Mondelez International Inc. MDLZ, known for its iconic Toblerone bars and Oreo cookies, is strategically positioning itself to maintain chocolate sales by keeping prices consumer-friendly amid volatile cocoa market conditions.
The approach aims to sustain demand even as the company anticipates a decrease in cocoa costs.
During a recent virtual conference hosted by Evercore ISI, Bloomberg reported that CFO Luca Zaramella expressed optimism about declining cocoa prices in the upcoming year, which could alleviate some cost pressures on chocolate production.
The backdrop to Mondelez’s strategy is a huge surge in cocoa prices, driven by poor harvests in major cocoa-producing countries like the Ivory Coast and Ghana.
This has led to a global shortage, prompting prices to more than double this year.
Also Read: Cadbury-, Oreo-Maker Mondelez Receives 337.5M Euro Fine From EU For Anti-Competitive Practices
Zaramella outlined that the company is closely monitoring cocoa market trends to time their purchases effectively, potentially capitalizing on lower prices.
However, he acknowledged a possible temporary mismatch between high cocoa costs and the company’s commitment to affordable chocolate pricing.
“The name of the game for us is — particularly in a context where we believe chocolate costs will come down — to go through a potential temporary dislocation and protect volume and share as much as possible,” said Zaramella.
Price Action: MDLZ shares closed at $66.10 on Thursday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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