Mondelez: A Sweet Opportunity in Global Snack Foods

Mondelez is a global snacking powerhouse with leading positions in biscuits, chocolate, and baked snacks. Its portfolio includes iconic brands like Oreo, Cadbury, and Ritz, which enjoy strong consumer loyalty and global recognition. With a strategy focused on core category growth, expanding distribution, and reshaping its portfolio through targeted acquisitions, Mondelez is positioning itself for long-term resilience and profitability. The question is: Should this snacking giant earn a spot in your portfolio?

This is not a financial advice. I am not a financial advisor and I only do these posts in order to do my own analysis and elaborate about my decisions, especially for my copiers and followers. If you consider investing in any of the ideas I present, you should do your own research or contact a professional financial advisor, as all investing comes with a risk of losing money. You are also more than welcome to copy me.

For full disclosure, I should start by mentioning that at the time of writing this analysis, I do not own any shares in Mondelez. If you would like to see the stocks in my portfolio or copy my portfolio, you can do so on eToro, You can find instructions on how to do this here. I don't own any stocks in competitors of Mondelez either. Thus, I have no personal stake in Mondelez. If you want to purchase shares (or fractional shares) of Mondelez, you can do so through eToro. eToro is a highly user-friendly platform that allows you to get started on investing with as little as $50.

The Business

Mondelez International is one of the world’s largest snack companies, operating in over 150 countries with manufacturing facilities across 46 of them. Founded in Chicago in 1923 and formerly known as Kraft Foods Inc., the company rebranded as Mondelez International in 2012 following the spin-off of its North American grocery business. Since then, it has focused squarely on snacking, with a portfolio that includes iconic brands such as Oreo, Cadbury Dairy Milk, Milka, Toblerone, Ritz, LU, CLIF Bar, and Tate’s Bake Shop. The company has built a strong and defensible competitive moat through a combination of global brand power, category leadership, geographic scale, supply chain efficiency, and innovation. Mondelez owns many of the world’s most recognizable snack brands, which have earned deep consumer loyalty over decades. In some international markets, particularly in Europe, products like Cadbury and Milka are closely associated with national identity and tradition. Consumers show strong attachment to these brands and are unlikely to switch, even when faced with rising prices. This brand loyalty translates into meaningful pricing power and strong relationships with retailers. Its global scale provides Mondelez with meaningful advantages in sourcing, distribution, and marketing. The company can leverage global supply chains to manage commodity costs effectively, secure prominent shelf space with retailers around the world, and invest consistently in building brand equity. At the same time, Mondelez’s deep understanding of local markets allows it to tailor products to regional tastes and respond quickly to evolving consumer preferences. Its innovation capabilities are supported by a network of R&D centers and platforms like SnackFutures, which incubate new brands and formats aligned with trends like health, sustainability, and mindful snacking. Unlike diversified food conglomerates, Mondelez is a pure-play snacking company, which allows it to focus all of its resources on building leadership in its core categories. This focus has contributed to a streamlined strategy centered on accelerating growth in chocolate, biscuits, and baked snacks, expanding digital and emerging market channels, and driving operational excellence across its supply chain and marketing activities.

Management

Dirk Van de Put serves as the CEO of Mondelez, a position he has held since 2017. He joined the company from McCain Foods, a privately held Canadian company and the world’s largest marketer and manufacturer of frozen french fries and potato-based appetizers. During his six-year tenure as CEO of McCain, he led the company through a period of impressive growth, increasing net sales by over 50%, with more than 75% of that growth coming organically. EBITDA also grew at a double-digit rate each year under his leadership. Before McCain, Van de Put held several executive roles across the consumer and healthcare industries. He served as President of the Global OTC Division at Swiss pharmaceutical giant Novartis and spent over a decade with Groupe Danone in various senior leadership roles. Earlier in his career, he held sales and marketing positions across Europe and Latin America at Mars Inc. and The Coca-Cola Company. This broad international experience has shaped his global leadership style and deep understanding of consumer preferences across regions. Dirk Van de Put holds a doctorate in veterinary medicine from the University of Ghent in Belgium, as well as a postgraduate degree in business from the University of Antwerp. Since taking the helm at Mondelez, he has focused on driving sustainable growth in core snacking categories, improving execution across markets, and strengthening the company’s cost discipline. Employee sentiment also reflects positively on his leadership. On Comparably, Dirk Van de Put holds an employee approval rating of 79 out of 100, placing him in the top 5% of CEOs at similarly sized companies. He is widely regarded as a seasoned global executive with a track record of delivering both top-line growth and operational improvements. Given his industry experience, history of performance, and strong internal support, I believe Dirk Van de Put is well positioned to continue leading Mondelez through its next phase of growth.

