Mondelēz International’s CEO expressed concerns about the impact of the Iran conflict on consumer confidence and the rising prices of everyday essentials.
During the company’s first-quarter earnings call, Dirk Van de Put highlighted that shoppers are feeling anxious due to ongoing uncertainties. The escalation of the Iran conflict and the resulting increase in oil prices are adding to consumer worries, affecting their confidence levels.
Van de Put emphasized that consumer confidence in the U.S. remains low and is expected to deteriorate further as the situation in the Middle East unfolds. He noted that while purchasing power has increased, affordability, economic outlook, and job security are key concerns for consumers.
Food industry leaders have been cautioning about the impact of affordability issues on earnings, with rising costs leading consumers to be more selective in their spending, especially in snacking categories. A surge in inflation could further dampen consumer confidence and spending.
Van de Put highlighted that lower-income consumers are prioritizing lower prices and are becoming more discerning in their purchasing decisions. There has also been a shift in shopping behavior, with consumers opting for value, club, and online retailers over traditional food and mass stores.
The CEO pointed out that retailers like Walmart, Costco, and value-focused channels have seen growth in biscuit sales, outperforming the overall market growth.
Even prior to the Iran conflict, industry executives had been anticipating challenges ahead. Despite investments in innovation and marketing, consumer return rates to certain product categories have not met expectations. Companies like PepsiCo and General Mills have resorted to price reductions to attract shoppers back.
However, Van de Put remains optimistic about Mondelēz’s future prospects. The company is focusing on affordability and exploring changes in its distribution system to offer a wider range of packaging sizes and prices.
Mondelēz anticipates a gradual improvement in its North American operations with increased investments in its brands. The company, known for products like Chips Ahoy!, Ritz, and Clif Bar, foresees positive volume and revenue trends for the remainder of the year in the region.
In the first quarter, Mondelēz reported a revenue increase to $10.1 billion, up from $9.31 billion in the previous year. North America, contributing 25% of the company’s sales, saw a 0.5% revenue growth to $2.6 billion.
The company reiterated its growth projection of organic net revenue growth ranging from flat to up 2% for 2026.