Consumer confidence is under threat as prices of everyday essentials continue to rise due to the conflict in Iran, according to Mondelēz International’s CEO.
Dirk Van de Put, during the Oreo maker’s first-quarter earnings call, expressed concern over the impact of the Iran conflict on consumer confidence. With ongoing tensions and the consequent increase in oil prices, shoppers are feeling the pressure, leading to heightened anxiety among consumers.
Van de Put highlighted the low consumer confidence levels in the U.S., predicting further deterioration as the Middle East conflict persists. He noted that despite an increase in purchasing power, consumers are worried about affordability, economic prospects, and job security.
Food industry leaders have been cautioning about affordability concerns impacting earnings, as rising costs prompt consumers to be more selective in their spending, especially in snacking. Any escalation in inflation could deepen these worries and dampen consumer confidence and spending.
Van de Put emphasized that lower-income consumers are prioritizing lower prices and displaying a cautious approach towards their purchases. There has also been a noticeable shift in shopping behavior, with consumers opting for value, club, and online retailers over traditional food and mass stores.
The CEO pointed out that certain retailers like Walmart, Costco, and value channels have seen growth in biscuit sales, outperforming the overall market growth.
Despite ongoing efforts in innovation and marketing, the food industry is facing challenges in regaining consumer interest. Some companies, such as PepsiCo and General Mills, have resorted to price reductions to attract customers back.
However, Mondelēz remains optimistic about its future prospects, focusing on affordability and enhancing its distribution system to offer a variety of packaging options. The company anticipates a gradual improvement in its North American operations, investing more in its brands like Chips Ahoy, Ritz, and Clif Bar.
Mondelēz reported a revenue increase to $10.1 billion in the first quarter, with North America contributing 25% of sales. The company reaffirmed its growth outlook for 2026, expecting organic net revenue growth to range from flat to 2%.