USA- Confectionary and beverage manufacturer, Mondelez International expresses confidence in the prospects of its chocolate wing despite challenges in the cocoa supply chain.
The company’s CEO, Dirk Van de Put, admitted Mondelez’s chocolate brands, like Oreo and Cadbury, are operating in a “challenging and dynamic” environment.
Van de Put spoke during the release of the company’s financial report for the first quarter of 2024.
The report acknowledged the surge in coca prices because of a global shortage and underinvestment in cocoa farms.
Van de Put expressed optimism despite the current challenges, “While surprising but temporary, the cocoa inflation does not affect the fact that our categories remain durable, and our growth opportunities remain sizeable.”
He predicted the company’s chocolate brands are “Fully covered for 2024 and well-protected heading into 2025.”
However, the report shows evidence of high elasticity, as a huge proportion of the company’s chocolate customers are trading down in response to increasing prices.
This sustained growth is attributed to high customer loyalty and low private-label penetration of the chocolate market.
The CEO described the company’s chocolate brands as “strong and agile.”
However, the CEO reiterated the need for continued market analysis and adequate response strategies to the prevailing challenges.
The CEO also predicted that the current turbulence experienced in the cocoa market is expected to be short-lived.
Van de Put further said, “While poor weather and other factors on the supply and demand side have driven prices to unprecedented levels, we believe there will eventually be a market adjustment.”
The market is expected to adjust after accidental circumstances like bad weather, disease, and low harvests subside.
The company’s CFO, Luca Zaramella, said, “When is a correction going to take place? And most likely, the answer is in September or October, as the data for the new crop becomes available.”
The company resolves to remain agile until this new data is available through a balanced pricing approach to offset inflation and maintain reasonable sales volume dynamics.
The company generated net revenues of US$9.3 billion in Q1 of 2024, a 4.2% increase.
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