Oreo Maker Mondelez Faces Rising Costs Due To New US Health Policies

Mondelez International MDLZ is bracing for rising costs as the "Make America Healthy Again" (MAHA) initiative, spearheaded by the U.S. Health Secretary Robert F. Kennedy Jr. adds pressure to the company.

According to Mondelez CEO Dirk van de Put, this movement may result in major reformulations of well-known U.S. products such as Ritz crackers and Chips Ahoy cookies, necessitating adjustments to ingredients and food colorings. These modifications are anticipated to drive up production expenses, reported Reuters.

Kennedy is vocal about specific food ingredients and the condition of major public health organizations, such as the Centers for Disease Control and Prevention, the Food and Drug Administration, and the National Institutes of Health.

Speaking at the 2025 Consumer Analyst Group of New York (CAGNY) Conference, the company's executives shared their perspectives on its strategic goals and leadership in key markets, highlighting expansion in promising areas such as cakes and pastries.

"Our strong foundation of iconic brands and attractive categories position us for continued value creation," said Chair and CEO Dirk Van de Put.

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"We're excited about our strong playbook to win in large and attractive adjacencies, like cakes and pastries, that provide a significant runway of growth opportunities."

The company's Chocolate Category recorded an 8% growth in 2024. the strategy to navigate the rising cocoa costs include targeted cost savings, increased cocoa supply chain resiliency and safeguarding entry-level pricing and low unit pricing

to support consumption.

Consumers can also expect higher prices on chocolate products, with Van de Put projecting a 30% to 50% increase in chocolate costs, particularly due to a supply crisis in Africa.

Mondelez's fourth-quarter revenue of $9.60 billion and adjusted EPS of $0.65 both missed the consensus estimates.

The company expects FY25 adjusted EPS to decline approximately 10% on a constant currency basis due to unprecedented cocoa cost inflation.

The company is dealing with issues that differ sharply from the wider consumer goods industry, where inflation worries have caused a pause in price increases and even some discounts.

According to a Bloomberg report, the near tripling of cocoa prices last year has had a direct effect on the chocolate giants.

Price Action: MDLZ shares closed higher by 1.23% at $61.93 on Wednesday.

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