The food and beverage industry is currently facing challenges due to high commodity prices. One prominent player feeling the impact is American multinational Mondelēz, particularly in Europe where negotiations with retailers over prices have been tough.
In its latest Q1 results, Mondelēz reports that volume sales in Europe are still down, but many of the negotiations have been resolved. Despite this, the company saw a positive growth of 4.4% in Europe sales, driven mainly by price as volume/mix declined.
Mondelēz faced customer disruption in Europe since 2022, affecting negotiations with retailers. CFO Luca Zaramella attributed the low volume growth to this disruption. However, core categories such as chocolates, biscuits, and baked snacks have shown resilience in Europe, where consumer confidence is improving.
Zaramella mentioned that most negotiations with European retailers causing disruption are now completed, with only one ongoing alliance. This disruption is expected to impact Q2 but remains in line with expectations. CEO Dirk Van De Put predicts sales will recover in Europe as negotiations conclude.
Even though the price of cocoa has rapidly risen, Mondelēz’s chocolate brands like Cadbury and Milka have shown strong growth in Europe. The company has secured cocoa supply for the year, anticipating potential price decreases as new crop data becomes available.
In conclusion, Mondelēz remains committed to current price points despite market fluctuations. By analyzing trends in the food and beverage industry and staying proactive in negotiations, Mondelēz aims to overcome challenges and continue its growth trajectory in Europe.
