Cadbury, Oreo, Maynards Bassetts… Mondelez International’s brands tend to trade on indulgence. And to a varying extent, they face challenges in an ever more health-conscious environment.

The fmcg giant yesterday gave a nod to that environment with news that its corporate venture capital arm SnackFutures Ventures had taken a minority stake in ‘healthier’ doughnut maker Urban Legend. SnackFutures global head Richie Gray branded the tie-up “very interesting for us from a strategic point of view”.

The brand certainly has plenty of impressive credentials. Founded in 2021 by former Graze CEO Anthony Fletcher, Urban Legend creates doughnuts that promise all the joy of a traditionally fat-filled treat without the HFSS definition. It uses a custom designed and patented air frying technology to make treats that contain 30%-75% less sugar, fat and calories than their traditional counterparts.

The brand has already made a name for itself in grocery, having secured investment from Samworth Brothers, Eka Ventures, the Good Food Fund, JamJar Investments – and even England men’s football team captain Harry Kane.

Today, Urban Legend is sold in standalone bakery cabinets across 200 Tesco and Sainsbury’s stores in London and the south east – an impressive feat for a fledgling food brand.

Taste over health

Urban Legend’s approach to marketing has been key to its success: its candy pink and yellow branding contrasts with the neutral (boring) colours often associated with healthier snacks.

The doughnuts themselves are decorated with multi-coloured icing and chocolate flakes – and loaded with cream. If you weren’t familiar with the brand, you would have no idea they were ‘better for you’ than standard doughnuts – a positioning that is completely intentional.

Fletcher understands that taste – not health – is the key priority for shoppers navigating sweet bakery fixtures. Despite being “one of the unhealthiest” food categories in the world, sweet bakery is also “one of the largest”, says Fletcher. “The reason we chose it is because we thought that there was a room for radical reformulation,” he adds.

Mondelez could learn something from Urban Legend’s approach. It has so far struggled to make an impact with its healthier innovations. Take Cadbury’s non-HFSS Fruitier & Nuttier Trail Mix. Having launched in February 2023, the SKU brought in £3.7m in its first 10 months – just 0.2% of Cadbury’s overall value of £2.1bn [NIQ 52 w/e 31 December 2023]. It suggests limited appetite for sweet treats that are seen as a healthy option.

While Urban Legend’s portfolio of doughnuts and cinnamon buns are undoubtedly healthier – all under 200 calories – crucially, they are marketed on taste first.

Mindful portions

There are other strategic benefits for Mondelez. Urban Legend’s 200 calorie claim aligns with Mondelez’s ambition for all of its net revenue to come through “mindful portions” by 2025. It has a way to go to achieve this goal, given around 62% of its net revenue comes from mindful portions today [Mondelez Snacking Made Right report 2023].

Urban Legend also gives Mondelez a stronger foothold in bakery, where it has been looking to expand its portfolio.

In summer, it entered a partnership with Lotus Bakeries, which involves growing the Lotus Biscoff biscuit brand in India and launching Biscoff co-branded chocolate products in Europe. The Urban Legend partnership is a further signal of intent, and Mondelez’s first step into fresh bakery outside of its licensing business.

There are plenty of advantages for Urban Legend, too. The doughnut brand will be able to utilise Mondelez’s scale and wide-ranging expertise to achieve its target of developing non-HFSS alternatives to a range of sweet bakery items “sooner”, says Fletcher, which will enable it to have “a bigger impact” on the industry.

Finally, both brands could benefit from the NPD potential. While the precise details of the partnership are yet to be revealed, there has been talk of product collaboration. A non-HFSS Cadbury pain au chocolat, perhaps?

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