Cloetta Fazer puts faith in its key brands
drop in 2005 as it focused on long-term development over short-term
gains.
Over the last fiscal year the company decided to close its Polish subsidiary and to invest heavily in pushing its core brands.
Management say losses over the last year will be made up in years to come as the confectioner's foremost products begin to grow and enter the emerging Eastern European markets.
"We have invested heavily in marketing of our prioritized brands, which is vital in meeting intensifying competition and price pressure. Relocations in production have also led to a short-term cost increase," company CEO Karsten Slotte explained.
"In a longer perspective, these marketing and production initiative will pay off," he said.
Cloetta Fazer's twelve marquee brands did grow over the year despite waning profits.
Operating profit over the full year was SEK 369m (€39m), a decrease of 12 per cent.
However the key brands grew by 10 per cent and for the first time accounted for more than 50 per cent of total sales.
The company's strategy is to focus on its key brands and launch new products under them.
"Cloetta Fazer's greatest strength lies in our popular and well known brands, and this is a top priority for us," Slotte said.
"The intention is to continuously create new products in these brand families as a means to deliver added value to our customers and consumers."
The confectioner is attributing the growth in its key brands to new product launches, mainly brand extensions.
These extra sales aided the company in achieving four per cent growth in its principle market. The Nordic region's sales were SEK 2.8bn (€298m).
Non-Nordic sales decreased following the closure of the Polish subsidiary, however a new sales team has been established.
Poland currently accounts for about eight per cent of the company's sales, while sales in Russia and the Czech Republic are growing from a smaller three per cent share.
Management said that last year had been devoted to creating a competitive and standardised product for Eastern European markets.
"Internationally, the single largest product campaign was aimed at promoting Geisha. The Russian market remains interesting and in the past year we increased our emphasis there," Slotte said.
The company claim to be the largest confectionery company in the Nordic region, with a market share of 22 per cent.
With production facilities in Sweden and Finland the confectioner employs 1,800 people and its sales in 2005 were SEK 3bn (€300m)
