markets

Lindt & Sprüngli is a global leader in premium chocolate and prides itself on a tradition dating back for 170 years which began in Zurich in 1845. Today, quality chocolate is made by Lindt & Sprüngli at its twelve production sites in Europe (main brands: LINDT, CAFFAREL, HOFBAUER) and the USA (main brands: LINDT, GHIRARDELLI, RUSSELL STOVER) and sold all over the world by many subsidiary companies and branch offices as well as a comprehensive network of independent distributors. With the pro rata contribution of Russell Stover, the Lindt & Sprüngli Group reported sales worth CHF 3.39 billion in the year under review 2014.

Switzerland

In a challenging environment, Chocoladefabriken Lindt&Sprüngli (Schweiz) AG reported good sales growth of 6.8 % to CHF 334.4 million (previous year: CHF 313.0 million).

In the year under review, the economic environment proved satisfactory, despite the continuing strength of the Swiss franc. This resulted in slight growth of the chocolate market. Driven by expanding discount chains, prices remained under pressure. In this challenging environment, Chocoladefabriken Lindt & Sprüngli (Schweiz) AG ended the year with good sales growth of 6.8 % against the previous year. Once again, it managed to invigorate the market with innovative product launches. With additions to the tablet segment such as GAMME BLEU “Gaufrettes,” LES GRANDES “Toffee Noisettes,” and the reintroduction of the LINDT Surfin tablet from 1879, these new products achieved an excellent position on the market. In the pralinés segment, the latest relaunch of the “Connaisseurs” range revitalized the market. Introduced in the previous year, the HELLO line has become firmly established and is being regularly extended to include new summer and Christmas offers. Further highlights of the seasonal business were a new record of six million GOLD BUNNIES sold at Easter, as well as the TEDDY with the new “Heartfelt Moments promotion” in Swiss cities where a nationwide response was achieved in cooperation with several media partners. Growth of our own retail business made further progress with the opening of two new shops at highly frequented tourist attractions, the Swiss Museum of Transport and the Jungfraujoch, which were accompanied by spectacular events and extensive national and international media coverage. A major new LINDOR facility was implemented in mid-2014, confirming the active leadership role of the Swiss subsidiary company within the Group; it is now admirably placed to meet growing demand for premium chocolate in coming years.

germany

With sales worth EUR 428.1 million (previous year EUR 407.3 million), Chocoladefabriken Lindt&Sprüngli GmbH once again reported above-average growth of 5.1 % and further increased its market share.

The economic environment was quite favorable at the start of the year before cooling noticeably in the second half because of the weak growth dynamic in the Eurozone and the accompanying uncertainty felt by market participants. The reduction of the chocolate market volume was compensated by price increases which brought slight growth. Another feature of the chocolate market was the growing importance of private labels and hard discounters. In this challenging environment Chocoladefabriken Lindt & Sprüngli GmbH managed to increase its sales by 5.1%, thereby gaining further market shares. This above-average result is attributable to the focus on successful classics such as LINDOR, EXCELLENCE and the GOLD BUNNY and also to product innovations. Following the successful launch of the HELLO and DIVA collections in previous years, further HELLO Christmas products and a new product line called ROCK CHIC in a modern rock style were added this year. In the Christmas segment, the new “Sweet Christmas Helpers” theme world contributed further growth. Finally, double-digit sales growth of the own retail business was achieved by maintaining the loyalty of existing customers and winning many new ones. The outcomes of a branch survey with regard to brand loyalty in which LINDT topped the rankings brought welcome confirmation of our marketing activities. The strategic expansion of the facilities at the Aachen production site was successfully completed in the year under review, creating capacity for further growth.

FRANce

Lindt&Sprüngli SAS increased its sales by 6.4 % to EUR 314.0 million (previous year: EUR 295.0 million). This good result confirms the company's leading position as the growth driver on the French chocolate market.

