Mondelēz Q3: Demand Strong Ahead of More Price Hikes Next Year

In response to seeing strong demand across its biscuit and chocolate segments and rebounding sales in gum and candy, despite price increases, Mondelēz raised its full year sales outlook ahead of additional price hikes set to take place in early 2022.

Net revenue was up 7.8% to $7.18 billion during the third quarter, which the company attributed to 5.5% organic net revenue growth as well as incremental sales from its acquisitions of premium chocolate brand Hu, United Kingdom-based nutrition bar maker Grenade and Australian cracker brand Gourmet Food. In North America, net revenue was mostly flat, rising just 0.3% year-over-year against Q3 2020’s elevated 6.3% growth, with 3.3% growth over two years. In response to its performance, the company raised its full year revenue growth outlook from 4% to 4.5%.

“Despite the current operating environment, we remain focused on and confident in our long-term strategy of delivering accelerated growth through a virtuous, top-line driven cycle which requires continuous investment in our brands and our capabilities,” CEO Dirk Van de Put said.

To continue to mitigate high input costs, Mondelēz is planning to raise prices an additional 6% to 7% across much of its U.S. portfolio at the start of next year, according to CFO Luca Zaramella. High product demand has led to “price elasticity below historical levels” as the company continues to raise prices in response to inflated input costs, Van de Put said.

While the company is continuing to evaluate potentially reducing its SKUs, Zaramella said, the biscuit and chocolate categories are “vibrant,” with biscuits revenue growing 2.7% in the quarter and chocolate revenue increasing 11.2%. While still below pre-pandemic levels, gum and candy saw a 12.7% revenue boost for the quarter largely due to international sales.

Van de Put noted that while increased consumer mobility has lifted gum and candy sales, the category is expected to remain below pre-pandemic levels through 2022. The company also continues to see elevated purchasing across its core categories that are focused around indulgence and in-home consumption.

“We see consumer behavior where the consumer on average is spending 15% more time at home than before the pandemic; that is clearly benefiting our categories and our portfolio,” Van de Put said.

Van de Put also discussed Mondelēz’s new sustainability targets after it committed earlier this week to reaching net zero greenhouse gas emissions across its full supply chain by 2050. The company signed the Science Based Targets Initiative’s Business Ambition for 1.5°C aimed at mitigating global temperature rise in compliance with the Paris Agreement, and has also joined the United Nations Race to Zero campaign. Van de Put said Mondelēz will reduce its carbon footprint by focusing on its highest contributors, raw materials like cocoa, dairy and wheat.

“Climate change is a critical issue facing our planet and we must do our part to help,” he said. “We know that if we want to deliver consistent long-term growth and shareholder returns, we must be a sustainable snacking company.”