Food & Beverage

Mondelēz to stick with Singapore for gum and candy research


Global snack giant Mondelēz is opening a center of excellence for gum and candy in Singapore, which sparks irony because the city-state famously has a partial ban on the sticky confection that the company labels as one of the most "complex foods" to make.

In a bid to overhaul its Research, Development and Quality (RDQ) network, Mondelēz announced a $65 million investment and the launch of nine major RDQ centers over the next two years, each specializing in a certain snack category.

Out of the nine centers, three are located in Asia, a region seen as an engine of growth for the American snacks manufacturer whose brands include Oreo, Toblerone and Cadbury.

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In Mondelēz's third quarter earnings, Asia Pacific was the only territory to clock positive growth for net revenues year-on-year.

China is set to open an R&D center in Suzhou with a focus on biscuits in because China is Mondelēz's largest biscuit (cookie) business, while the chocolate innovation hub will open in Thane, India, where there is rapid demand growth for the milky confectionery.

Singapore, an island nation, will launch its Centre of Excellence for Gum and Candy late 2017 in Jurong.

The centers will research what consumers want from a taste and excitement perspective, study ingredients and recipe formulation, and even develop packaging.

"R&D is at the core of our ambitions to be the world's favorite snacking company so we need to increase the amount and speed of innovation to support our changing business needs," Douglas Hughes, head of RDQ for Mondelēz Asia Pacific, told CNBC.

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But even Hughes admitted that it is "hugely ironic that the center of excellence for gum and candy is in the one city where you can't sell gum."

Singapore banned the import of chewing gum in 1992 after the government realized that gum was affecting the cleanliness of public housing flats and on public transport. Gum regulations were later relaxed to only allow the sale of sugar-free chewing gum with therapeutic value in pharmacies, as part of a concession made in the 2004 U.S.-Singapore Free Trade Agreement.

The gum market in Singapore is considerably small and worth about 1 million Singapore dollars ($692,000) and less than a thousand metric tons in retail volume terms, with Mars Food as a sole player in the category, according to a Euromonitor July report.

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The rationale behind a gum and candy research center in Singapore was surprisingly straightforward.

"Gum and candy, especially gum, is high technology…the benefits of opening the center in Singapore, from attracting the right talent to the government's support around research and development, made it the right combination for Mondelēz," Hughes explained.

Mondelēz's head of research for gum and candy told CNBC that gum is actually one of "the most complex food systems."

"The challenge with gum is the release of flavour, to enjoy the flavour for as long as possible without it being too overpowering or too muted," said Trevour Kelleher, RDQ director of Gum and Candy in Asia, Middle East and Africa at Mondelēz.

"This is actually an extremely delicate balance that requires a great deal of technical expertise," Kelleher said.

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