The Numbers

The first number we will look into is the return on invested capital, also known as ROIC. We want to see a 10-year history, with all numbers exceeding 10% in each year. These numbers are underwhelming. Mondelez has only managed to achieve a ROIC above 10% once in the past decade. A key reason for the historically low ROIC has been significant spending on acquisitions and restructuring. In addition, unexpected operational costs - including commodity price swings and currency fluctuations - have weighed on returns. That said, Mondelez saw a notable improvement in 2024, which marked the only year in the past decade when ROIC exceeded 10%. This improvement was driven by several factors. The company successfully implemented higher net pricing across its product lines to offset inflationary pressures. Manufacturing costs declined due to improved productivity and operational efficiencies. And the contribution from recent acquisitions, such as Clif Bar and Ricolino, helped lift net revenues. Management has emphasized its focus on disciplined pricing, cost control, and value-accretive acquisitions going forward. Based on these priorities, I believe ROIC will likely be stronger in the future than it has been historically.

The following numbers represent the book value + dividend. In my previous format, this was referred to as the equity growth rate. It was the most important of the four growth rates I used in my analyses, which is why I will continue to use it in the future. As you are accustomed to seeing numbers in percentage form, I have decided to provide both the actual numbers and the year-over-year percentage growth. The numbers are a bit mixed, which can be attributed to the many acquisitions and divestitures Mondelez has made over the years. Volatility in commodity prices has also impacted the company’s equity over time. In addition, Mondelez has used debt to repurchase shares, which has further influenced its equity base. For these reasons, I don’t place too much weight on the equity numbers in this case.

Finally, we will analyze the free cash flow. Free cash flow, in short, refers to the cash that a company generates after covering its operating expenses and capital expenditures. I use levered free cash flow margin because I believe that margins offer a better understanding of the numbers. Free cash flow yield refers to the amount of free cash flow per share that a company is expected to generate in relation to its market value per share. It is not surprising to see that Mondelez has consistently generated positive free cash flow every year over the past decade. Since 2019, free cash flow has remained relatively stable. In 2024, free cash flow declined slightly due to an antitrust settlement with the EU Commission of approximately $400 million. If not for that settlement, Mondelez would have delivered its highest free cash flow to date, which is encouraging. Capital expenditures were also elevated in 2024, which impacted both free cash flow and the levered free cash flow margin. The company intends to allocate free cash flow toward shareholder returns, growth-accretive M&A, and maintaining balance sheet flexibility. Management remains committed to increasing free cash flow, which should ultimately benefit shareholders. Mondelez has grown its dividend at a compound annual growth rate of 10,5% over the past five years, while reducing its share count by 15%. A new $9 billion share repurchase program has been approved, giving the company flexibility to continue its opportunistic approach to buybacks, especially when shares are trading below what management believes reflects the company’s long-term earnings power. The free cash flow yield is currently at its highest level since 2020, suggesting that the stock is trading at a more attractive valuation than it has in recent years. However, we will revisit valuation later in the analysis.

Debt

Another important aspect to consider is the level of debt. It is crucial to determine whether a business has manageable debt that can be repaid within a three-year period. We calculate this by dividing total long-term debt by earnings. After performing the calculation on Mondelez, I found that the company has 3,39 years of earnings in debt. While this is slightly above the three-year threshold, it is at its lowest level since 2016. It’s also worth noting that one of the company’s capital allocation priorities is maintaining balance sheet flexibility, which signals that management intends to keep debt levels under control. Therefore, although Mondelez is currently just above the threshold, it would not prevent me from investing in the company. That said, it remains a metric worth monitoring going forward.

