Lindt & Sprüngli Reveal Profits Despite Rising Cost of Cocoa

26 Jul 2016 --- Swiss chocolate and confectionery maker Lindt & Sprüngli is making significant market share gains despite working against the backdrop “of a challenging environment” in the global chocolate industry.

Speaking to FoodIngredientsFirst, about the release of its financial position for the first six months of the year, a company spokesperson explains what has been making 2016 a success so far.

“We are pleased that despite the difficult environment we once again outperformed the chocolate market as a whole,” the Lindt spokesperson tells us.

“We hold on to our well-proven selective distribution strategy and marketing activities and build on our excellent relations with the trade.

“We continue our expansion strategy by building up the premium segment in the world’s biggest chocolate markets.”

The company achieved solid sales growth of +6.6 percent, with sales of US$152.4 billion in the first half of 2016, despite the continuously high raw material prices for cocoa beans and cocoa butter.

The commodities have continued to increase in price because of poor crop yields in West Africa as a result of bad weather. However, this was offset to some extent by the lower prices for other raw materials like almonds and hazelnuts.

At the same time, stagnating chocolate markets and ‘generally subdued consumer sentiment’ have impacted the results so far this year, according to Lindt & Sprüngli.

However, despite the challenges, the company reports its outperforming the chocolate market as a whole and gaining important market share.

Switzerland and Europe, the key markets for chocolate, are largely saturated with the home market also suffering from the continuing trend in Switzerland for consumers to shop in neighboring Europe.

“Nevertheless, Lindt & Sprüngli holds on to its well-proven selective distribution strategy and achieved slight growth thanks to targeted marketing activities and excellent relations with the trade.”

Meanwhile, the German and French subsidiaries reported good results, and the UK subsidiary was particularly significant, reporting double-digit growth as did the smaller subsidiaries such as the Nordics, Russia and the Czech Republic and Poland. The world’s biggest chocolate market, North America, was weak with decline in sales and volume. But the premium chocolate segment continues to outperform the chocolate market as a whole as Lindt & Sprüngli’s three brands, Lindt, Ghirardelli and Russell Stover, hold the number one market position.

Looking forward to the second half of 2016, Lindt & Sprüngli expects a further acceleration of sales growth, backed up by recent investments in cutting-edge technology and new locations; In Stratham, US, a large production line has recently been installed to make filled chocolate products as well as a state-of-the- art Lindor machine. In Switzerland a new production line has also been set up.

by Gaynor Selby