Fazer eyes expansion in Swedish confectionery market

By Caroline Scott-Thomas

- Last updated on GMT

Related tags Fazer Baltic sea Recession Sweden

Newly de-merged Finnish confectionery company Fazer Konfektyr has announced plans to expand into Sweden while underlining its environmentally friendly credentials.

The confectionery brand – until recently a collaboration between Cloetta AB and Fazer’s confectionery branch – is currently in the process of emerging from Cloetta Fazer, ending an eight-year alliance. The company’s division, presented in June, entered its final stage this week with a tender offer to shareholders.

Fazer Konfektyr, Fazer Group’s newly named confectionery division, currently controls seven per cent of the Swedish confectionery market, compared to 42 per cent in Finland. With the de-merger set to be completed by the end of the year, it has its sights set on increasing its Swedish market share in 2009.

Fazer’s CEO Karsten Slotte said:Sweden is Fazer’s second home market. We have a strong foothold among Swedish consumers and conduct operations throughout the country.”

The company has announced that it will concentrate on brands and product development and has appointed someone to set up the commercial organisation of Fazer Konfektyr in Sweden.

Global economic insecurity

However, Slotte acknowledges the potential difficulties it could face in adopting an expansion strategy in the current economic climate.

He said: The global economic recession and challenges in the operating environment, such as fluctuation in raw material prices, pay raises and cost pressures, will test Fazer Group in the coming year. Economic insecurity affects also the consumers' behaviour and choices. However, Fazer operates in a field which has to do with people's everyday life.”

Confectionery – and chocolate in particular – has proved resilient in the economic downturn, with major chocolate and cocoa manufacturers Barry Callebaut and Natra both reporting increased profits recently, while confectionery companies such as Nestle have also reported sales growth.

Slotte is also keen to highlight the commonality of Finnish and Swedish environmental standards.

He said: Responsible and local operations are one of Fazer's strategic focuses. For example, all Fazer's bakeries in Finland, Sweden and the Baltic states have common goals and measurements for sustainable development. We especially focus on rationalising the use of energy and diminishing the amount of waste.”

Following the confectionery branch’s reintegration, the Fazer Group now has four divisions: Fazer Amica, a catering company operating in Nordic and Baltic states; Fazer Bakeries; Fazer Russia; and Fazer Konfektyr.

Fazer’s confectionery division originally merged with Cloetta AB in 2000 and the company says the current de-merger has resulted from a disagreement between the owners of the respective businesses over the future development of the company.

Its top-selling confectionery brands in Sweden are Dumle, Tutti-Frutti, Geisha and Karl Fazer.

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