Mondelēz plans to raise prices and ad spending in 2022

Mondelēz International is supporting whopping shelf-price increases with an even bigger uptick in its advertising spend, the snack marketer's executives said late Tuesday. Advertising and consumer promotion spending is up by double-digits year-to-date, as the maker of Oreo cookies, Ritz crackers and Cadbury chocolates passes along rising commodity, supply chain and transportation costs to retail. In the U.S., Mondelēz intends to raise prices by another 6% to 7% in January, but will soften the blow to consumers through promotions intended to maintain sales volumes, while reinvesting about 50% of its operating profits back into brand-building initiatives. “The worst you can do, I think, is increase prices and not increase your support for your brand,” Dirk Van de Put, chairman and CEO, told analysts during the company's third-quarter conference call on Tuesday. “So we’ve been supporting our brands now every year, more and more. Our media pressure has significantly increased versus three or four years ago. We can see that the brand health is increasing. So I think our brands are now more susceptible to pricing, and the consumers should accept it better.” The company's executives also reported progress in ambitions to grow its leading cookie brand, Oreo, by $1 billion by 2023, in part through the September release of an Oreo x Pokémon edition that features 16 limited edition cookie designs inspired by the popular media franchise. A secondary market for rare finds like the Mew character has developed on eBay, where the cookies are listed at prices up to $1,000 each. Pokémon Oreos have become the fastest-selling Oreo edition of all time, surpassing previous sales records of Game of Thrones and Lady Gaga Oreos, Van de Put said. Mondelēz is the 135th largest U.S. advertiser, based on 2020 spending of $369 million, according to the Ad Age Datacenter. Executives said they are still seeing elevated demand for its categories and that consumers are willing to pay more for essentials and affordable treats as they spend less on eating and drinking outside the home. Third-quarter so-called organic revenue rose 5.5%, underpinned by volume growth of 3.1% and a pricing increase of 2.4%. Operating income increased by 4.5%, supported through higher gross profits, a double-digit increase in advertising and consumer promotions, and cost reductions. The company strengthened its annual forecast for organic revenue, which excludes the impact of acquisitions, divestitures and currency rate fluctuations. It now expects organic revenue growth of about 4.5% this year, up from a prior forecast calling for growth of at least 4%. Register for Ad Age Next: CMO at AdAge.com/NextCMO.

Mondelēz plans to raise prices and ad spending in 2022

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