain experts to help with logistics,” he adds.

In terms of acquisitions and investments he’s proud of, Gray is just getting started in his role. But the team is growing, and he’s working with more departments across the business to better understand new or emerging opportunities. There’s also been follow-up investments in businesses he’s backed before, “which sends a good message that if we invest in you, this isn’t it. We’ll keep doubling down on it as long as things keep going in the right direction,” he says.

Among the emerging companies that Gray and his team are focusing on is a cellular cocoa company. “We won’t name it. It’s a long way from commercialization, but they’re interested,” he says.

How can businesses attract Snackfutures support?

The gaps in the market that Snackfutures is trying to fill are a closely guarded secret, but he says, “Better for you has been a trend for a long time, but it’s still big and important. Consumers still want to indulge, but they want to do it in a better way. So we see protein (as a trend) and other ways to provide healthier (or functional) snacks.”

The convergence of trends also piques his interest, such as the convergence of wellness and personalization, as well as gifting and premiumization. But it becomes all the more interesting, or gray, when technology combines with this convergence, enabling the use of consumer data to deliver better snacking options.

Richie Gray Wants to Invest in Snack Businesses, But He Has Very Specific Requirements to Meet

“But of course, the other really big trend is sustainability,” he says. “So brands, products and technologies that can enable carbon neutrality, regenerative agriculture or protect the long-term supply of our ingredients, like cocoa, wheat, etc., companies that enable those things play an important role. But sustainability and wellness can’t be compromised on the taste of snacks, you can’t base sustainability on that.”

So what do companies need to have in place to become the next big Snackfutures and Gray bet? The most important thing, he says, is for the company to prove it can be successful and profitable. “They need to have strong management teams, we’re taking them a few more miles and they need strong people.

“Does the company have the potential to revolutionize the snack? Does it fit into a major trend, like better-for-you or sustainability, and does it have a different business model or route to market that would allow consumers to buy it?” he says.

In addition, Gray and other company executives recently discussed Mondelēz International’s growing interest in brands that operate in the cake and baked goods market, a huge category in which the company believes it has a right to operate.

“It’s right up there with cookies and chocolate. When we changed the perception of cookies as a bakery, one of the biggest acquisitions we made was the Chipita business. That was our first big foray into the European baked goods market. There’s so much untapped potential (in that category for Mondelēz International).”

Perhaps right now, a start-up company emerges with the ability to shake up the market by introducing a product that has never been seen before, and soon the founder’s world will be shaken by the most influential man in the snack industry.

Richie Gray, Vice President and Global Head of Snackfutures, Mondelēz International, will speak on the panel “Industry Collaboration: Strengthening Partnerships with Foodservice, Retailers and Enterprises” at the upcoming Future Food Tech event in London, October 2-3.

Quick questions:

What is the biggest challenge facing European food and drink producers?

It’s still inflation. It’s weakening in some areas and worsening in others. Maybe inflation is too specific, it’s volatility – the external market is volatile.

What technologies do you use to shape your company’s success?

It’s so broad. We’re applying technology to so many areas. I reached out to our IT leaders to look at where we can work together. If you start at the beginning of the supply chain, we’re looking at technology that can enable better yields, better ingredient tracking, better allergen detection, help with food safety. Also technology that can increase efficiency and lower carbon footprint and more efficient production, all the way to technology that enables better experiences and more efficient routes to market and makes it easier for consumers to buy what they want, when they want.

And AI. We’re all learning how to apply it and we see so many different possibilities in how we can use consumer data and how we can apply it. It’s also going to be huge in terms of opportunity and risk. There’s no part of the business that’s not being touched by technological advances and there’s nothing that we’re not ignoring.

What mistakes do you think start-ups in the restaurant industry make?

I’m generalizing because it’s not true for everyone. The bottom line is that valuation expectations are still too high in the fundraising environment. Food companies, these startups are not tech companies, and some want to be valued as tech companies.

Too many companies ignore the fact that you have to make a profit quickly, so their cash is burned, and as an investor you see cash being burned, not that the founders are fascinated by costs and cost control. So, if you do it right, it’s easier for you to grow and attract investment.

A good business is often based on a great idea and the founders’ ability to execute it. They ignore the brand they are creating and think they can fix it later if there is a problem. I would ask founders to look at what their brand stands for in the beginning. You have the opportunity from launching a brand to building assets – whether it’s a logo, packaging design and/or product presentation. Look at the assets and make them consistent from the beginning.