Mondelēz growth boosted by emerging markets as Europe sees decline

Overview of Mondelēz Q2 growth and cocoa risks

• Mondelēz revenue growth was driven mainly by emerging markets
• Latin America, India and Southeast Asia supported stronger sales
• European revenue declined amid subdued confidence and the continent’s heatwave
• Cocoa prices face pressure from supply risks and El Niño
• Middle East conflict offset growth

Mondelēz International has announced its Q2 results. The US snacking multinational has seen solid revenue growth overall, although this is primarily driven by emerging markets, particularly Latin America. In North America, net revenue growth was modest, whilst in Europe, it declined.

Consumer confidence in emerging markets is “stable”, says Mondelēz CEO Dirk Van de Put. In India in particular, it is very strong, although slightly softer in China. This comes as the company expands its emerging market distribution, especially in Brazil, India, China and Southeast Asia.

For many FMCGs, emerging markets have been a key source of growth, due to increasing urbanisation, growing middle classes, and less competition from private label.

Revenue growth in North America is slightly stronger than in Q1. The company gained share in all its categories in North America.

Its success in this market, according to Van de Put, is in part due to consumer confidence, which has “rebounded” from its lows, although it remains very subdued.

Purchasing in North America remains ‘K-shaped’, with consumers gravitating towards value products on one hand and premium products and better-for-you options on the other.

Europe, meanwhile, has seen some decline, with a slight fall in net revenues compared to strong growth in Q1. Consumer confidence in Europe is also subdued, according to the company, with energy prices continuing to bite. Consumers here are shifting to value products.

Chocolate consumption in Europe has been affected by the recent heatwave, explains Van de Put. However, he predicts that volumes will increase in the second half.

Volume and mix is back in growth, compared to a slight decline in Q1, indicating that sales for the snacking multinational are increasing.

In the future, the company predicts at least 2% organic net revenue growth, and growth in its adjusted earnings per share of between 0-5% on a constant currency basis.

Cocoa prices

Mondelēz reported its Q1 results amid reports that the price of cocoa was stabilising. Now, several factors are threatening to push prices up.

Pod count is slightly below average, explains Mondelēz EVP and COO Luca Zaramella. There has also been a short squeeze, meaning a rush of buying activity among short sellers to buy back a particular security, which causes an increase in the security’s price.

The third element is the looming super El Niño, which could have a profound impact on crops around the world, including cocoa.

However, Zaramella says, industry coverage is greater than it was during the cocoa crisis of 2024 – 10 months, rather than seven at that time.

The company is pushing to become less reliant on cocoa in the future, Zaramella stresses. Earlier this year, the company developed a cell-cultivated chocolate bar, suggesting it is exploring alternatives to cocoa-based chocolate.

Gains offset by geopolitical conflict

Mondelēz reports that its gross profit, which increased by 26.5% in the year-to-date, was partially offset by incremental costs due to the conflict in the Middle East.

The Middle East crisis has led to “headaches” for the business, explains Zaramella, significantly impacting revenue in the first half of the year.

The company admits that “greater than usual volatility” hovers over any predictions it makes about the future.