Because of the tense economic and political situation in France, consumer sentiment remained flat at a weak level. The retail scene, on which price competition was as tough as ever, saw the formation of new alliances and is now heavily concentrated with just four key players who occupy a similar market position. Against this difficult background, the French subsidiary company, which ranks among the fastes growing consumer goods businesses in the country, reported sales 6.4% higher at EUR 314.0 million, against previous year, once again growing faster than the chocolate market as a whole. LINDT accounted for some two-thirds of overall market growth in the tablet segment, winning record market shares and further strengthening its no. 1 position as the leading tablet brand. This trend was led by the key products EXCELLENCE and CREATION. Once again LINDT proved its ability to win further consumer loyalty with successful new concepts. For example, the CREATION “Citron Frappé” was awarded the title of “Best Innovation of the Year” by a leading trade partner. LINDT's market share in the important French seasonal business also rose. At Easter LINDT successfully established its ranking as the second most important player on the market and won new followers at Christmas with PLAISIRS D'ENFANCE, a new creation by the LINDT Master Chocolatiers. The first edition of the LINDT customer magazine “LINDT Passion Chocolat” was also launched and distributed to more than two million households. The extension of the Oloron-Sainte-Marie production site was completed and a new manufacturing line was commissioned. This now enables growing demand in France and on the export markets to be met more efficiently.

ITALy

Lindt&Sprüngli SpA and Caffarel SpA achieved a consolidated result of EUR 216.1 million (+3.1 %) in a very challenging economic environment.

The Italian economy lost ground once again, lapsing into an even deeper stagnation. Although consumer sentiment stabilized slightly, the overall chocolate market declined, and the commercial environment remained tense. Manufacturers were obliged to leave their prices mostly unchanged, as a result of which branded products are being offered in the retail trade at near deflationary prices. Thanks to the focus on key brands, convincing innovations, a strong presence during the main festive seasons and improved visibility at the point of sale, LINDT nevertheless achieved further growth and gained market shares in every segment. Product distribution was extended and good progress achieved, especially in the modern retail segment. Good sales figures were reported in particular for EXCELLENCE and LINDOR, with the “Milk,” “60% Cocoa” and “Champagne” variants as well as “Petits Cœurs” on Valentine's Day. The national launch of HELLO in autumn, boosted by a stronger presence at the point of sale, also proved successful. Moreover, LINDT is particularly well placed with 44 own retail outlets to which two new units were added in the year under review. At the now traditional and universally known “Eurochocolate” festival in Perugia, which attracts more than one million visitors every year, LINDT remains one of the key partners. In the year under review a strong focus was placed here on HELLO in order to support the national launch. LINDT even won the “Eurochocolate Award” of the year for the most impressive and innovating presence of the HELLO range.

In the year under review, Caffarel SpA organized a big marketing package to celebrate the 150 th anniversary of its best-known line GIANDUIOTTI, which features the unique and incomparable gianduia filling of cocoa and hazelnuts. CAFFAREL products are distributed exclusively in the traditional trade reporting a weak development. On the other hand, export business to around 50 countries proved impressive.

NORth america

Lindt & Sprüngli (USA) Inc., Lindt & Sprüngli (Canada) Inc. and the Ghirardelli Chocolate Company achieved cumulative sales of USD 1.06 billion (previous year: USD 943.2 million), representing organic growth of 14.3 %. Additionally, North American business was strengthened by the acquisition of Russell Stover.

Last year the economic situation in North America picked up strongly, accompanied by a greatly improved unemployment rate and a robustly higher gross domestic product. The good developments in the chocolate market are being driven by the over-proportional growth of the premium segment. As has been the case for many years now, LINDT and GHIRARDELLI are the fastest-growing chocolate brands in this segment. In addition, the LINDT and GHIRARDELLI product assortment will be supplemented in future by the brand portfolio of Russell Stover.

With substantial sales growth of 17.6% Lindt & Sprüngli (USA) Inc. further strengthened its leadership in the premium segment in terms of market share and made an important contribution to its swift development. Sales were driven by successful market launches such as the HELLO line which appeals to an all-new target group with its trendy design and sophisticated recipes. The LINDT assortment was further extended to include a range of innovative taste variations which were successfully placed on the market under the LINDOR and EXCELLENCE label. In the important Easter business, another LINDT GOLD BUNNY “Celebrity Auction” was held for a good cause, further strengthening the GOLD BUNNY's position on the market as an Easter icon. The presence of the LINDT Master Chocolatier's float at the traditional Macy's Thanksgiving Day Parade in New York was a highlight of the year once again. This unique event marks the official start of the Christmas business in the USA and is watched by some 3.5 million spectators along the route and more than 50 million people at home on TV. Special mention must be made of the 25th anniversary of Lindt & Sprüngli (USA) Inc. which was suitably celebrated by a number of campaigns in the year under review. With sales of less than USD 10 million the brand was practically unknown in 1989. In recent years, LINDT has written a unique success story in the world's biggest chocolate market. Not only were sales stepped up to well over USD 420 million, but LINDT also mainly contributed to establish the premium chocolate segment and, with LINDOR, EXCELLENCE and the GOLD BUNNY, built up unique brands with an iconic reputation, making millions of American citizens adepts of these premium products. Of the 50 employees who joined the company 25 years ago, 17 are still in the team; a fitting tribute was paid to them for their loyalty and strong commitment at the jubilee celebrations. They have given exemplary proof of their dedication to the business and of the motivated work which has been done in the USA since 1989.

