Mondelez finally got its volume back — and the market is charging it for the cocoa that paid for it
Volume turns positive in Europe and LatAm, cocoa flips from a $1bn write-down to a record surplus, yet the stock sits 20% below its 2023 peak and management won't talk 2027 revenue
MDLZ · Earnings Call · 2026-10-29
Volume up, price down — the pendulum they called wrong
For the better part of a year Mondelez has promised a handoff from price to volume. It finally arrived in Q3. In Europe — the company's volume problem child since the 2025 chocolate price rounds — Dirk Van De Put could point to “we have positive volume mix growth of 1.6” — Dirk Van De Put, Chair and Chief Executive Officer · 2026-10-29, broad-based, with share trends improving, even after unseasonably hot weather shaved a point off the region. Latin America stopped bleeding too: strip out cash-managed Argentina and chocolate volume mix ran 4–5%. The catch is what pays for it. European price is now negative, not because Mondelez cut list prices but because it is lapping its own increases and has surgically re-set price gaps. Luca Zaramella was blunt about the philosophy: “We didn't reduce prices, but we have become, I think, more precise as to what we do when.” — Luca Zaramella, Executive Vice President · 2026-10-29 In North America the plan is the same — “the majority of them will be most likely through PPA” — Luca Zaramella, Executive Vice President · 2026-10-29, with pricing explicitly subordinate to protecting share and volume mix momentum. That is the inversion worth marking. Earlier this year a peer was cutting price in US snacking and Dirk stood his ground: “we don't necessarily think that we need to decrease our prices to the magnitude that I heard from another company.” — Dirk Van de Put, Chairman and Chief Executive Officer · 2026-02-03 Today the pendulum has swung the other way — Peter Galbo of BofA noted peers now talking about taking pricing up — and Mondelez is the holdout in the opposite direction, running negative price while everyone else refills the pool. The pricing action list is now short and selective; this is a company deliberately buying volume with gross profit instead of price. What makes it credible rather than desperate is that the promotional machinery was rebuilt a year ago, after an expensive failure. From the February call: “we started off 2025 and we're quite aggressive on promotions and on deals... it didn't give us a return on our investment.” — Dirk Van de Put, Chairman and Chief Executive Officer · 2026-02-03 The current quarter's language — a good level of incrementality, "fine tuned" depth and frequency — is the payoff, not a retreat.Cocoa stopped being a crisis and became an accounting event
Amit Banati spent the better part of an answer dismantling the 2024 narrative, and it is the single most important fact in this report:Even the projected 2026/27 deficit of roughly 190,000 tons is absorbable against that stock. This is a complete regime change from February, when the collapse in cocoa forced a pipeline-cost write-down: “that is causing in the first February, but predominantly in Q1, an impact that is at a billion dollars.” — Luca Zaramella, Chief Financial Officer · 2026-02-03 That headwind is now a tailwind. Gross margin in the last reported quarter reached 42.6%, up roughly ten points year on year, with gross profit up 36% and net income more than doubling to $1.55B. And yet the market refuses to capitalize it as recurring. Price-to-net-income sits at 21x, down 12% year on year; price-to-revenue is 1.9x, 42% off its 2021 high. The tape says the same thing: +1.3% over ninety days, flat, still 20% below the May 2023 peak of $78.36. Management is compounding; the market is discounting. There is a broader tell here. The cost environment keyword is back in Mondelez's own Q3 list — with the flipped sign, attached to "favorable." The company's answer undercuts its own keyword: “we are seeing increases in commodities, commodities like dairy, oil, packaging.” — Dirk Van De Put, Chair and Chief Executive Officer · 2026-10-29 Global tape confirms it — cost inflation is live across packaging and chemicals reporters in this batch, and el niño now cuts both ways, cited as a supply risk to next year's cocoa crop. The cocoa relief is real; the aggregate input basket is not cooperating.we expect to be ending this year with a surplus of almost 0.5 million tons. So 500,000 tons, which is a record level of surplus... if you look at the coverage levels of the industry. They're at around nine months.
The confidence is in EPS. The silence is in sales.
Amit Banati's reply: “it's premature to talk about the 2027.” — Amit Banati, Executive Vice President · 2026-10-29 That is a striking asymmetry — earnings guided with conviction three quarters running (July: “earnings for 2027 is going to be strong” — Luca Zaramella, Executive Vice President & Chief Financial Officer · 2026-07-28), revenue deferred indefinitely. Chris Carey's probe on the wide Q4 spread got the same shape: volume mix up, "strong gross profit and OI dollar growth," no number. The quiet answer to the revenue question is distribution. numeric distribution is still running at roughly 25% headroom in China, India and Brazil; 130,000 outlets added in India year-to-date, more than a million stores in Brazil, and an expanding universe of points of sale underneath it. Management also capped its inorganic ambition explicitly — “There are bolt-ons, which could be in the $0.5 billion, sometimes even close to $1 billion in sales. But that would be sort of the order of magnitude” — Dirk Van De Put, Chair and Chief Executive Officer · 2026-10-29 — confirming the small Undercover Snacks deal is the template, not a prelude to something transformative.You sound very confident about the strong EPS growth in 2027, but little has been said about the outlook for sales growth... What are the big puts and takes and could we get back onto algorithm next year?