Lindt: consumer sentiment buttresses top-end confectionery sales

By Lynda Searby

- Last updated on GMT

Related tags: Chocolate maker lindt, Profit, Lindt & sprüngli, Switzerland, Lindt

Despite volatile cocoa prices, fragile consumer confidence and retail price pressure, positive first-half results posted by Swiss chocolate maker Lindt & Sprüngli point to a high level of resilience at the premium end of the confectionery category.

Whereas most chocolate markets recorded modest value growth of around three per cent and negligible volume growth during the first half of 2011, Lindt reported profits up by almost a third and organic sales growth of 6.1 per cent versus the same reporting period last year, and battled a strong Swiss franc into the bargain.

Net profit rose 29.4 per cent to CHF32.1m in the first half, on sales of just over CHF1bn.

Lindt reported that particularly good progress was made in Germany, France and Italy, as well as by Lindt and Ghirardelli in North America.

“Germany is our most important European market, followed by France and Italy,”​ spokeswoman Sylvia Kälina told ConfectioneryNews.com. “Consumer sentiment was still positive in the early half which has led to a very good Easter business in these very important countries. Moreover, this year’s Easter term was late which had an additional positive impact on Easter sales.”

Profiting from a premium positioning

She added that the brand’s premium image played a role in this performance.

“The Lindt brand has very high awareness and is strongly positioned as a premium brand in these countries.”

Only the UK subsidiary failed to meet expectations, which Lindt attributed to the ‘especially difficult economic climate’.

To maintain its top-end positioning, Lindt has had to stand firm in the face of intensifying price pressure.

“The spread of discount chains means competition is increasingly price-focused. As a consequence of this, manufacturers are more and more under pressure in terms of the conditions imposed by their trade partners. The market is becoming dominated by increasingly aggressive promotional activities. In line with the consistent positioning of Lindt as a premium brand, the company is firmly adhering to its existing pricing policy and is only involved in such activities to a very limited extent,” ​said the company in a statement.

But sticking to its premium guns is clearly a strategy that has reaped dividends - the chocolate maker is on target to achieve its full-year forecast of 6-8 per cent organic sales growth and an increase in operating profit margin of 20-40 basis points.

Moving into emerging markets

International expansion will also be crucial to realising its growth aspirations. The company established a subsidiary in Japan last year, and in South Africa this year, and told ConfectioneryNews.com it has other markets in its sights.

“We plan to go into new emerging markets ie China, Russia, Brazil or India. All these countries are emerging markets with fast economical growth and an ever growing middle class which is likely to be reached by our premium chocolates,” ​said Kälina.

She said the company also plans to extend its network of Lindt Chocolate cafés. “This concept, which proved to be very successful in Australia, is very much qualified to build brand awareness in countries without a traditional chocolate culture.”

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