Lindt Chocolate Research Paper
INTRODUCTION: Chocoladefabriken Lindt & Sprungli AG was established in 1845 by David Sprungli and his son Rudolf Sprungli. Company was started as an artisanal sugar bakery & transformed itself into in innovative chocolate maker in 1892. In 1994 the structure was redesigned & a kilchberg based holding company was formed. Chocoladefabriken Lindt & Sprungli AG is one of the world’s leading manufacturers of premium chocolate and chocolate-related products in confectionary industry, selling in more than 80 countries, with almost $1 billion in worldwide sales.
The predominantly Swiss-owned Corporation manufactures various products of its renowned Lindt brand in Switzerland, Germany, France, Italy, and Austria, as well as in the United States. The international group includes major sales and distribution firms in England, Poland, Spain, Canada, and Australia, as well as sales offices in Buenos Aires, Hong Kong, and Dubai. Lindt & Sprungli products are distributed by a network of distributors that spans the globe.
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Objective: I have chosen this firm because of my interest in Swiss chocolates and to know the factors responsible for making Switzerland as the world’s largest manufacturer of chocolates and the influence of geography in making this firm a renowned chocolate brand in the world. (Chocoladefabriken Lindt & Springli AG History) COMPANY PRODUCTS: Chocolate bars, Chocolate bags, Gift boxes, Lindor, Excellence and Golden bunny. ROLE OF GEOGRAPHY: Swiss leads the world in chocolate consumption with, Switzerland being the top most chocolate loving country in the world with the per capita consumption of 25. 6 lbs. year (people), thus the chocolate consumption level of the people, provides ample scope for the growth and progress of firms like Lindt. Higher standard of living: people in Switzerland has high standard of living thus boosting the performance of premium chocolate firm like lindt. Chocolate associations: there are chocolate associations in Swiss that maintain the brand and quality of chocolates thus help the firm in increasing their market share. Geography: As Switzerland is surrounded by other high chocolate consumption countries like Germany, Austria, France, Liechtenstein and Italy, it widens the scope of the company to improve its nternational trade. Culture: food is an important part of Swiss culture, Swiss culture remained unto itself and is mostly an agrarian society, with Dairy farming has always been important and is the basis for Swiss chocolate, also as chocolate manufacturing was initiated by Switzerland chocolate has been attached a cultural importance and Each season, festival, and region has their own specialty crafted, tis cultural importance of chocolate has created a permanent loyal market for the company. chocolate by country) Infrastructure: Switzerland has great infrastructure facilities, thus eliminating the friction of distance problem and enabling the company to develop its market. Tourism: Switzerland is a great tourist destination, thus increasing the sales of the firm due to tourism particularly during spring season. PEST ANALYSIS: Political: Switzerland has an advanced parliamentary democracy and politically highly stable. With centralized power and the President and authorities easily accessible and transparent and no political issues in chocolate industry .
Switzerland is also a member of the European free trade association, WTO and many more and has excellent relations with the UK. Hence such conditions favor the firm to carry its operations successfully along with increasing international trade. Economic :Switzerland has high purchasing power, high standard of living , low inflation rate and competitive economy in the world, thus boosting the sale of premium Lindt chocolates, though the economic crises in Europe has affected the business of the company as compared to 2010, but still geographic expansion of company has helped it to even face the economic crises.
Social: people in Swiss are quality conscious, respect culture, loyal, peace loving, respect moral values and believe in long term relationship with the firms, all these social factors had helped the firm improve on its performance by delivering premium quality chocolates with Swissness. Technology: Switzerland is highly advanced in science & technology, most innovative nation in the world, research and innovation forms driving force, this technological environment has been a backbone to success of the firm as it has developed new manufacturing methods to create innovative products and thus attract ore customers both domestic and international. (PEST analysis of Switzerland) STRATEGIES OF THE FIRM: Positioning: the brand positioned itself as “affordable quality” communicating that it’s an affordable brand with excellent quality; this strategy also helped the company to enter the gift market positioning its range as an affordable alternative to common gift ideas including flowers and wine. Sampling program: they run sampling programs to put the product in the hands of the consumers as the first step towards building brand awareness and encouraging repeat purchase.
