Despite higher prices Mondelez, the maker of Oreos, is the rare CPG company selling more.
Thanks to five years of strategic acquisitions, Mondelez sells more units at higher prices.
What to know
After two years of price increases-on everything from toothpaste to cookies — consumers may have reached their limit. Early in the pandemic, most manufacturers’ sales volume stayed roughly the same-despite higher shelf prices. Now, two years in, more Americans are tightening their wallets and choosing not to pay elevated costs for everyday goods.
The below graph measures the revenue composition of eight major American everyday product manufacturers: Colgate-Palmolive, General Mills, Hershey, Kellogg, Kimberly-Clark, Kraft-Heinz, P&G, and Reynolds Consumer.
As you can see, the eight major companies have become dependent on price increases.
The Chicago-based maker of Oreos and Wheat Thins saw organic volume grow by 2.7%, despite significant price increases. “Our strong top-line performance was driven by excellent pricing execution and continued volume strength,” CEO Dirk Van de Put told investors last week. “Consumers all over the world remain loyal to our iconic snacking brands.”
This scenario, strong brands in fairly inelastic categories, didn’t happen overnight. It’s been nearly five years in the making.
Mondelez focused on becoming the predominant Biscuit and Chocolate company in the world.
- A 2018 strategic review delivered an audacious goal: generate 90% of all sales through biscuits and chocolates.
- At that time, the company generated 75% of its revenue through those categories. Now, it’s up to 80%.
- “It’s a sweet spot for us as a company,” Van de Put told investors back in June, “And gradually, we will get out of the categories that are not growing fast enough and that kind of drag us down.”