How Cocoa Cost Surge and Sourcing Strategies Could Shape Mondelez International’s (MDLZ) Investment Case

• In the past quarter, Mondelez International faced input cost pressures as cocoa futures prices surged, driven by challenging crop yield conditions in West Africa, a major supplier for the company.
• In response, Mondelez has sought to diversify its cocoa sourcing by expanding into Southeast Asia, aiming to reduce risk from regional supply disruptions.
• We'll examine how the impact of ongoing cocoa cost inflation could alter Mondelez International's longer-term investment narrative and margin outlook.

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Mondelez International Investment Narrative Recap

To be a shareholder in Mondelez International right now, you need conviction in the company’s ability to balance strong brand growth and global expansion with the real challenge of rising input costs, especially with cocoa prices at multi-year highs. The latest quarterly pullback in share price reflects concern that cocoa cost inflation could weigh on near-term margins, though Mondelez’s broader pricing power and supply diversification strategies remain crucial short-term catalysts. While cocoa volatility is a headline risk, the long-term narrative for brand reinvestment and innovation appears intact for now.

Among this quarter’s announcements, Mondelez’s push to diversify cocoa sourcing into Southeast Asia directly addresses the most pressing challenge highlighted in the recent news. By reducing reliance on West African supply, the company is aiming to soften the margin impact and improve resilience, which connects directly to ongoing investor focus on margin stabilization and revenue trajectory.

However, investors should be aware that despite these efforts, the persistently high cost of cocoa could continue to pressure Mondelez’s net profit margins if conditions do not improve...

Read the full narrative on Mondelez International (it's free!)

Mondelez International's narrative projects $42.7 billion revenue and $4.7 billion earnings by 2028. This requires 4.8% yearly revenue growth and a $1.1 billion increase in earnings from $3.6 billion today.

Uncover how Mondelez International's forecasts yield a $69.07 fair value, a 21% upside to its current price.

Exploring Other Perspectives

Four different fair value views from the Simply Wall St Community place Mondelez's worth between US$69.02 and US$113.95 per share. With cocoa cost inflation now front and center, it’s clear opinions on the company’s earnings outlook can differ sharply.

Explore 4 other fair value estimates on Mondelez International - why the stock might be worth just $69.02!

Build Your Own Mondelez International Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Mondelez International research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Mondelez International research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Mondelez International's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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