In the company’s second quarter, Mondelez’s net revenue climbed 15.8% -- pushing up revenue for the half year 17% over the same period last year to $8.5bn. This is on top of a 12% full-year increase in 2022.
The gains were driven by a 15.8% increase in organic net revenue and positive volume mix in three out of four regions. In North America, volume/mix was up 2 percentage points while Latin America saw an increase of 2.6 percentage points and Asia, Middle East and Africa increased 3.3 percentage points.
“Recall last year’s Q2 total company volume mix was plus 5%, making this performance even more impressive,” CFO Luca Zaramella pointed out to investment analysts during the company's earnings call yesterday.
Europe was the only region where volume fell – down 4.5 percentage points – but company CEO Dirk Van de Put said he was confident this would turn around in the back half of the year now that price negotiations in the region have been resolved.
The company also held or gained share in 70% of its revenue based compared to approximately 40% gains in the first half of 2022. Gum and candy saw the biggest gains with 25.8% category growth, followed by total snacks at 15% and both the chocolate and the biscuits and baked snacks segments growing 13.7% each, according to the company.
Based on the strength of this performance, Mondelez raised its full year organic net revenue and adjusted EPS growth outlook to 12%+ -- up from a previous projection of 10%+.
“There is a good chance that we exceed the 12% plus guidance, but I prefer having another quarter under the belt and then narrow guidance for Q4,” Zaramell said, adding: “If all things play out as we have in mind, as I said, there are good chances we will exceed the guidance.”
Mondelez’s secret to successfully driving volume
Mondelez sales gains are in line with other CPG players who have reported similar results as most have pushed through price hikes to offset inflation. But Mondelez stands out in its ability to also maintain and grow volume.
Van de Put attributed Mondelez’s success to a combination of innovation, marketing, strategic promotions and consumer resilience in the categories in which the company plays.
“The big difference between us and the competition will be that we have a very strong top-line combined with some good volume growth and promo levels,” he said.
He explained Mondelez has invested heavily in creative assets, personalization at scale and innovation “combined with strong in-store execution … resulting in continued sales growth and brand loyalty increases in our core categories of chocolates, biscuits and baked snacks.”
Examples of innovation include the recent launch of the company’s first under 100 calorie Cadbury treat for adults and a broader range of portion-controlled packs and products as well as a portion-controlled education campaign delivered digitally and on pack.
The company also is “making solid progress in expanding our successful cookie and chocolate franchise into choco-bakery, cakes and pastries,” as in the case in the US of Oreo Cakesters, which have earned a 3.7% share of packaged snack cakes since its launch, Van de Put said.
While pleased with this performance, Van de Put is not taking it for granted and said he is keeping a close eye on changes in consumer behavior – although so far he says he is not too worried.
“We do see consumers shopping around more, hoping to find deals. The quantity bag per shopping trip is the same, but they ted to shop a little bit less frequently, but nothing really that preoccupies us,” he told investment analysts.