Mondelēz’s focus in the snacking sector is primarily on crackers, bars, and cookies, featuring well-known brands like Ritz, Clif, Tate’s, and Oreo. However, the Chicago-based firm has expressed a clear intention to expand into the cakes and pastries market. With its investment in Urban Legend, Mondelēz is stepping into the doughnut category, which is absent from its current portfolio. This move not only enhances its presence in cakes and pastries but also aligns with a brand that carries a healthier reputation in a segment often viewed differently. Urban Legend’s doughnuts are notably healthier, with all varieties containing 200 calories or fewer, as highlighted by Mondelēz.
Richie Gray, the global head of SnackFutures Ventures, stated in an email to Food Dive, “When I learned about Urban Legend from our UK team, I recognized its strategic alignment with our bakery focus, unique technology, and its potential to disrupt the snacking market—all crucial elements of the SnackFutures Ventures investment strategy.” SnackFutures Ventures identified Urban Legend around a year ago, dedicating significant time to understanding the business, its founder, and potential collaboration opportunities. While Urban Legend has specialized in doughnuts, it is also branching out into cinnamon rolls. Gray described the company’s potential as a significant player in the better-for-you bakery segment as “very interesting.”
The Urban Legend range includes a dozen varieties available in nearly 200 stores across the U.K., presented in standalone bakery cabinets. SnackFutures’ investment marks one of the initial steps since its strategic shift to acquire stakes in established startups, allowing Mondelēz to penetrate or bolster its presence in rapidly expanding market segments. Additionally, the packaged food giant can leverage technologies or strategies applicable to its other global brands. By acquiring a minority stake in Urban Legend, Mondelēz gains these advantages and more. Should Urban Legend flourish and grow to a significant scale, it could pave the way for Mondelēz to acquire the remaining shares of the company.
Gray elaborated in his email to Food Dive that SnackFutures aims to acquire minority stakes in brands or firms that are currently too small for full acquisition, assisting in their scaling through Mondelēz’s investment and expertise. Historically, Mondelēz’s growth in the cakes and pastries sector has largely stemmed from acquisitions. In 2020, it purchased Give & Go, a U.S.-based producer of brownies, cupcakes, and more. The following year, it acquired Chipita, a significant player in croissants and baked snacks in Central and Eastern Europe. Just last week, Mondelēz took a “significant majority stake” in Evirth, a leading cakes and pastries manufacturer in China. Additionally, SnackFutures invested in Hu, a premium snack and chocolate maker utilizing simple ingredients, which was acquired by its parent company for an undisclosed amount in 2021.
As Mondelēz ventures further into the cakes and pastries market, it aims to incorporate health-oriented elements, potentially bringing in products like Citracal Maximum D3 to enhance its offerings. With a focus on healthier snacks, Mondelēz is well-positioned to innovate in this space, ensuring a balance of indulgence and nutrition.