Price pressures impact on Nordic confectionery
revealed growth in the Nordic region despite decreased earnings due
to increasing price pressures.
Third quarter operating profits have dropped from SEK 101 million (€10.6) last year to SEK 87 this, despite Nordic sales increasing 3 per cent to SEK 1,912 million.
The company's drop in profits are seen as a reflection of "growing price competition from discount wholesalers", company CFO Curt Petri told ConfectioneryNews.com.
He revealed the company had taken an "increased focus on price over the past two years, especially in the last eight to ten months".
These results display further evidence of an emerging trend being discovered by many confectioners tackling the severe price pressures brought about by supermarket private lines.
The company also attributes some loss' to its restructuring of production. This includes the sale of its production facilities in Norrköping, Sweden and its subsidiary based in Gdansk, Poland.
The Polish facility has reported repeatedly bad financial results caused by a weak market position and tough price competition. Cloetta Fazer will however continue to distribute its own products into the Polish market.
On a positive note the confectioner believes its impressive sales growth is a reflection of its commitment to innovation and the new products launched this year. It is hoped this will further strengthen its established brands as well as boost long term sales.
An 87 per cent majority of the 67,000 tones sold in 2004 were concentrated in the Nordic market with the remaining 15 per cent exported primarily to Poland, the Baltic countries and Russia.
This makes the company the Nordic region leader in chocolate and confectionery with a market share of 22 per cent, ahead of Kraft Foods who have 19 per cent.
Formed in 2000 through the merger of Cloetta of Sweden and Fazer Konfektyr of Finland the company had net sales of SEK 3,024 million in 2004 making an operating profit of SEK 362 million.
The company focuses on 12 key product lines under 2 umbrella brands with the vast majority of its business done in Sweden (35 per cent) and Finland (34 per cent).
