Mondelez: Pricing Drives Q3 Growth as Biscuits, Snack Bars Rise

As it continues to focus on its core categories of chocolate, biscuits and baked snacks, Mondelez International reported net revenue growth up 16.3% in Q3 to over $9 billion, raising its full year revenue growth outlook from 12% to 14%-15%.

• Despite continuing with high price increases (+15.7% in Q3), volume/mix remained strong, up 3.8 points.
• Overall biscuits and baked snack growth was up 12.4% in Q3, reflecting 50% of total revenue for the company.
• Chocolate, which reflects around 30% of the overall business, was up 14.9% in the quarter.
• Gum and candy, which makes up 11% of total revenue, was up 33.2%. However, in October, Mondelez completed the divestment of its developed market gum business to Perfetti Van Melle Group. The current year-end outlook reflects this sale, CEO Dirk Van de Put noted.
• In the U.S. alone, biscuits business outpaced the set, with volume up 3.4% across all channels compared to a -2% volume decline for the overall biscuit category, according to NielsenIQ data.
• Led by Clif Bar, Perfect Snacks and European brand Grenade, Van de Put said the company anticipates its snack bar division to surpass $1.2 billion in sales this year.

In North America, the company reported strong growth in the club and ecommerce channels cross categories, Van de Put said, noting that a shift to higher pack sizes for biscuits and strong performance from brands like belVita helped drive growth.

“We continue to see evidence that consumer demand for our snacking categories remains resilient and that consumers continue to prefer our widely loved brands over private label alternatives,” Van de Put said on an earnings call this week. “In North America, the biscuit category is experiencing some softness in scanner data, most notably among lower-income families. However, I would note that these families are increasing their purchases in the non-measured club store channel.”

In chocolate, Mondelez is repositioning its Toblerone brand as a premium product, with a new marketing campaign “Never Square” that Van de Put said was inspired by luxury fashion brands, positioning the candy treat as a “jewel.” In the U.K., Switzerland and Australia, the company launched a new Toblerone Truffles line, which will expand to additional markets next year.

Mondelez’s snack bar division was among its strongest categories this quarter. The Clif Kids Zbar line grew dollar sales by 19% year-over-year, while refrigerated brand Perfect Snacks experienced double-digit growth. In the sports nutrition segment, Grenade has more than doubled its business since Mondelez acquired the brand two years ago, Van de Put added.

In North America, sales grew 11.4% thanks to higher pricing and a volume/mix increase of 4.6%. Oreo, Clif, Tate’s and Sour Patch all reported double digit growth, the company reported, while the Ritz and belVita brands saw “high single-digit increases” in the quarter.

Oreo, Van de Put said, has continued to benefit from a partnership with Super Mario Brothers, which was initially timed to the release of the animated feature film this spring.

“Profitability in the base business remained strong, while acquired businesses, such as Clif and Tate’s, posted strong double-digit profit dollar growth. This is an important proof point showing how accretive our M&A agenda can be,” said Luca Zaramella, EVP and CFO, on the call.