With sales growth of 12.5%, Ghirardelli Chocolate Company continued on the path to growth reported in previous years. The introduction of the innovative “Minis” proved particularly promising. This product appeals to a younger target group and will further enhance demand for premium chocolate from Ghirardelli. The SQUARES too reported another successful year. With its high cocoa percentage, the “Intense Dark” line in particular gained ground with double-digit sales growth, which was driven mainly by innovative recipes and strong marketing backup. The own shop and restaurant chain attracted some 14 million visitors in the year under review and further extended its presence with new openings at prominent sites such as Louisville, Las Vegas and Boston.

Russell Stover, the new subsidiary company, was acquired on July 14, 2014, and added sales worth some USD 270 million to the North American business in the third quarter with the RUSSELL STOVER, WHITMAN'S and PANGBURN'S brands. Strategically the biggest and most important acquisition in the history of Lindt & Sprüngli, this move will greatly enhance the Group's presence from now on; as the no. 3 chocolate manufacturer in the USA, it will in fact clearly dominate the premium segment in the world's biggest and most important chocolate market.

Lindt & Sprüngli (Canada) Inc. with sales growth of 11.3% still leads the premium segment in the country and gained substantial new market shares yet again. An Ipsos survey shows that LINDT is now the no. 1 chocolate brand in Canada in terms of consumer awareness. The good result is all the more impressive in view of the great challenges facing the market. In the year under review, mergers in the trade led to increasing pressure being put on suppliers' prices and aggressive price promotions. LINDOR and EXCELLENCE remain the two key sales drivers in Canada and were backed up by an extensive marketing package. LINDT's own shops, some 20 in all, cover the whole territory and make a key contribution to the generation of profitable growth.

GReat britain

Lindt&Sprüngli (UK) Ltd. continued its successful growth of previous years, ending the year under review with sales 14.7 % higher.

LINDT once again achieved an excellent result in Great Britain, further extending its market shares and so continuing the steady growth of previous years. Both LINDOR and EXCELLENCE reported strong growth rates attributable in part to the launch of country-specific recipes such as LINDOR “Strawberries & Cream” in spring, contributing to still higher sales on Valentine's and Mothers' Day. Launched in the pralinés segment in the previous year, the “Master Chocolatiers' collection” was very well received and complemented by a delicate Truffle range. At Easter, the presence of the GOLD BUNNY was boosted by a nationwide treasure hunt campaign in selected parks; this met with an enthusiastic response everywhere. In addition, the LINDT Master Chocolatiers' craftsmanship was celebrated at many further events including a “Taste of London,” the “Coffee Week” and the “Salon du Chocolat.”

rest of europe

Lindt&Sprüngli (Austria) Ges.m.b.H. ended the financial year with sales growth of 7.0%. The biggest Austrian Easter Bunny hunt in Schönbrunn Palace Park, organized for the third time, once again proved a magnet for the public and developed into the Vienna Easter Festival for young and older chocolate gourmets. With sales 6.8% higher in an economic environment that remained as tough as ever, Lindt&Sprüngli (España) SA grew faster than the chocolate market as a whole, thanks to strong development of the LINDOR and EXCELLENCE core brands and now also HELLO, winning market shares in every segment. Lindt&Sprüngli (Nordic) AB once again reported strong growth and won further market shares on all three key markets of Sweden, Norway and Finland. In September 2014 the first LINDT boutique was inaugurated in Oslo city center. Lindt&Sprüngli (Czechia) s.r.o. serves the markets of the Czech Republic and Slovakia where it is the fastest growing brand on the entire chocolate market. Lindt&Sprüngli (Poland) Sp. z o.o. reported robust growth with a concentrated focus on the expansion of LINDOR sales through numerous activities. In the second year since its opening, Lindt&Sprüngli (Russia) LLC. turned in very impressive results in a challenging economic environment. Thanks to marketing support and many tasting events, business was very positive, especially in the big cities of Moscow and Saint Petersburg. The presence of the Master Chocolatiers at the Moscow City Anniversary when 800,000 LINDOR truffles were handed out for tasting was a special highlight. Further progress was also achieved on the other European markets. Particular mention should be made of the strong sales growth in Bulgaria and in Holland where LINDT was able to achieve a strong performance.

