The Swedish-Finnish company has appointed specialist confectionery distributor Galleberg to help it expand sales of its core brands in Norway, with effect from 1 January 2005.
"Cloetta Fazer has some of the market's strongest brands and our ambition is to further advance its position in Norway" said Christer Stierna, Galleberg's managing director. "Cloetta Fazer's products are an excellent complement to our existing product portfolio."
Cloetta Fazer's products will account for around 40 per cent of Galleberg's total sales, making it the largest supplier in the company's product portfolio. Cloetta Fazer's top-selling brands in Norway are Dumle, Center and Bridgeblandning.
This is the second distribution deal in Norway for Cloetta Fazer. Earlier this year it signed a new long-term distribution agreement with Brynild Salg, its distributor there for 20 years. Brynild Salg is Norway's third largest confectionery company with a market share of approximately 15 per cent, and it distributes around 3,000 tonnes of Cloetta Fazer's brands there each year.
The move comes as Cloetta Fazer reported a downturn in exports to Norway and other key export markets such as Denmark, Russia, the Baltic countries, the Czech Republic and Germany, partly due to a tighter focus on a smaller number of core brands. But the company compensated for the lower volumes with higher prices in many markets, helped by new product launches.
As result of these price increases in particular, total sales for the third quarter of the year were up 7 per cent to SEK742 million, with volume sales up 3 per cent, although core brand volumes were 13 per cent higher. For the first nine months of 2004, sales were a more modest 1 per cent higher, reflecting the increase in prices coming mainly in the third quarter, at SEK2.1 billion.
Net profit for the nine-month period was SEK260 million, an increase of 14 per cent.
"Our strategy to concentrate on the strongest brands has been successful," said Cloetta Fazer's CEO Karsten Slotte. "Our top-selling brands, Kexchoklad and Fazer Blå, showed stable development and new product launches mainly in the Dumle and Center brand families were enthusiastically received by consumers."
Consumer acceptance of the new products in Sweden (Tutti Frutti Sour and Dumle chocolate milk mix) and Finland (Fazer Blå Kexcrisp and Pantteri Jumbo Mix) was excellent, he added.
The company's Polish business remained problematical, however, with the weak economy and inefficient production having a major impact on sales. But here again, volume declines were offset by price increases, and Slotte said that "efforts are under way to adjust the product range and strengthen our position in selected segments of the Polish market".
"We will also be looking over the organisational structure in Poland," he added.