Mondelez Earnings Call: Near-Term Pain, 2027 Promise

Mondelez International ((MDLZ)) has held its Q4 earnings call. Read on for the main highlights of the call.

Mondelez Balances Near‑Term Headwinds With 2027 Margin Upside

Mondelez International’s latest earnings call struck a cautiously constructive tone, mixing solid execution in core categories and emerging markets with clear near‑term headwinds. Management was upbeat on the resilience of chocolate, the success of innovation partnerships like Biscoff, and strong momentum in premium and protein‑focused brands. At the same time, they were transparent about a sizeable inventory accounting hit in early 2026, softer North American biscuit volumes, and pricing challenges in parts of Europe. The big swing factor for investors is cocoa: while 2026 is constrained by high‑cost hedges, management sees cocoa normalization as a powerful margin catalyst for 2027.

Chocolate Category Shows Resilience Despite Heavy Pricing

Mondelez emphasized that the global chocolate category remained resilient through 2025, even after significant price increases. The company leaned heavily on its “playbook” of list pricing changes and price‑pack architecture, which worked particularly well in India, Brazil, Australia, South Africa and roughly half of European markets. Household penetration held up, but consumers did cut back on frequency and quantity, signaling some pressure on discretionary snacking. These consumption shifts are informing more targeted recovery actions, as Mondelez looks to protect share while rebuilding volume.

Biscoff Collaboration Fuels Innovation Pipeline

Management highlighted the Biscoff collaboration as a standout success for 2025, describing the initiative as “very successful” and confirming plans to expand it in 2026. The partnership is a key pillar of a broader innovation agenda in Europe and beyond, aimed at re‑engaging consumers and reigniting growth. Mondelez pointed to a strong product pipeline led by Biscoff‑branded offerings and additional European innovation waves, designed to bring excitement back to shelves and support both volume and pricing.

Cocoa Normalization Sets Up a 2027 Margin Tailwind

Cocoa prices have recently fallen back toward more historical levels after an extreme spike, and Mondelez sees this as a major long‑term positive for its chocolate margins. Because the company is largely hedged at higher prices through 2026, the benefit will not be fully visible next year. However, as lower cocoa costs roll through the P&L, management expects a “considerable” improvement in chocolate margins in 2027. This expected tailwind underpins their confidence in stronger earnings power over the medium term, even as 2026 remains a transition year.

Emerging Markets Remain the Growth Engine

Emerging markets finished 2025 with high‑single‑digit growth and are expected to remain a key growth engine in 2026. Management reiterated expectations for these regions to continue growing in the high‑single‑digit range, providing the bulk of the company’s modest 0–2% consolidated organic sales outlook for next year. While developed markets are expected to decline, strong execution in regions such as EMEA/AMEA and Latin America (excluding Argentina) is helping to stabilize the overall growth profile and support the company’s longer‑term strategy.

Rebuilding Brand Investment After a Sharp 2025 Pullback

Mondelez took a cautious stance on marketing in 2025, cutting Advertising & Consumer (A&C) spend by roughly 25% year‑on‑year, primarily in non‑working media. This helped protect margins in a volatile cost environment but also contributed to lower activation, weaker consumption frequency and softer category dynamics in some markets. Management now plans to step up working‑media spending materially in 2026 and again in 2027, aiming to more than recoup the 2025 pullback over the 2024–2026 period and to re‑energize brand growth.

Premium and Protein‑Led Brands Deliver Double‑Digit Growth

Within its portfolio, Mondelez called out strong performance from premium and protein‑oriented brands such as Perfect Bar, Clif Builders Bar and premium chocolate/date SKUs. These franchises are growing at double‑digit rates and are helping to offset softness in more mainstream segments. The success of these higher‑value offerings supports the company’s premiumization strategy and suggests consumers are still willing to pay up for perceived quality, health benefits and indulgence, even as they trade down or cut back in other areas.

Supply‑Chain Modernization and Cocoa Diversification for Long‑Term Resilience

The company is pursuing a multi‑year supply‑chain modernization program, expected to run over three to four years, aimed at enhancing efficiency and network flexibility. Beyond factory and logistics improvements, Mondelez is also investing in diversifying its cocoa sourcing across regions such as Ecuador, Brazil, other parts of Latin America and some Asian markets. Management is even exploring lab‑grown cocoa as a potential long‑term solution to supply risk. Together, these initiatives are designed to reduce volatility, improve cost control and strengthen the resilience of the chocolate business.

