Packaged foods companies in general have benefited during the COVID-19 pandemic as people staying at home spent more on snacks and quick meal mixes. Confectionary giant Mondelez International Inc. (NASDAQ: MDLZ) was no exception. The company posted revenue growth of nearly 5% in the third quarter of 2020 with increases across most of its markets, driven by healthy demand for its products as well as strength in the ecommerce channel.
Quarterly performance
Revenues grew 4.9% on a reported basis and 4.4% on an organic basis driven by volume and pricing. Developed markets posted a strong revenue increase of 9.6% on a reported basis and 3.8% on an organic basis. Emerging markets fell 3.1% on a reported basis but grew 5.3% on an organic basis.
In North America and Europe, Mondelez saw higher consumption versus pre-COVID levels along with strong retail demand. Categories such as biscuits, chocolates, meals and powdered beverages witnessed good growth while candy, despite seeing some softness, slowly picked up. The gum category continues to face challenges based on shifts in consumer behavior.
In developed markets, the gum business comprises only a small portion allowing the weakness in that category to be offset by the strong grocery business. Most of the emerging markets, including regions like China, India, Russia and Brazil, saw growth during the quarter as restrictions eased but places like Latin America continued to face challenges due to the portfolio mix and pandemic impact.
On the whole, the biscuits category grew 8% driven by growth in North America, Europe and EMEA. Chocolate gained over 5% helped by strength in the chocolate businesses in India and Brazil. Gum and candy declined double-digits as the gum category faces headwinds from pandemic-related restrictions.
Ecommerce
During the quarter, the ecommerce channel gained significant momentum growing 78% on a reported basis. The channel currently makes up 5% of the revenue base. Mondelez saw triple-digit growth in the US and UK and double-digit growth in China and France in ecommerce.
The ecommerce channel continues to see strong demand and is also contributing meaningfully to profits. The company is investing significantly in this channel to improve the customer experience and drive additional growth.
Market share
Mondelez has managed to retain or gain share in 80% of its revenue base thus far this year, driven mainly by biscuits which gained share in 90% of the revenue base and chocolate which gained an 85% share. Gum and candy gained 45%. The company gained meaningful share in regions like the US, UK, Australia, France, China and Russia.
Outlook
For the full year of 2020, Mondelez expects revenue to grow over 3.5% on an organic basis and adjusted EPS to grow over 5% at constant Forex.
Click here to read the full transcript of Mondelez Q3 2020 earnings call