The maker of brands like Oreo, Toblerone, and Sour Patch Kids will launch a business unit this November aimed at developing the future of snacking, Mondelez announced Monday in their third quarter earnings call.
One of the fastest growing food categories, the snack business grew $3.4 billion globally last year, but the increase in sales comes from consumers spending more, not purchasing more, according to an analysis from Nielsen.
That growth is good news for Mondelez—the $26-billion-in-revenue company that produces belVita breakfast biscuits, Wheat Thins, Triscuits, Ritz crackers, and Nilla wafers—as long as it can keep up with the quickly shifting preferences of shoppers.
The new innovation hub will focus on three areas the company feels are ripe for growth: well-being snacks, digital platforms, and premium snacks, according to Mondelez EVP and chief growth officer, Tim Cofer.
The snacking giant, number 117 on the Fortune 500 list, expects the program to contribute $100 million to revenue by 2022.
Cofer will lead the innovation team, dubbed SnackFutures, which will include both internal talent and entrepreneurial-minded partners. He spoke to Fortune about the goals, strategy, and structure of the new independent business unit ahead of the announcement Monday.
“SnackFutures is about capitalizing on new trends, mobilizing this ecosystem of entrepreneurs and the best of internal all towards our end goal which is consumer-centric growth and to really advance our global snacking leadership,” he says.
A three-pronged approach will drive the SnackFutures team, Cofer says: invention of new products, reinvention of smaller or local brands that have large-scale potential, and investment in outside ventures that Mondelez can bring on to diversify its portfolio.
The venture portion of this mandate will see both direct investment in early-stage founders of snack brands and sharing of Mondelez capabilities and resources, Cofer says.
“We’ve already begun to lay some foundations in terms of potential partners that we would invest in on the venture side,” he told Fortune, adding that it won’t be long before the company “begins to place bets” on new products and platforms.
The innovation hub, says Cofer, is “a critical component” of the new strategy at Mondelez, announced in September by CEO Dirk Van de Put, who took the helm in 2017.
A big part of that growth strategy is the addition of healthier snack options.
“Our portfolio of offerings really does run the continuum from indulgence and pleasure products, like chocolate, all the way to wholesome products, like, in the U.S., a Triscuit, or, around the world, like a belVita,” Cofer said. “But if we look at our portfolio makeup, I think it’s fair to say that we skew more towards the indulgent side, so my first key area of focus in the SnackFutures group is well-being snacks and well-being ingredients.”
The group’s focus on “digital snack platforms” is intended to help the company connect with customers in new ways, a task that becomes increasingly important as “impulse buy moments” in grocery stores and other brick-and-mortar retailers decrease with the rise of online shopping.
Mondelez is working towards bringing in $1 billion in e-commerce revenue by 2020 and Cofer says it’s on track to meet that target.
SnackFutures will also allow the company to develop products for emerging markets, which make up 40% of Mondelez’s revenue.
“The whole objective here is to unlock emerging snacking growth opportunities around the world,” he said.
Countries like Brazil, China, Russia, and particularly India have been important growth markets for Mondelez for some time. Now next-wave emerging markets in Southeast Asian countries like Indonesia and Vietnam, as well as Turkey to some extent, present an opportunity for fulfilling the company’s top-line growth mission, Cofer said.
Cofer hopes the lessons learned through the innovation hub—like agile ways of working, a more compressed speed to market model, and close relationships with external partners such as co-manufacturers, nutritionists, and entrepreneurs—will be shared across the company’s operation and culture as Mondelez looks to move faster and stay more connected to customers and consumers.
The SnackFutures group will work like a much smaller company, cutting out some of the large-organization bureaucracy and testing and scaling products quickly, he says. At the same time, Mondelez aims to learn from startups it will support under SnackFuture’s venture arm.
Shoppers can expect to see the results of the new team’s efforts on shelves as soon as 2019, according to Cofer.