This week saw chocolate maker Lindt reporting strong growth across all its main regions and consolidated sales of CHF 2.58bn for its financial year 2010, with an analyst claiming the time is ripe for the firm to capitalise on recovery in consumer sentiment.
The Swiss confectionery group said it generated organic growth of 7.3 per cent in local currencies, which it added is “considerably higher than the average for the chocolate market as a whole.”
Lindt said that following the mood of uncertainty among consumers during the economic crisis, demand is increasing again for quality chocolate products: "Not only has this had a favourable impact on Lindt & Sprüngli's whole-year business, it has also boosted its important seasonal sector, namely the Easter and Christmas business,” said the premium chocolate maker in a trading statement.
And in reaction to the firm's upbeat trading statement, Kepler Capital Markets analyst Jon Cox told ConfectioneryNews.com that the Swiss group now has somewhat of “an open playing field in the premium segment given Kraft is integrating Cadbury and Hershey has given up on the space during the downturn.”
Lindt did stress though that its sales figures had been undermined somewhat by negative currency effects involving the euro as well as the US dollar and pound sterling, resulting in an increase of 2.2 per cent as against the previous year.
The maker of brands such as Excellence had been hard hit by the recession with consumers migrating to private label and cheaper brands but on Tuesday it revealed double-digit growth for its brands in the North American market. The group also reported positive sales figures for its products in the UK and in markets such as Italy and Germany, which had notably weak consumer sentiment during the economic downturn of 2009.
“Even in the ultra-competitive and highly saturated Swiss home market, it was possible to further expand Lindt & Sprüngli's already considerable market share.
Despite the strong Swiss franc, direct export from Switzerland to the overseas markets performed positively, posting high double-digit figures - a clear sign that the 'step-by-step' strategy is having a significant impact in terms of anchoring the Lindt brand ever more broadly in emerging markets. Only Australia failed to meet expectations,” continued the chocolate manufacturer.
In addition, said Lindt, upgrades to production sites, particularly in the US, that allow every individual production step to be carried out on site, ensures that the Swiss group can optimize transport costs as well as minimize currency risks.
And, in spite of the hike in the price of cocoa beans in the first three quarters of 2010 and the negative impact of currency effects on consolidated profit in Swiss franc terms, Lindt said it “will be in a position to post an operating profit (EBIT) within the range published for 2010 of CHF 300m to 340m.”
Earlier in 2010, Kepler analyst Cox cited the Swiss confectionery firm as an ‘obvious' takeover target for Nestlé, in that the food giant lacked a global premium chocolate brand.
And, speaking to this publication today, the market specialist said he expects that, ultimately, Lindt will “be taken over by Nestlé but that could be a couple of years away given the latter's current emerging market focus.”
Earlier this month, industrial chocolate supplier, Barry Callebaut, concluded that the global chocolate market was recovering slowly with Eastern Europe and Asia showed good growth.