Mondelez International (NASDAQ:MDLZ) executives used the company’s fourth-quarter and full-year 2025 earnings Q&A to address investor focus on cocoa volatility, the outlook for chocolate pricing and margins, and the demand environment in North America. Chairman and CEO Dirk Van de Put and COO and CFO Luca Zaramella also discussed planned increases in brand investment, regional volume expectations, and longer-term efforts to diversify cocoa sourcing.
Chocolate strategy: pricing adjustments, higher investment, and innovation
Van de Put said the global chocolate category showed “a lot of resilience” in 2025 despite volatility and “rather important price increases.” He said Mondelez executed against its 2025 chocolate “playbook,” relying on list price increases and revenue growth management through price pack architecture (PPA).
Van de Put said the company intends to “increase substantially” investment behind brands in 2026 because cocoa coverage for the year is at a better cost than it was in 2025. The goal is to restore “normal frequency and quantity of consumption,” noting that penetration “hasn’t gone down,” but frequency and quantity did decline.
Innovation is also a key plank of the plan. Van de Put highlighted the company’s Biscoff collaboration, calling it “very successful” in 2025 and saying it is expected to go “to the next level” in 2026, alongside additional innovation and in-store activations.
Cocoa’s sudden decline adds uncertainty for 2026, but management sees 2027 benefits
Management repeatedly emphasized that cocoa prices fell sharply in recent weeks. Van de Put said the decline was “more than anybody would have expected,” creating short-term pressures because large industry players may be covered for 2026 at higher prices than the current spot market. He said this could lead to “unexpected competitive reactions,” prompting Mondelez to build flexibility into its guidance.
Zaramella added that the company’s “pipeline cost for 2026 is determined at this point in time” and is “clearly at a higher than current cocoa spot,” a dynamic he said the company had not anticipated before the recent move. He characterized the current cocoa level as a “fairer representation” of supply and demand and said it is important for Mondelez’s profitability outlook “particularly going forward into 2027 and beyond.”
Looking further out, Van de Put said cocoa’s return to a more historic range “bodes very well for 2027,” when he expects the chocolate business to increase margin “in a considerable way.” Zaramella echoed that view, telling analysts the company expects “a significant uplift” in chocolate margins in 2027, with the benefit split between reinvestment and flow-through to the bottom line. He said the company is aiming for “strong EPS growth in 2027,” while also planning to continue investing in brands rather than letting all margin gains drop to profit.
2026 planning: pricing stance, inventory accounting headwind, and phasing
On guidance construction, Zaramella said the company aimed to be prudent, pointing to a subdued biscuits category in the U.S. that the company expects to persist through at least the first half, with marginal improvement in the second half. In Europe, he said the plan assumes a stable chocolate category following the meaningful pricing taken, while also anticipating disruption from annual customer negotiations early in the year.
When asked directly about chocolate pricing in 2026, Zaramella said the company is “not going to price cocoa further necessarily,” but added that Mondelez’s profit took a “material hit” in 2025 and the company was “not certainly fully priced” for 2025 cocoa levels. As a result, he said Mondelez needs to keep pricing “pretty much the same” as in 2025. In a later exchange, he characterized the planned price-cost balance in chocolate as “slightly positive to neutral,” even if pricing itself “is not going to move much.”
On cost phasing, Zaramella detailed an inventory accounting impact tied to resetting inventory values on the first day of 2026 to the year’s pipeline costs versus the exit rate in 2025. He said this creates a one-time adjustment that impacts the first two quarters, “but predominantly in Q1,” totaling about $500 million. He said this results in higher costs in the first half versus the second half, and he expects sequential improvement through the year in volume and revenue, and “most importantly” in EBIT phasing.
Zaramella also said A&C investments are expected to be “equally spaced throughout the quarter,” implying no major quarter-to-quarter swing in absolute A&C spending.
North America: pressured consumer, value-seeking behavior, and a shift away from heavy promotion
Van de Put described a difficult North American backdrop centered on consumer stress. He said U.S. consumer confidence is near historic lows, with shoppers “worried about overall affordability” and “fed up with the price increases.” He said the average shopping basket has not increased for 2–3 years, while spending within that basket has shifted toward essentials such as milk, meat, and bread, pressuring snacking categories broadly.
He also outlined a bifurcated market, where higher-income consumers are driving pockets of growth in premium and “better for you” offerings, while “the bulk of the consumers” seek value via lower unit prices, deals, and larger packs. He said shoppers are also shifting channels from food and mass to value, club, and online.
Van de Put cited category trends, saying the biscuits category declined 4% in volume over the last three months and 3% for full-year 2025. In response, he said Mondelez plans to invest more to drive awareness and improve frequency and quantity purchased, use PPA to address affordability, and expand further in underpenetrated channels. He also pointed to growth in certain offerings—Perfect Bar, Tate’s, Hu, and Clif’s Builder’s Bar—saying those brands are growing double digits.
On pricing and promotions, Van de Put said the company was “quite aggressive” on promotions early in 2025 but did not see an adequate return. In the second half, Mondelez reduced promotional and pricing activity, which increased price realization and improved the North America P&L, though he said market share declined as volume performance lagged. Looking ahead, he said Mondelez does not believe it needs to cut prices “to the magnitude” announced by another company, emphasizing instead improved activations to keep consumers engaged on each shopping trip.
Emerging markets momentum, Argentina impact, and other topics
Zaramella said the company was pleased with emerging markets momentum and noted sequential improvements in developed markets, though he said the company is “not fully there yet.” When asked about the organic sales growth framework, he said emerging markets are expected to continue growing in 2026, with less contribution from pricing and more from volume/mix, and he suggested emerging markets could do “even better” than what is embedded in guidance.
On Latin America, Zaramella said recent weakness has been influenced by Argentina’s economic turmoil and Mondelez’s decision to protect working capital rather than extend payment terms, consistent with its cash and repatriation priorities. Excluding Argentina, he said performance is stronger, highlighting Brazil as one of the company’s best-performing markets and noting Mexico had a “big comeback” and returned to growth.
Van de Put also addressed two additional investor concerns:
- GLP-1 medications: He said the company models potential impacts quarterly and does not expect a significant change versus prior estimates. He said Mondelez does not see a near-term impact due to modest adoption and “relatively benign” calorie reduction, and estimated a 0.5%–1.5% potential volume effect over 10 years under an assumed 10%–20% U.S. adoption rate.
- Cocoa supply diversification and innovation in inputs: He said Mondelez is investing to balance cocoa sourcing beyond West Africa, citing Latin America (including Ecuador and Brazil) and some Asian markets. He also said the company expects “more and more lab-grown cocoa” to become available over time and believes regulators in Europe and the U.S. may have interest in approving it due to potential climate and social benefits, adding that Mondelez is investing in and supporting that direction.
Management said it plans to provide more detail on European chocolate strategy, North America plans, emerging markets, and the financial outlook at the upcoming CAGNY conference.
About Mondelez International (NASDAQ:MDLZ)
Mondelez International is a global snacks company headquartered in Chicago, Illinois, formed in 2012 when Kraft Foods split to create a business focused on snack foods and a separate North American grocery company. Mondelez develops, manufactures, markets and distributes a broad portfolio of snack products intended for retail, foodservice and e‑commerce channels around the world.
The company’s product mix centers on biscuits and cookies, chocolate and confectionery, gum and candy, and savory crackers and baked snacks.
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