Mondelez International’s stock price fell 1.43% and $0.58 today, ending the day April 24th at a price of $39.77 per share. This is a striking number, because the Mondelez stock (MDLZ) has only fallen under $40 per share three times in the last year. In fact, today’s closing is only $0.58 over the absolute lowest the stock price has been in the last 52 weeks. Last year today, the stock was worth $44.48 per share. That’s more than a 10% drop in exactly one year. But why does this matter? It matters because it shows that the Mondelez business model of slashing costs and outsourcing production doesn’t work, and it means the consumer boycott of Nabisco snacks made in Mexico does.
Last year Mondelez announced that long-time CEO Irene Rosenfeld would be leaving the corporation and newcomer Dirk Van de Put would be taking her place. Rosenfeld’s legacy is one of severe cost-cutting, best highlighted by her now infamous decision to lay off 600 Nabisco workers from the iconic Chicago Nabisco bakery and send those jobs to a newly constructed Mondelez facility in Salinas Victoria, Mexico, where a contract provided by the Mexican government shows workers are paid little more than $1 per hour and lack the protections guaranteed to workers in the United States. The idea behind the mass layoffs and outsourced production was to boost profit margins by cutting labor costs and bringing the Nabisco-branded products back to be sold in the United States at the same price. The problem is, it didn’t work. American consumers banded together in support of Nabisco working families and boycotted the snacks made in Mexico with fierce commitment. Sales of Nabisco “Power Brands” like Oreo, Ritz Crackers, and Chips Ahoy suffered, consumers and shareholders lost faith in the Mondelez business model, and the stock price fell through the floor.
What Mondelez needs to realize now is if they continue to treat workers in the United States and around the world as recklessly and irresponsibly as they have for the past number of years, this downward trend will only continue. Revenues will continue to drop and the Mondelez stock price will find a new low. American consumers are fed up with the Mondelez way of doing business which leaves so many jobless and exploits the rest. The only way up now is a business model change which shows Nabisco working families the respect they deserve. Enough is enough, the MDLZ stock says it all.