Double-digit growth in the Chinese market, soaring cocoa prices—how is Mondelēz preparing for the 'worst-case scenario' after a strong start to the year?

After delivering double-digit growth in both revenue and profit for Q1 2024, Mondelēz International—home to iconic brands including Oreo, Chips Ahoy!, Cadbury, and Stride—must now demonstrate how it will continue navigating headwinds. According to its Q1 2024 financial results, Mondelēz’s China business maintained growth in both revenue and market share. Globally, however, the company experienced volume declines attributable to pricing actions. As the world’s second-largest chocolate manufacturer, Mondelēz also faces persistently surging cocoa costs. “Although the operating environment remains challenging and dynamic, our team continues to stay focused and agile in addressing short-term issues while executing our long-term growth strategy,” said Dirk Van de Put, Mondelēz’s CEO, during the company’s recent Q1 2024 earnings call. He emphasized that current cocoa inflation has not dampened the growth potential of the chocolate category—or of Mondelēz itself. He also elaborated on the company’s performance in China, expressing confidence in sustaining strong momentum there. China’s Growth Stands Out In Q1 2024, Mondelēz China’s growth outperformed both its own prior-year performance and that of all other regions within the Mondelēz group. Financial reports show that the AMEA (Asia, Middle East & Africa) region—which includes China—recorded net revenue of $1.95 billion (approx. RMB 14.07 billion), representing 5.9% organic growth year-on-year. Within this, volume/mix declined by just 0.2 percentage points—the smallest drop among all regional divisions. Compared with the single-digit growth rates seen across other regional divisions, China’s performance was notably robust. “The China business delivered low double-digit growth this quarter, again posting a strong quarterly performance, driven by initiatives enhancing the Chips Ahoy! brand equity,” Van de Put revealed. Meanwhile, the brand’s market share in China also posted “strong growth.” Zooming in further on Mondelēz China’s two core categories—biscuits & baked snacks, and chewing gum: In the biscuits and baked snacks segment, Mondelēz’s global revenue rose 0.6% to $4.299 billion (approx. RMB 3.10 billion). Van de Put noted that although the U.S. market remains sluggish, many brands—including Oreo and LU, both available in China—achieved steady growth. During Q1 2024, Mondelēz China continued investing in its biscuit business. Taking Chips Ahoy!—a brand highlighted by the CEO—as an example, the company launched an integrated online-offline marketing campaign targeting young consumers during the Spring Festival. Campaign themes such as “This Year, No More Pie-in-the-Sky—Let’s Eat Cookies and Have Fun Together!” trended on Douyin (TikTok’s Chinese version), while AR-enabled QR-code scanning for red envelope rewards boosted sales. According to Kantar data, Chips Ahoy!’s brand penetration rate reached an all-time high in March 2024. For its flagship brand Oreo, Mondelēz rolled out co-branded products featuring the popular IP “Line Friends’ Dog,” alongside multiple spring-limited “Sunshine Lemon” flavor variants. Additionally, the Oreo ice cream—a joint venture with Nestlé China—began rolling out across markets starting in Q1. Meanwhile, chewing gum and confectionery remained Mondelēz’s fastest-growing global segment—evidence that its strategy of focusing on high-growth businesses continues to deliver results. In 2022, the company announced plans to divest its slower-growing chewing gum business in developed markets—including the global Halls brand. By the end of that same year, the chewing gum business had been sold to Perfetti Van Melle—but the China business was excluded from the deal, and the Halls confectionery brand remains pending sale.

What are Mondelēz’s strategies for achieving local breakthrough and sustained growth in China’s snack industry?

Mondelēz’s portfolio spans five product categories: ・Biscuits and baked snacks (including cookies, crackers, savory snacks, snack bars, cakes, and pastries) ・Chocolate ・Chewing gum and confectionery ・Beverages ・Cheese and grocery This multi-brand architecture accelerates category penetration. By pursuing multi-brand development, Mondelēz continuously enriches its premium product matrix and builds a three-dimensional product structure. The strategic advantages include: (1) Targeting niche markets: Entering diverse sub-segments with more categories enables the company to meet varied consumption occasions, attract different consumer groups, and—crucially—mitigate internal competition and cannibalization of market share across its own brands. (2) Covering multiple price tiers: Structuring its portfolio to span premium, mid-tier, and mass-market offerings prevents brand value dilution that could arise from excessive price disparity within a single brand. Acquisitions serve as a key channel for acquiring high-quality brands, while proprietary brands act as complementary additions to fill category gaps. Most of Mondelēz’s brands originate from acquisitions of mature companies; concurrently, non-core businesses are gradually being divested. Q1 2023 financial performance was outstanding: Net revenue grew +18.1%; organic net revenue grew +19.4%; diluted EPS reached $1.52, up 149.2%; adjusted EPS stood at $0.89, rising 17.3% in constant currency terms. Operating cash flow totaled $1 billion—flat year-on-year—while free cash flow amounted to $900 million, down $100 million YoY. Shareholder capital return totaled CAD 900 million. The company raised its organic net revenue growth outlook to above 10%, and its adjusted EPS growth forecast to over 10%. Chairman and CEO Dirk Van de Put stated: “We started the year strongly, delivering double-digit growth in both net revenue and profit in dollars for Q1—and we remain committed to executing our long-term strategy. These results were driven by consistent pricing execution to offset cost inflation, coupled with solid volume growth.” As consumers worldwide continue prioritizing Mondelēz’s chocolate, biscuit, and baked snack categories and brands, demand remains broad-based across both developed and emerging markets. Mondelēz is also making significant progress on portfolio reshaping—reducing its coffee equity stake while unlocking powerful top- and bottom-line synergies from recent acquisitions. While achieving global leadership in the snack industry, Mondelēz has simultaneously sustained impressive financial stability and growth. We believe its strategic approach offers valuable insights for the broader fast-moving consumer goods (FMCG) sector. Accordingly, we summarize Mondelēz’s three core strategies for achieving local breakthrough and sustained growth in China’s snack industry: 01. Premium, continuous acquisition of high-quality companies The company evaluates acquisition targets against four strategic dimensions: advancing wellbeing (i.e., health- and nutrition-focused foods), premium positioning, filling geographic or category gaps, and adjacency to existing Mondelēz businesses. Mondelēz is currently undergoing an “asset rotation.” This U.S.-based snack giant already commands extensive product lines—including chocolate, biscuits and cookies, powdered beverages, chewing gum, and confectionery—with chocolate and biscuits accounting for roughly 80% of its portfolio. CEO Dirk Van de Put notes that these two categories have delivered “remarkable growth” in revenue and market share over recent years. In contrast, the remaining ~20%—comprising other categories—is viewed as non-core.

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