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Risks

Competition is a risk for Mondelez. The company operates in a highly competitive environment, facing global, regional, and local rivals across all its product categories. Competitors range from multinational food and beverage giants to emerging startup brands, as well as retailers with their own private-label products. In many cases, these retailers control shelf space and pricing decisions, giving them significant leverage that can impact Mondelez’s visibility and product positioning. What makes this landscape particularly challenging is that not all competitors share the same profit motives or investment time horizons. Some are willing to sacrifice margins in order to gain market share or accelerate growth, which can pressure Mondelez to respond with price reductions or promotional activity. These dynamics can weigh on profitability, especially in emerging markets where pricing sensitivity tends to be higher. The rapid rise of discounters and digital commerce adds further complexity. New distribution models and online channels have lowered barriers to entry, allowing smaller or niche players to capture market share more easily. If Mondelez fails to adapt to shifting consumer behaviors - such as the growing preference for direct-to-consumer or e-commerce platforms - it risks losing relevance, particularly among younger consumers who expect seamless digital experiences. Additionally, competition for retail shelf space remains intense. There is no guarantee Mondelez will retain or expand its in-store presence, and poor visibility or unfavorable pricing compared to rivals could negatively impact sales. Even when shelf space is secured, new products must perform well to meet retailer expectations. Failure to do so could result in reduced support or removal from store shelves.

Commodity prices represent a significant risk for Mondelez due to the company’s heavy reliance on key raw materials such as cocoa, dairy, wheat, sugar, edible oils, nuts, and various packaging inputs. These inputs are subject to considerable price volatility, driven by factors that are often unpredictable and beyond the company’s control — including extreme weather, geopolitical tensions, supply chain disruptions, inflation, and global competition for resources. Cocoa, in particular, presents a pressing concern given its central role in Mondelez’s chocolate portfolio. In 2023 and into 2024, cocoa prices surged to historically high levels, largely due to global drought conditions intensified by the El Niño weather pattern. These droughts have significantly impacted cocoa-producing regions such as West Africa, while uncertainty around the mid-crop in the Ivory Coast has added to market instability. Despite solid main crop yields, volatility remains high due to thin trading volumes, low industry coverage, and speculative trading activity. Mondelez has acknowledged that elevated cocoa prices are putting pressure on its profit and loss for 2025, with management forecasting a decline in adjusted EPS partly due to unhedged exposure. Looking further ahead, climate change adds another layer of long-term risk. Increasingly severe weather events, crop diseases, and water scarcity are likely to continue disrupting agricultural productivity, especially in regions reliant on smallholder farmers — a common characteristic of the cocoa supply chain.

Reduced demand for Mondelez’s core products represents a significant long-term risk to the company’s growth trajectory and profitability. While Mondelez continues to see steady demand today, a range of evolving factors could gradually erode its position in traditional snacking categories. Consumer preferences are shifting. Increasing health consciousness and growing awareness around nutrition are influencing purchasing decisions. Consumers, especially younger generations, are becoming more mindful of their sugar intake, opting for foods perceived as healthier, more natural, or plant-based. Although Mondelez has stated that it has not observed any material decline in demand due to these trends, management acknowledges the ongoing shift toward health and wellness, which could pose a challenge over time - particularly for indulgent, high-calorie products. Another source of uncertainty stems from the potential long-term effects of GLP-1 weight-loss drugs, such as Ozempic and Wegovy. These drugs are designed to suppress appetite, and while current data does not indicate an immediate impact on snacking behavior, the risk remains. If adoption of these medications accelerates, they could lead to structural changes in consumer eating habits - such as smaller portion sizes, fewer snacking occasions, or reduced interest in high-sugar treats. Mondelez has been monitoring this closely, but given the relatively early stage of mass adoption, the full effects are still unclear. In addition to consumer-driven changes, regulatory risks are also on the horizon. Governments worldwide are increasingly scrutinizing sugar content in food and beverages due to public health concerns. While there are currently no broad sugar taxes affecting Mondelez’s core categories, several U.S. cities have already implemented sugary drink taxes, and it’s plausible that similar measures could be extended to snack foods and confectionery. If sugar taxes or labeling restrictions are introduced, they could reduce demand, hurt pricing power, and compress margins.