Conservative 2026 Outlook and Neutral Price‑Cost in Chocolate

Management framed 2026 guidance as deliberately prudent, targeting 0–2% organic sales growth. Chocolate pricing is expected to be broadly flat, with the goal of maintaining a neutral‑to‑slightly‑positive relationship between price and cost in chocolate, despite high‑cost cocoa hedges. The company is building flexibility into its plans to adapt to competitor moves and demand shifts following the recent drop in cocoa spot prices. Overall, 2026 is positioned as a year of stabilization and investment rather than aggressive top‑line expansion.

$1 Billion Inventory Accounting Hit Weighs on Early 2026

A key near‑term headwind is a one‑time inventory accounting adjustment tied to high‑cost pipeline cocoa hedges. Mondelez expects this to be roughly a $1.0 billion impact, largely concentrated in the first quarter of 2026. This front‑loaded charge, combined with higher input costs in the first half compared with the second, will suppress early‑year profitability. Management expects sequential improvement in volumes and EBIT as the year progresses and increased media investments start to pay off.

North America Softness and Biscuit Volume Pressure

In North America, the picture is more challenging. Consumer confidence and affordability pressures are weighing on demand, particularly in biscuits. Volumes in the biscuit category were down about 4% over the last three months and around 3% for 2025, and management does not foresee a quick rebound in 2026. This segment will likely remain a drag on overall performance, highlighting the importance of emerging markets and premium brands to offset developed‑market weakness.

Elasticity Forces Price Adjustments in Northern Europe

Several northern European markets—including Germany, the Nordics and the UK—showed higher‑than‑expected elasticity following 2025 price increases. Consumers pushed back more than anticipated, pressuring volumes and prompting Mondelez to rethink its pricing architecture. The company plans to adjust price points and some price‑pack configurations in 2026, which could lead to customer negotiations, short‑term disruption and margin volatility as it works to restore a healthier balance between price, volume and share.

High‑Cost Cocoa Hedges Add 2026 Competitive Uncertainty

Mondelez’s cocoa needs are largely hedged for 2026 at prices above current spot levels, limiting its ability to immediately benefit from the recent downturn in cocoa markets. This creates a potential competitive challenge if rivals move faster to pass through lower input costs. Management acknowledged that these dynamics introduce uncertainty into 2026 performance and may require tactical adjustments in pricing, promotions and guidance as the year unfolds.

Argentina and Select LatAm Markets Mask Underlying Strength

Latin America presented a mixed picture, with Argentina’s economic turmoil a significant drag. Mondelez chose to protect working capital in that market by not extending payment terms, which weighed on reported regional results. Excluding Argentina, however, performance in Latin America improved meaningfully, with Brazil and Mexico cited as doing much better. Even so, country‑specific stress is expected to remain a headwind, underscoring the uneven nature of the recovery across the region.

Reduced 2025 Marketing Support Weighs on Activation

The decision to cut A&A spending by around 25% in 2025, largely in non‑working media, helped control costs but also dampened brand activation and demand. Management linked the reduced marketing support to lower consumption frequency and indicated that some of the softness in key categories reflects this under‑investment. The company now sees rebuilding media and activation spend as essential to reigniting growth, particularly in markets where elasticity and competitive intensity are high.

Guidance Signals a Transition Year Before 2027 Upswing

Looking ahead, Mondelez guided to 0–2% organic sales growth in 2026, with emerging markets expected to sustain high‑single‑digit momentum while developed markets decline in the low‑ to mid‑single digits. Chocolate pricing should be roughly flat, with pricing net of cost modeled as slightly positive to neutral, even as 2026 cocoa hedges sit above current spot levels. Cost headwinds are expected to be front‑loaded, with a roughly $1 billion inventory accounting charge in Q1 and higher costs in the first half than in the second. Management anticipates sequential improvement in volumes and EBIT through 2026 as A&C investments ramp back up and plans further brand and media spending in 2027. Crucially for investors, they expect a material uplift in chocolate margins and strong EPS growth in 2027 as lower cocoa costs flow through and the supply‑chain and marketing investments begin to pay off.

The call painted 2026 as a rebuilding and investment year, with Mondelez absorbing a large inventory adjustment, navigating weak North American biscuit trends and recalibrating pricing in northern Europe. Yet management’s confidence rested on the resilience of its chocolate franchise, strong emerging‑market growth, accelerating innovation and the structural tailwind from cocoa normalization. For investors, the near term may be bumpy, but the company is clearly positioning for a stronger earnings profile and healthier margins as it moves into 2027.