Raw material price hikes hit Swedish confectioner Cloetta

By Jane Byrne

- Last updated on GMT

Related tags: Sweden, Finland, Cloetta

Ongoing high prices for raw materials including cocoa, milk powder, sugar and wheat and a decline in contract manufacturing sees Swedish confectionery group Cloetta reporting second-quarter sales loss and falling first-half earnings.

The manufacturer, the oldest confectionery firm in Sweden, said late last week that its net sales for the first half of the year - September 2010 to 28 February 2011 - totalled SEK 557m (€62.1m) (down from SEK 581m on the same period a year ago) and operating profit was SEK 22 million (down from SEK 37m).

It also reported that sales of Cloetta’s products for the second quarter – from 1 December 2010 to 28 February 2011 - amounted to SEK 202m (down from SEK 212m).

Cloetta has a strong position in Sweden as number two in the market in terms of volume, and last year saw it secure a dominant position in the Fairtrade category with the launch of its Cloetta Good brand.

"The second quarter can be summed up by a number of notable product launches and continued good performance for our strong brands but an overall decrease in sales, mainly for the pick-and-mix segment and seasonal products,"​ commented Cloetta’s CEO Curt Petri.

The pick-and-mix category is more popular in Sweden than the other Nordic countries and accounts for roughly one third of the total market.

Petri added that the confectioner will continue to implement operational efficiencies but, price increases on certain brands will, nevertheless, be unavoidable due to the hike in input costs.

Aiming for average organic annual growth of 3 per cent, Cloetta said previously that it intends to growth through strategic partnerships and acquisitions. 2009 saw it team up with Finland-based Oy Panda Ab to further broaden its product portfolio with a range of liquorice based products.

During the period August 2009 to July 2010, the Swedish confectionery market including pastilles and boxed tablets such as throat lozenges grew by 1.4 per cent in volume and 3.7 per cent in value, according to data from market research firm Nielsen.

Volume sales of chocolate confectionery rose by 1.8 per cent and sugar confectionery by 1.9 per cent, while pastilles declined by 7 per cent.

Sweden is Cloetta’s largest market, with a volume share of 13.3 per cent. The foremost competitors are Kraft Foods and Malaco Leaf, with volume shares of 30.2 per cent and 11.8 per cent, respectively.

Cloetta is also present in the other Scandinavian countries of Denmark, Finland and Norway.

Related topics: Business

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