Lindt bets on realignment of Russell Stover Candies for long-term growth

By Douglas Yu

- Last updated on GMT

Lindt acquired Russell Stover Candies in 2014.  Photo: ©iStock/Ekaterina Minaeva
Lindt acquired Russell Stover Candies in 2014. Photo: ©iStock/Ekaterina Minaeva

Related tags Lindt & sprüngli Chocolatiers Revenue Lindt

Lindt has reported organic sales growth of 3.6% for the first half-year 2017, reaching CHF 1.549bn ($1.603bn).

Lindt said it managed to increase shares in key regions and said is growing faster than the overall chocolate market, which is stagnant or growing slightly depending on geography.

However, Lindt faces challenges in North America where “consumer sentiment remained largely restrained,”​ the company said.

Realignment of Russell Stover

Lindt said Russell Stover sales declined during the period due to “strategic realignment in the challenging US chocolate market.”

“Excluding Russell Stover… Lindt & Sprungli was able to achieve very good growth of 6.6%,”​ the company added. “This is within the scope of the medium-/long-term strategic growth of target and represents an above-average result.”

Lindt has repositioned Russell Stover as an everyday chocolate​ brand rather than a seasonal one since acquiring​ the company in 2014.

Russel Stover recently launched its first line of sugar-free chocolate​ made with stevia, and named Andrew Deister​ as its new CEO to succeed Andrea Pfluger.

Lindt half-year 2017 Results
Source: Lindt

Lindt mentioned the brand’s realignment is making progress, but will take more time than originally anticipated. The realignment has caused the organic sales of company’s NAFTA segment (US, Canada, Mexico) to decrease by 3%.

The NAFTA segment amounted to total sales of CHF 558.1m ($577.9m).

Growing core brands

Lindt’s core business including the Lindt brand generates approximately 75% of the company’s total sales.

The two brands Lindt and Ghirardelli were able to “expand their leading positions in the premium chocolate segment [in North America],”​ Lindt said. “Taken together, the three brands Lindt, Ghirardelli and Russell Stover are number one in the premium segment, and number three in the US chocolate market as a whole.”

“Worth mentioning is also the double-digit growth for the subsidiary in Canada, supported by very good seasonal sales,”​ Lindt added.

Business outlook

Lindt expects accelerated sales growth in the second half of 2017.

However, “due to current developments in North America, it is anticipated that revenue growth for the full year will be slightly lower than in the previous years, combined with an increase of the operating profit margin,”​ the company said.

“The group is confident that its growth will considerably exceed the industry average,”​ Lindt said.

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