Rest of World

Lindt & Sprüngli (Australia) Pty. Ltd. ended the last financial year with impressive sales growth of 10.0%. The EXCELLENCE line developed particularly well after its extension to include the new “90 % Cocoa” and “Sea Salt Caramel” varieties. With the new LINDOR “Strawberries & Cream” recipe, this most pupular product line is very well accepted by consumers, achieving particularly strong sales on Mothers' Day. The “Chocolate Cafés” continue to strengthen the premium image values of the LINDT brand. Lindt  & Sprüngli (South Africa) Pty. Ltd. reported further progress with an extended product portfolio. The exclusive launch of HELLO with the biggest retail partner proved particularly successful and was further boosted by numerous promotions. Lindt & Sprüngli Japan Co., Ltd. has opened further outlets so that we now have twelve separate boutiques in that country. Sales continue to advance strongly with growth in excess of 50% representing a welcome combination of higher sales in existing and new outlets. In the Middle East, despite the challenging political environment, dynamic growth was nevertheless achieved, especially in the United Arab Emirates, Qatar and Egypt. Sales growth at Lindt & Sprüngli (China) Ltd. proved satisfactory. In the principal cities of the People's Republic of China our market share has been growing thanks to the launch of LINDOR Cornets and the strong focus on EXCELLENCE tablets. In department stores and gourmet outlets LINDT is present with a shop-in-shop concept and its own sales force which highlights Swiss chocolate culture and hands out tasting samples of LINDOR truffles. In Hong Kong, LINDT is represented with its finest chocolate specialties at major public events in the city. The trend is equally satisfactory in Taiwan, and Korea. In Latin America, the local chocolate markets continue to grow in the main, highly promising markets of Brazil, Chile and Columbia despite the difficult economic situation. To further enhance dynamic growth in the key strategic market of Brazil, our own subsidiary company was incorporated in the year under review and established a joint venture with the CRM Group, the market leader for Brazilian premium chocolate. The joint venture in which Lindt & Sprüngli holds a 51% majority stake plans to draw on the own successful retail concept to build up LINDT as the leading premium chocolate brand in Brazil. In parallel, distribution in the local trade channels will be further stepped up.

DUTY FREE/TRAVEL RETAIL

In the Duty-Free/Travel Retail segment, LINDT is represented at over 500 airports worldwide and again reported highly dynamic growth in 2014, winning further market shares. The development of LINDT shop-in-shop concepts and a heightened presence at major international airports help greatly to enhance familiarity with the LINDT brand and its image all over the world. Growth of LINDT in the Duty-Free sector was achieved in 2014 both in the core range, e.g. the LINDT Napolitains and 300g tablets, and also with successful innovations. The launch of the LINDOR “Tubes” Limited Edition proved particularly successful with promotional measures achieving double-digit growth for LINDOR.

procurement

For some two years now the price of cocoa has been rising constantly to reach record highs. In 2014 this resulted in general price increases throughout the chocolate industry. Although Lindt & Sprüngli always endeavors to hold its prices as stable as possible through efficient cost management and optimized purchasing policy, some punctual adjustments nevertheless had to be made. Despite a record harvest in 2014 the commodity markets reacted sensitively to speculative fears that the Ebola epidemic might spread in West Africa. That pushed cocoa prices up still higher. Higher milk production and falling demand from Asia caused milk prices to collapse by almost half on the global milk market. In Switzerland, however, milk prices remained as high as ever. World sugar prices fell because of further surpluses and big stock inventories. In the dried fruit segment, prices rose because of heavy demand for hazelnuts and almonds. This development was further heightened by frost damage to the 2014 hazelnut crop in Turkey, the main producer country. Prices of packaging materials remained relatively stable.