Dirk Van De Put
Chairman and Chief Executive Officer at Mondelez International
Thanks, Shep, and thanks to everyone for joining the call today.
I will start on Slide 4. I am pleased to share that we delivered a solid first half to the year with strong profit dollar growth driven by effective cost management and pricing. We also successfully completed our annual pricing in Europe, which helps position us well for the second half in terms of top line and volume growth. We continue to see momentum in emerging markets, and we're continuing to invest significantly in our brands and capabilities to drive sustainable long-term growth. And we continued our track record of strong free cash flow, generating $1.5 billion.
While our operating environment remains challenging and dynamic, our teams remain focused and agile in executing against our long-term growth strategy. We continue to play for the long term in chocolate, biscuits and baked snacks because these core categories remain strong consumer favorites with very high loyalty to our iconic brand portfolio. Within these great categories, our advantaged geographic footprint provides additional confidence that we are well positioned to compound long-term sustainable growth.
Turning to Slide 5, you can see that organic net revenue grew 2.5% this quarter, with adjusted gross profit dollar growth of 11.3%, enabling us to continue investing in the business. A&C spending is up high single-digits, helping to drive consumer and customer loyalty to both our iconic global brands and our local jewels, and adjusted EPS grew 25%.
Turning to Slide 6. While many food and beverage segments are continuing to experience softness, snacking remains relatively durable. Consumer trends vary by region, but overall we are seeing volume growth start to rebound as inflation cools. Consumer incomes are rising, which helps to reduce the inflation-driven financial strain on many households. As a result, private label growth in our categories is decelerating, while branded share growth is improving.
In North America, some consumers are seeking snacking options at specific price points to fit within a specific overall ticket size. Other consumers, who are more focused on convenience, look for multipacks, which offer value, as well as variety and versatility. Our proven playbook for price pack architecture allows us to offer a broad range of options to meet each of these consumers' differing definitions of value. As a result, our two largest US brands, Oreo and Ritz, are gaining share year-to-date.
Meanwhile, in Europe, elasticities are moving slightly higher but remain modest. Consumer confidence is cautiously optimistic and is rising in the second quarter versus the same period last year, as inflation softens and incomes rise behind stable employment. We continue to see positive value growth in biscuits and chocolates. Volume in seasonal chocolate also is growing well, up 0.6% year-to-date, driven by the performance of seasonal shapes, novelties and bite-sized products. Consumers continue to demonstrate that holidays like Easter just wouldn't be the same without chocolate and they are willing to spend accordingly.
In emerging markets, modest elasticities continue. Our China business is delivering strong growth in online and social commerce. In Brazil, we're seeing an uptick in elasticities, but the consumer and economy remain resilient. In Mexico, the economic backdrop is healthy with solid employment and consumer confidence. And within India, we see some food inflation impacting lower and middle income households driving a pullback in spend and causing some down trading, particularly in biscuits. Overall our combined emerging markets value and volume share is improving in biscuits and chocolate.
Against this backdrop of gradually improving consumer confidence, as you can see on Slide 7, we are continuing to deliver against our focused action plan to improve volumes in North America in the second half of the year. We are already seeing value share improvement in Oreo and Ritz. To further accelerate growth, we are continuing to increase distribution points across food, club and convenience stores. And to meet the right price points, we are also implementing new targeted promotions, as well as a new pack size priced in the $3 to $4 range to drive continued brand loyalty and value for Oreo, Chips Ahoy!, and Ritz. Additionally, we're continuing to launch compelling activations, like Star Wars OREO and Oreo Space Dunk, to delight our fans while driving incremental lift.
Turning to Slide 8, along with improving biscuit volumes in the second half, we are well positioned to deliver sustainable long-term growth in chocolate. Recent spikes in the cost of cocoa ingredients have been widely discussed, but we soon expect a market correction to a more sustainable price, as the mid-crop is emerging in line with historical trends, and early signs on the main crop are encouraging.
