Mondelez International Q4 FY25 earnings call MDLZ

Mondelez's chocolate strategy in 2025 focused on pricing and revenue growth management, which proved resilient despite volatility. However, higher-than-expected elasticity in Northern European markets (Germany, Nordics, U.K.) necessitates adjustments for 2026, including refined price points, PPA, increased brand investment, and innovation. The recent sudden decline in cocoa prices, while beneficial for 2027 margins, introduces short-term competitive uncertainty for 2026 due to existing higher-priced coverage.

North America faces a challenging environment with consumer confidence near historic lows, impacting snacking categories. Consumers are prioritizing value, seeking lower unit prices, deals, bulk packs, and shifting to value, club, and online channels. The biscuit category saw a 4% volume decline in the last three months and 3% for FY25. Mondelez is adapting by increasing awareness investments, using PPA for affordability, expanding in under-indexed channels, and focusing on growing premium/protein brands like Perfect Bar and BUILDERS bar.

The company anticipates a significant $0.5 billion impact, predominantly in Q1, due to inventory accounting adjustments. This adjustment is necessary to align the value of inventory at the beginning of 2026 with the actual pipeline costs for the year, which were locked in at higher rates than current spot prices. This will result in higher costs in the first half of 2026 compared to the second half, leading to an expected sequential improvement in EBIT phasing^📎 throughout the year.

Mondelez plans a substantial step-up in working media investments in 2026, recovering amounts pulled back in 2025. This is part of a multi-year strategy to strengthen brands and drive volume growth, with further investment increases anticipated in 2027. The company aims to continue overhead savings while increasing annual incentive plans, resulting in a meaningful increase in A&C investments from 2024 to 2026.

Mondelez regularly models the potential impact of GLP-1 medications, noting recent developments like lower prices and oral approvals. However, the company projects a negligible long-term effect on its business, estimating a 0.5% to 1.5% impact on overall volumes over a 10-year period. This assessment is based on currently modest adoption rates and a relatively benign calorie reduction observed, with no significant short-term impact expected.

To mitigate long-term supply risks, Mondelez is actively diversifying its cocoa sourcing beyond West Africa, which currently accounts for 60-65% of global supply. Investments are being made in Latin America (Ecuador, Brazil) and Asia (India, Indonesia), supporting different farming models. The company also supports the development of lab-grown cocoa, viewing it as a future solution to address climate and social issues associated with traditional cocoa supply chains.