Reasons to invest

Mondelez’s iconic brands are one of the company’s most durable competitive advantages and a key reason to consider it as a long-term investment. Brands like Oreo, Ritz, Cadbury Dairy Milk, and Milka are not only category leaders — they are deeply embedded in consumer habits and cultures around the world. This brand equity drives consistent demand, pricing power, and resilience in the face of economic or competitive pressures. Consumers continue to prioritize Mondelez’s brands across both developed and emerging markets, even as the broader food landscape evolves. Recent volume mix results suggest that, despite inflation and shifting consumption patterns, shoppers are remaining loyal to trusted favorites. While private label offerings have gained ground in some sectors, Mondelez’s products are still gaining or holding share — thanks in part to successful pricing strategies and continued reinvestment in marketing, innovation, and brand-building. Importantly, Mondelez holds leading global market positions in key categories: number one in biscuits with a 17,4% market share, number two in chocolate with 12%, and strong positions in cakes, pastries, and snack bars. These categories are attractive in their own right, growing about 1,3 times faster than the broader food industry. Mondelez’s leadership in these high-growth segments gives it an advantaged platform to sustain revenue growth and maintain scale benefits across sourcing, distribution, and brand support. Brand loyalty also supports pricing power. Consumers have shown a willingness to continue buying Mondelez’s snacks even as prices rise or portion sizes shrink. According to the company’s State of Snacking report, over 70% of consumers say they continue snacking even during inflationary periods, and a strong majority view snacks as one of life’s few non-negotiable indulgences. This emotional connection - particularly in categories like chocolate and biscuits - gives Mondelez a defensible moat against private label and lower-cost competitors. In addition to its global flagship brands, Mondelez also benefits from a strong lineup of local “jewel” brands like Lacta in Brazil, Freia in Norway, and Marabou in Sweden, which further deepen its relevance in regional markets. These brands often carry national-level recognition and help Mondelez tailor its portfolio to local tastes without compromising its global scale.

Expanding distribution is a key driver of growth for Mondelez and an important reason to consider the company as a long-term investment. The company continues to broaden its global reach, with a focus on both traditional retail expansion and high-growth digital channels. In 2024, Mondelez’s e-commerce business delivered double-digit growth, supported by continued investment in digital capabilities and infrastructure aimed at strengthening its position in online snacking. This strategic push is helping Mondelez reach consumers across new platforms and purchase occasions, particularly in markets where digital commerce is growing rapidly. Distribution growth isn’t limited to digital channels. Mondelez is also expanding its physical retail presence, especially in next-tier and emerging markets, which saw revenue grow by approximately 35% in 2024. This reflects the company’s success in tailoring distribution strategies to different geographies and channels. At the product level, Mondelez is optimizing pack architecture to better serve various consumption occasions and price points. New product formats like smaller “fresh stack” packs of Oreo, Ritz, and Chips Ahoy! are helping the company gain shelf space, improve affordability, and appeal to health-conscious consumers seeking portion-controlled snacks. In chocolate, the introduction of multiple pack sizes at differentiated price points allows Mondelez to serve both value-driven shoppers and premium customers. This combination of format innovation and distribution expansion enables Mondelez to meet consumers where they are - physically and digitally - while supporting category growth and improving brand accessibility. As the company continues to invest in distribution capabilities, especially in high-growth regions and channels, it is positioning itself to capture long-term demand and drive sustained revenue growth.

Mondelez’s ongoing portfolio reshaping strategy is a reason to invest. By doubling down on its core categories - biscuits, chocolate, and increasingly, baked snacks - Mondelez is aligning its business around high-growth, resilient segments of the snacking market. Recent acquisitions demonstrate how Mondelez is using strategic M&A to strengthen its foothold in closely related snack categories. For example, the company’s acquisition of Evirth, the leader in China’s fast-growing frozen-to-chilled baked snacks segment, has opened new avenues for innovation and distribution. Mondelez is leveraging this partnership to introduce fresh, premium offerings that combine its iconic global brands - such as Oreo and Philadelphia - with Evirth’s local expertise and advanced R&D capabilities. This is part of a broader effort to meet the growing demand in Asia for more sophisticated and indulgent snacking options. At the same time, Mondelez is divesting non-core assets - like its developed market gum business and its stake in JDE Peet’s - to free up capital for reinvestment into higher-growth areas. This disciplined approach allows the company to sharpen its focus while expanding its reach through bolt-on acquisitions that complement its brand strengths and geographic priorities. One of the most exciting aspects of Mondelez’s portfolio shift is its expanding presence in the $97 billion global cakes and pastries market. This category, which grows at a high single-digit pace, is a natural extension of its biscuit and chocolate business, and Mondelez is increasingly treating it as a core category rather than just a side opportunity. The company already holds the number three global position and is growing at a 34% CAGR, gaining share through a mix of brand extensions and acquisitions like Chipita, Give & Go, and now Evirth. With strong growth coming from brands like Oreo Cakesters, Cadbury cake bars, and Milka brownies, Mondelez is tapping into new occasions, price points, and consumer preferences - all while improving revenue and margin per kilo compared to traditional biscuits. Ultimately, Mondelez’s strategy to reshape its portfolio strengthens its competitive position by expanding its reach into faster-growing and higher-margin snack segments.

