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Lindt seeks foothold in new markets ‘as quickly as possible’

By Oliver Nieburg , 01-Mar-2012

Swiss chocolatier Lindt & Sprüngli has posted stagnant sales in its 2011 results and says it must look to new markets to foster growth.

The company said it needed to gain “a foothold on new markets as quickly and efficiently as possible”.

Russia, China and Brazil,

“With access to new markets in buoyant emerging countries such as Russia, China and Brazil, opportunities have arisen which hold great potential for further development and must be grasped,” it said as its full-year results were announced today.

In preparation for the step into pastures new, Lindt said that it had extended its management structure and had established an international retail department.

The company hopes to test new markets through own-brand retail stores which it believes can raise brand awareness and help underdeveloped chocolate markets mature, based on a pilot in Australia.

During 2011, the company established a subsidiary in South Africa and has invested in marketing to create consumer awareness of its brand.

It said its sales in Russia had grown faster than the market average in 2011, while it oversaw double digit growth in China.

Jon Cox, head of European food and beverage research at Kepler told this site last month: “The positive development of Lindt in Hong Kong, is very pleasing and builds a sound foundation for the further development of the Chinese market, which will be pushed henceforth in the context of the geographical expansion of the Group,”

Results roundup

Lindt sales in 2011 were down 3.5% on last year to €2.06bn (CHF 2.5bn), though it reported organic sales growth of +6%.

Operating profit was flat at around €273m (CHF 328m). The company said it had increased its EBIT-Margin 60 basis points on last year.

Established markets

The company said it must increase its marketing efforts to secure growth in established markets such the US, Germany and France.

Despite a downturn in sales in Lindt’s home market of Switzerland, sales elsewhere were relatively pleasing given the turbulent economic climate.

German and French sales were highlights with 7% and 10.3% growth respectively.

2012 Outlook

Lindt doesn’t expect the global economic situation to ease and anticipates commodity volatility and a worsening employment market.

However, the company has set targets for growth.

CEO Ernst Tanner said: “We are confirming our long-term growth and earnings targets and continuing to aim for sales growth of 6 to 8% and an increase in our operating profit margin of 20 to 40 basis points per year.”

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