Due to this initiative Sales for 2000 Christmas period were up 60% on the previous year and sales of Lindor balls (individual units) have rocketed to 40 million in 2000. TV campaigns: traditionally advertising was limited to press and consumer sampling programs, but recently Lindt is set to embark on TV campaign to generate interest and excitement in the brand while promoting the brand values of “quality”, “Swiss ness” and “tradition” and ‘Smooth Surrender” tagline. Premium range: company mainly focuses on the premium chocolates as a strategy to capture the quality conscious premium market of Swiss to increase its market share. Lindt strategy wins hands and hearts) Seasonal offerings: company produces seasonal offerings like “Golden Bunny” every Easter which is chocolate rabbit with red (dark chocolate) or white (milk chocolate) around the neck. Also during Christmas, items like chocolate reindeer, ‘Santa’, ‘Snowmen’, bells. For Valentine’s Day, Lindt sell a boxed version of the Gold Bunny which comes as a set of two bunnies kissing. Other Valentine’s Day items include a selection of heart shaped boxes of Lindor chocolate truffles. Lindt & Sprungli) CSR initiatives: Lindt strongly condemns child labor and remains committed to eradicating it from cocoa production by directly controlling the supply of raw materials from the farmers, also it is indulged in fair trade as it directly purchases from the farmers thus ensuring fair prices to farmers for their economic and social welfare while maintaining excellent quality. (company social responsibility) Lindt Gold Bunny Campaign:”Lindt GOLD BUNNY ONLINE” (2010) an online game and supporting Easter campaign that ngages mums and kids and encourages participants to play and enter a prize draw to win a 1KG Lindt GOLD BUNNY, the game also included simple data capture solution so that Lindt can capture as many potential customer as possible for the future E-commerce chocolate shops or other online events. As the campaign was huge success with approx. 50,000 visitors in 30 days and over 9 out of 10 enjoyed the game, they came up with “Lindt GOLD BUNNY EASTER WONDERLAND HUNT”(2012) LINDT’S MILESTONES/ EVIDENCE OF SUCCESS:
Establishment of the wholly-owned subsidiaries in the following countries: Lindt & Sprungli England (1932), Lindt y Sprungli (Espana) SA in Barcelona(1981), Lindt & Sprungli (Canada) Inc. in Toronto(1995), Lindt & Sprungli (Sweden) (2005), Lindt & Sprungli s. r. o. (Czechia) in Prague(2008), Lindt & Sprungli Japan Co. , Ltd. in Tokyo(2010), Lindt & Sprungli (South Africa) (Pty) Ltd. in Cape Town(2011), Lindt & Sprungli (China) Ltd. n China, Shanghai(2012) (Milestones) The following diagrams indicating growth in the dividend per share and share capital of the company indicates that the company is constantly performing well and even during the economic crises in European nations, the company has managed to earn good profits mainly due to its geographical expansion in different countries and continuous innovation, thus indicating that the market value of the company is good and is world’s leading premium chocolate company (lindt & sprungli’s annual report 2011) (milestones) SWOT analysis:
Strengths:1. Strong financial position. 2. Excellent brand name and brand presence3. High brand loyalty4. Great taste and packaging4. Highly regarded as a leading global chocolate brand5. continuous innovation| Weaknesses:1. Expensive chocolates2. Not easily available| Opportunities:1. Tap growing cities and retail chains2. Have more variety and smaller gift packages3. Tap the potential market of health conscious people. 4. Can diversify into cakes and coffee market. | Threats1. Other competing chocolate brands2.
Calorie conscious people| Based on the above mentioned strengths, the company can respond to the challenges and opportunities in the following ways: * Company can use its well established global brand and innovativeness to come up with low calorie chocolates while maintaining its rich taste and brand name to capture the potential health conscious market. * Unlike other premium chocolate competitors, company can use multi-channel approach to make its chocolates available easily via retailers and even online distribution by investing its huge funds into multi-channel distribution. Also as consumers today demand smaller gift packages and company has only large gift packages so, it can come up with small and extra small gift packages to add to its product line and meet the current need through its innovative nature. * Also using its global renowned brand image company can diversify into other products like cakes and coffee to increase its market share. FUTURE PROSPECTS OF THE FIRM AND INDUSTRY IN SWITZERLAND:
Though the economy is currently going through economic and financial crises, still the firm and industry has future prospects in the region because of the following reasons: Growing population: As Switzerland has highest chocolate consuming population, growth in the domestic population will open doors for the company to increase its domestic share further. Large demand for luxury goods: as Switzerland is known for its high end luxury goods, the emerging markets like BRIC countries have large demand for such luxury items, thus giving the firm an opportunity to capture this potential market and increase its exports.
Excellent research and development capabilities: Switzerland is known for its great R&D activities, which enables the firm to come up with new concepts and excellent packaging. Major centre for consumer goods multinationals: many multinationals are attracted towards Switzerland due to its protectionist policy and government aided research, thus contributing to GDP and national income and creating prosperous future for domestic companies even during recession.
Qualified and skilled work force: Switzerland has highly skilled and qualified work force which will help the companies to operate efficiently and in an organized manner. Mergers and acquisition: many domestic companies as known for their renowned quality and global brand and so huge cash reserves, had successfully merged with other companies to increase their international presence and gives the same opportunity to the other domestic companies. Key Competitors: 1. Toblerone, 2. Ghirardelli, 3. Ferror Rocher SOME ENVIRONMENTAL CHALLENGES:
There is a general perception of a substantial risk that the release of GMOs in the environment will have negative impacts on the environment . therefore, Most of the Swiss chocolate industry need to follow the regulation of not using derivatives from genetically modified soy in its chocolate production. Also there is regulation of using proper label for the use of consumers to know that the product is GMO-free. Also, they encourage only organic food production. Thus the firm need to take all this points into account for their successful operations.
CONCLUSION: Thus, from the above mentioned factors it can be said that, Switzerland plays a vital role in the growth and development of chocolate companies considering geography and multidimensional factors like people, history and so on and is so rightly called as the heaven for chocolate industry and also in future due to its competitive edge over R&D, premium quality and other above stated factors Swiss will continue to be favourable for the development of chocolate industry despite of currently going through economic slowdown.
Also the strengths and strategies of the global brand” Lindt & Sprungli AG”, is helping it to overcome all the challenges posed by the economic crises in European nations and is still the world’s leading premium chocolate brand and will continue to be because of its bright future in Switzerland and other nations of the world. BIBLIOGRAPHY Chocoladefabriken Lindt & Springli AG History. (n. d. ). Retrieved 7 1, 2012, from fundinguniverse: http://www. fundinguniverse. om/company-histories/chocoladefabriken-lindt-spr%C3%BCngli-ag-history/ chocolate by country. (n. d. ). Retrieved 7 1, 2012, from Zchocolat: http://www. zchocolat. com/chocolate/chocolate/chocolate-by-country/swiss-chocolate. asp company social responsibility. (n. d. ). Retrieved 7 2, 2012, from lindt: http://www. lindt. ca/swf/eng/company/social-responsibility/lindt-strongly-condemns-child-labor/ Lindt & Sprungli. (n. d. ). Retrieved 7 2, 2012, from wikipedia: http://en. wikipedia. org/wiki/Lindt_%26_Spr%C3%BCngli lindt