MDLZ Q4 2025 Earnings Analysis

And I'm Jordan. Today we're diving into Mondelez International's Q4 2025 earnings call - that's the snacking giant behind brands like Oreo, Cadbury, and Trident gum.

Absolutely. Now Alex, this earnings call was fascinating because it was all about one commodity - cocoa. The chocolate world has been turned upside down.

Well, it's actually a tale of two stories. Throughout most of 2025, cocoa prices were sky-high due to supply issues in West Africa. Mondelez had to take significant price increases on their chocolate products. But then, in just the last couple weeks before this earnings call, cocoa spot prices absolutely cratered - we're talking about an unprecedented drop.

Exactly! CEO Dirk Van de Put was very clear about this. He said their cocoa coverage for 2026 is locked in at much higher costs than current market prices. In fact, CFO Luca Zaramella mentioned they're facing a massive one billion dollar inventory accounting expense in Q1 alone as they adjust their books to reflect these hedged costs.

The performance was really mixed. Van de Put said that markets like India, Brazil, Australia, and South Africa held up well despite the price increases. About half of European markets performed as expected. But the northern European markets - Germany, UK, the Nordics - showed much higher price elasticity than they anticipated.

Exactly. And here's an interesting insight from the call - Van de Put said penetration didn't really decline, but frequency and quantity of purchases did. So people are still buying chocolate, just less often and in smaller amounts.

They're taking a multi-pronged approach. First, they're keeping chocolate pricing flat for 2026 - no more increases despite their higher hedged costs. Second, they're significantly ramping up advertising and brand investment, focusing specifically on getting consumers back to normal consumption patterns.

Yes! The Biscoff collaboration was apparently very successful in 2025, and they're planning to take it "to the next level" in 2026. Van de Put seemed really excited about their innovation pipeline, particularly in Europe.

They're projecting organic sales growth of 0% to 2% for 2026. That's pretty conservative, and they admitted they built in flexibility because of uncertainty around how competitors might react to the cocoa price volatility.

Absolutely. Emerging markets finished 2025 with high single-digit growth, and they expect that momentum to continue. The challenge is really in developed markets, particularly North America where the biscuit category has been soft - down 4% in volume for 2025.

Van de Put painted a pretty stark picture. He said consumer confidence is near historic lows, people are worried about affordability and job security. The average shopping basket hasn't grown in 2-3 years, but consumers are spending more on basics like milk and bread, leaving less for snacking.

That's the key debate, isn't it? Van de Put acknowledged they're seeing a "K-shaped" economy where wealthier consumers are still buying premium products, but the bulk of consumers are really focused on value-seeking - looking for deals, bulk packs, shopping at discount channels.

This is where it gets exciting for potential investors. Since their hedges reset in 2027, they'll finally benefit from these lower cocoa prices. Van de Put said they expect "significant chocolate margin recovery" and "strong EPS growth" in 2027.

No, they're going to continue investing heavily in brands and advertising. Zaramella said that between 2024 and 2026, their advertising investment will "more than recover" what they had to pull back in 2025.

Van de Put addressed this head-on. They model it every quarter, and even with a 10-20% adoption rate in the US over ten years, they only see a 0.5% to 1.5% impact on volumes. Essentially, they don't view it as a major threat to their business.

Yes, they're investing in cocoa growing regions outside of West Africa - mainly Latin America and some parts of Asia. Van de Put also mentioned something fascinating about lab-grown cocoa, which could eliminate many of the environmental and social issues with traditional cocoa farming.

I think 2026 is a transition year. They're dealing with high hedged cocoa costs, investing heavily in brands, and navigating a challenging consumer environment. But 2027 could be a real inflection point where margins recover significantly and all that brand investment starts paying off.

And don't forget they have that CAGNY conference coming up where they promised to go much deeper into their European chocolate strategy and North American plans.

Everything we've discussed is AI-generated analysis for educational purposes. Past performance doesn't guarantee future results. Please do your own due diligence.

See you next time! --- *[Total word count: approximately 1,100 words]*