Despite higher prices Mondelez, the maker of Oreos, is the rare CPG company selling more.

Mondelez is armed with super-strong brands in two categories. It’s all thanks to great execution of a 2018 strategy.

Thanks to five years of strategic acquisitions, Mondelez sells more units at higher prices.

What to know

After two years of price increases—on everything from toothpaste to cookies--consumers may have reached their limit. Early in the pandemic, most manufacturers' sales volume stayed roughly the same–despite higher shelf prices. Now, two years in, more Americans are tightening their wallets and choosing not to pay elevated costs for everyday goods.

The below graph measures the revenue composition of eight major American everyday product manufacturers: Colgate-Palmolive, General Mills, Hershey, Kellogg, Kimberly-Clark, Kraft-Heinz, P&G, and Reynolds Consumer.

As you can see, the eight major companies have become dependent on price increases.

Not Mondelez.

The Chicago-based maker of Oreos and Wheat Thins saw organic volume grow by 2.7%, despite significant price increases. "Our strong top-line performance was driven by excellent pricing execution and continued volume strength," CEO Dirk Van de Put told investors last week. "Consumers all over the world remain loyal to our iconic snacking brands."

This scenario, strong brands in fairly inelastic categories, didn't happen overnight. It's been nearly five years in the making.

Mondelez focused on becoming the predominant Biscuit and Chocolate company in the world.

• A 2018 strategic review delivered an audacious goal: generate 90% of all sales through biscuits and chocolates.

• At that time, the company generated 75% of its revenue through those categories. Now, it's up to 80%.

• "It's a sweet spot for us as a company," Van de Put told investors back in June, "And gradually, we will get out of the categories that are not growing fast enough and that kind of drag us down."

Mondelez has acquired eight premium internationally focused brands.

• Since 2018, management has spent $6.9 billion acquiring eight biscuit and chocolate brands.

• The largest acquisition was  Clif Bar for $2.9 billion. The purchase gave Mondelez a strong foothold in the snack bar category. This followed an earlier $261 million aquisition of Grenade—a UK-based energy bar company.

• The most strategically important move may be the 2022 purchase of Ricolino. The $1.3 billion deal gave the company control of the number one Mexican chocolate brand. More importantly, it tripled their distribution network in the country--allowing it to potentially expand its product footprint.

Mondelez is divesting non-essential brands.

• The company sold its Middle East, African and Australian cheese business for around $500.

• Recently announced it exited the gum business, when it sold Trident, Denyte and other gum brands for $1.35 billion.

• Management plans to sell its Halls Cough Drops business.

They said it

Luca Zaramella, CFO on Mondelez, describing the importance of the Clif Bar and Ricolino acquisitions:

I would say that Clif, which is almost a $1 billion platform projected into 2023 as sound gross margins at this point in time, given the fact that as we've said, we are about to implement another wave of pricing same dynamics that we saw in our U.S. business, little elasticity so far. So I think the P&L is going to shape up quite well. In terms of gross margin, the North American segment has the highest gross margin of Mondelez, particularly because of the [DSD] system that is quite effective from that standpoint. But Cliff has gross margin that, albeit a little bit below the average of North America they are above the average of the company. So that is really a sound platform in terms of potential and profitability.

Importantly, there are material synergies we are after -- we just announced a new organization in place. And clearly, there will be some testing going on on the platform through DSD and I think if you see what happened with -- this is quite promising potentially.

In terms of Ricolino it is a $600 million, $700 million platform. It is growing double digit at the moment. And in terms of margins, I think it's more important to say that the combination of both platforms between our existing business and Ricolino will step change materially the profitability of Mexico. And I think particularly in route to market and cost synergies, there is a big benefit to come now. We are in the process of combining the 2 companies. So the fruition into the P&L will come towards the second part of the year.