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Chocolate benefiting from economic gloom, says Natra

By Jess Halliday , 11-Nov-2008
Last updated on 12-Nov-2008 at 12:15 GMT

Natra’s nine month results provide more evidence that the chocolate sector can withstand – and even do well – in periods of financial depression.

The Spanish cocoa and chocolate specialist has reported a 50 per cnet increase in its cocoa and chocolate sales to €218.8m in the year up to end Q3, and a margin (EBITDA) of 11.4 per cent.

Amongst the explanations for this bumper increase, it cites its “solid positioning in a defensive sector, in which chocolate consumption traditionally increases in crisis periods”.

Natra has also been able to successfully pass on the cost of raw material prices that had been wearing away at its margins over previous quarters.

Recently, demand pressurised supply lines, pushing prices for the valuable cocoa bean to crash through the $3000 a tonne barrier in June, according to the International Cocoa Organisation.

But since then, prices have undergone a general downward trend, closing to just under $2550 a tonne at the end of September on the New York (ICE) futures market , and £1495 a tonne at LIFFE in London. Private label boom

A spokesperson for Natra explained that consumers’ move towards private label brands has also provided Natra with good momentum.

There is a strong indication that tough economic times can encourage more consumers to embrace private labels, which tends to be cheaper than branded goods.

Market research, such as IRI’s recent analysis of the private label market in the US, has indicated that lower- and middle-class customers have traditionally been more attracted to private label – but now higher earners are tending to abandon brands as well.

Although Natra’s business is mainly Europe-focused, the Natra spokesperson added that Natra’s business is well-spread across markets and customers, which helps minimise the risk that economic woes from any one quarter could have on sales.

“We have no country risk, since our presence through more than 40 countries (mainly in Europe) is balanced, and we have no customer risk, none of our customers represents a high share of our sales.”

Natraceutical

Natraceutical Group, the health-geared company in which Natra has a 50.3 per cent stake, reported EBITDA of €15.8m and a recurring profit of €5.47 – figures that were up 7.5 and 15 per cent respectively on the same period of last year.

Sales were up 3.3 per cent on September 2007 to €124.8m, a result said to have been impacted by variations in currency exchange rates and the finalizing of the production of synthetic caffeine.

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