Price increases are delivering Mondelēz International strong revenue growth, while volume loss remains surprisingly limited: European consumers in particular continue to remain loyal to their favorite brands, despite the higher prices.
Impressive figures
Mondelēz’s net profit in the second quarter is 7.7% higher than a year ago. This shows a much stronger result than in the first quarter, when there was barely any growth (0.2%). Organic revenue also rose significantly by 5.6%. The main driver behind these performances is the price increases implemented by the producer of Milka and Oreo to offset rising costs for cocoa, among other things. At the same time, volume decreased by only 1.5%, a smaller contraction than earlier in the year.
Particularly in Europe, the figures are quite impressive: net revenue increased by 18.7%, while organic growth was 12.5%. According to CEO Dirk Van de Put, European consumers remain loyal to their chocolate purchases even with significantly increased prices. In the lead-up to Easter, the higher prices had no impact on the sold volume, although the warm weather since then has somewhat decreased chocolate sales.
Inflation and economic uncertainty
The situation in North and Latin America is different: there, Mondelēz reports lower revenues. Inflation and economic uncertainty are pushing consumers towards basic products, causing chocolate to be left aside more often. CFO Luca Zaramella expects that the US will show slight recovery later this year.
CEO Van de Put nuances concerns about the impact of GLP-1 weight loss medications on American volumes. “Only 4% of the American population uses these medications, and only for the past nine months,” he states. According to him, the volume decline is mainly due to consumer concerns about purchasing power and general price pressure.