Chocolate remains a great category. It is continuing to grow with volume resiliency and despite increasing prices. And within this great category, we offer some of the world's strongest, most iconic chocolate brands, which include Cadbury Dairy Milk, Milka, Toblerone, Cote d'Or, Marabou, Freia, and Lacta. These brands are already the leaders in numerous key markets and we are continuing to invest in A&C to further accelerate loyalty and growth.
At the same time, our proven RGM playbook provides our teams with the necessary agility in offsetting inflation while maintaining solid volume dynamics and protecting shares. We remain confident that we are well equipped to continue navigating fluctuating input costs and that we're structurally advantaged to accelerate long term chocolate growth.
Turning to Slide 9, it is important to reinforce that while the external environment remains volatile, we remain focused on accelerating our long-term growth strategy. We're continuing to reinvest in our brands, expand distribution, drive M&A, and scale sustainable snacking. We remain on track to deliver 90% of revenue through our core categories of chocolate, biscuits and baked snacks by 2030. And our teams continue to deliver strong progress against our strategic agenda.
For example, our Oreo marketing team continues to design and deliver exciting, creative activations that capitalize on consumer trends and drive incremental lift. We recently collaborated with Lucasfilm to launch two versions of a special edition Star Wars cookie in the United States, which unites our strong Oreo fan base with the equally strong Star Wars fan community. While both versions are wrapped in identical exterior packaging, consumers don't know which side they're on until they open the pack. This creative and fun approach is driving strong sales, making this collaboration our strongest limited edition yet. This collaboration is the latest example of our strategy to cement the cultural relevance of Oreo with key partners who help us bring their favorite stories to life. We're planning some more exciting, but still top secret, collaborations for the remainder of this year and into 2025.
Along with these marketing activations, we are continuing to strengthen store availability, visibility and execution around the world. Here in the US, for instance, our performance in the club channel is growing mid-single-digits while the value channel is growing double digits. Both are driven by our family-sized multipacks which offer a great price per cookie or cracker rather than overall package prices. We also are continuing to harness the power of recent acquisitions to capture synergies and drive growth. For example our Chipita baked snacks business is growing high single-digit volume in Europe, led by convenient 7Days croissants that help satisfy consumers on the go across a broad range of snacking occasions.
Additionally, we are making continued progress on our environmental and social sustainability agenda. For example, we continue implementing our structured and scientifically validated roadmap to reach net zero carbon by 2050. As an example, our biscuit manufacturing plant in East Suzhou, China was recently certified as carbon neutral. The plant has reduced carbon emissions by 16,000 tons, the equivalent of planting 7,000 trees for 100 years. Through implementing new technology solutions, including an innovative system to recycle residual heat and wastewater, as well as a new solar photovoltaic system to generate green electricity. To learn more about our strategy and review our annual performance data in detail, I encourage you to read our Snacking Made Right report available on our website.
On Slide 10, before I turn the microphone over to Luca, I'd like to briefly highlight our recently announced strategic partnership with Lotus Bakeries. This exciting initiative includes two main components. First, we will work with Lotus Bakeries to develop and launch co-branded chocolate products combining unique caramelized crispy Biscoff taste with our iconic global chocolate brands, including Cadbury and Milka. We aim to launch the first products in Europe in early 2025.
Second, we will manufacture, market, distribute and sell the Lotus Biscoff cookie brand in India starting in the second half of 2025. Partnering with Lotus will enable us to simultaneously scale our sweet biscuit business in the important emerging market of India while also innovating our strong European chocolate business with new products to grow consumer interest and loyalty.
As we strive to lead the future of snacking by winning in chocolate biscuits and baked snacks, M&A and ventures remain an important part of our growth strategy. This innovative partnership is a great example of our approach and we continue to explore additional opportunities.
With that, I'll turn it over to Luca to share additional insights on our financials.