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Valuation

Now it is time to calculate the share price. I perform three different calculations that I learned at a Phil Town seminar. If you want to make the calculations yourself for this or other stocks, you can do so through the tools page on my website, where you have access to all three calculators for free.

The first is called the Margin of Safety price, which is calculated based on earnings per share (EPS), estimated future EPS growth, and estimated future price-to-earnings ratio (P/E). The minimum acceptable rate of return is 15%. I chose to use an EPS of 3,42, which is from the year 2024. I have selected a projected future EPS growth rate of 7%. Finbox expects EPS to grow by 6,7% in the next five years. Additionally, I have selected a projected future P/E ratio of 14, which is double the growth rate. This decision is based on Mondelez's historically higher price-to-earnings (P/E) ratio. Finally, our minimum acceptable rate of return has already been established at 15%. After performing the calculations, we determined the sticker price (also known as fair value or intrinsic value) to be $23,28. We want to have a margin of safety of 50%, so we will divide it by 2. This means that we want to buy Mondelez at a price of $11,64 (or lower, obviously) if we use the Margin of Safety price.

The second calculation is known as the Ten Cap price. The rate of return that a company owner (or stockholder) receives on the purchase price of the company essentially represents its return on investment. The minimum annual return should be at least 10%, which I calculate as follows: The operating cash flow last year was 4.910, and capital expenditures were 1.387. I attempted to analyze their annual report to calculate the percentage of capital expenditures allocated to maintenance. I couldn't find it, but as a rule of thumb, you can expect that 70% of the capital expenditures will be allocated to maintenance purposes. This means that we will use 971 in our calculations. The tax provision was 1.469. We have 1.337 outstanding shares. Hence, the calculation will be as follows: (4.910 – 971 + 1.469) / 1.337 x 10 = $40,45 in Ten Cap price.

The final calculation is called the Payback Time price. It is a calculation based on the free cash flow per share. With Mondelez's Free Cash Flow Per Share at $2,63 and a growth rate of 7%, if you want to recoup your investment in 8 years, the Payback Time price is $28,87.

Conclusion

I believe Mondelez is an intriguing company. I really like the management, as the CEO has a proven track record, extensive experience, and high employee ratings. The company has historically achieved a low ROIC, but in 2024, ROIC topped 10% for the first time in a decade, which is encouraging. Free cash flow decreased slightly in 2024, but this was due to an antitrust settlement with the EU Commission and higher capital expenditures. Competition is a risk for Mondelez because it operates in a crowded global market where rivals include multinational brands, startups, and private-label retailers who often control shelf space and pricing. The rise of discounters and digital commerce has also lowered barriers to entry, increasing pressure on Mondelez. Commodity prices are another risk, as the company depends heavily on volatile raw materials like cocoa, dairy, and sugar. Sharp increases - particularly in cocoa - can squeeze margins and impact earnings, while long-term threats like climate change and supply chain disruptions add further uncertainty. Reduced demand for Mondelez’s core products is also a concern, given the shift in consumer preferences toward healthier, lower-sugar foods. The growing adoption of appetite-suppressing weight-loss drugs may also reduce snacking occasions over time. In addition, future sugar-related regulations or taxes could further impact sales, pricing power, and profitability. On the positive side, Mondelez’s iconic brands - such as Oreo, Cadbury, and Ritz - remain a key reason to invest, thanks to strong consumer loyalty, pricing power, and global recognition. Expanding distribution is another strength, as the company continues to grow across both digital and physical channels, especially in high-growth and emerging markets. By investing in e-commerce, localized strategies, and innovative product formats, Mondelez is broadening its reach and positioning itself to meet long-term demand. Mondelez’s ongoing portfolio reshaping is also a reason to invest, as the company focuses on faster-growing, higher-margin categories like baked snacks and cakes while divesting non-core assets to reinvest in strategic opportunities. I believe that Mondelez could be a good long-term, sleep-well-at-night investment at the Ten Cap price of $40.

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