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Lindt

Lindt & Spruengli (Switzerland)

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Lindt & Spruengli is the world's leading manufacturer of fine chocolate, and one of the top six overall. Its principal products are marketed under the Lindt brandname, now one of Switzerland's most valuable brands, and the top-selling tablet chocolate in several continental European markets including Germany and France. The company produces a wide range of boxed and bar chocolates, as well as the enormously popular Gold Bunny and Santa Claus shaped hollow eggs. The group has prospered in recent years by firmly maintaining premium positioning and avoiding the mass confectionery sector. It has expanded its footprint through the acquisition of other upper-end manufacturers in key markets, including Ghiradelli and Russell Stover in the US and Caffarel in Italy.

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Competitors

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Brands & Activities

Lindt & Spruengli's range has been successfully extended across a number of different sub-brands. The most successful of these currently is the Lindt Excellence selection of flavoured premium chocolate tablet bars, with a high cocoa content. Other tablets include Creation filled bars, Passion Chocolat gourmet chocolate and nutty Les Grandes, all in several different flavours or varieties.

The company also markets a wide range of wrapped treats under the main Lindt brand. The most widely known of these is perhaps its Gold Bunny hollow eggs, a perennial favourite at Easter. Their success has led to the introduction of shaped Gold Reindeer and Santa Claus hollow eggs for Christmas. However, the company has been forced to fight a series of legal battles to protect its Gold Bunny from copycat manufacturers. Lindt has successfully registered the design as a three-dimensional trademark in 15 European countries. The company won a case against an Austrian copier in 2011, but its decade-long legal action against German competitor Confiserie Riegelein finally ended in defeat in 2013. German courts had repeatedly rejected Lindt's claims against Riegelein, and the appeal process was halted by the German Supreme Court just before Easter 2013. Meanwhile, Lindt's own Gold Bear, introduced for Christmas 2011, was itself on the receiving end of a suit from Haribo which claimed to have a patent on the concept.

Another key brand is the Lindor range of boxed wrapped truffles, accompanied by Petits Desserts and Connaisseurs boxed pralines. The Lindt brand family accounts for 75% of revenues, or around €2.9bn, including just over CHF1bn from the Lindor sub-brand.

In 2012 Lindt introduced a new premium "lifestyle" chocolate sub-brand under the name Hello, aimed at a younger and more fashionable market. Launched in Germany, it was gradually being rolled out into other markets. The group has also accumulated a small collection of other gourmet chocolatiers, such as Caffarel in Italy, famed for its Gianduia 1865 brand; Ghirardelli in the US, best known for its individually wrapped Ghirandelli Squares, bars and fine baking chocolate; and Hofbauer and Kuefferle in Austria.

In July 2014 the group expanded its footprint in the US with a deal to acquire Russell Stover, the maker of boxed chocolates and candies. No price was disclosed, but analysts estimated a deal value of $1.5bn. Best-known for gift box selections under the Russell Stover, Whitman's and Pangburn's brands, Stover's sales are around $600m annually, but the business has continued to under-perform Lindt's other global operastions for several years. The acquisition of Stover established Lindt as the third largest US confectioner behind leaders Hershey and Mars. According to Nielsen data for the year to July 2015, combined share was 5.4%, more or less on a par with Mondelez (5.3%) and Nestle (5.1%). The acquisition of Nestle's US confectionery by Ferrero in 2018 will push Lindt back into 4th place.

Also in 2014, the group merged its operations in Brazil into a joint venture with leading local premium chocolatier CRM Group, in which Lindt retains a 51% interest.

The subsidiary brands tend to run separately from the Lindt business in each of these three markets. Currently, the group has six production facilities in Europe and two in the US, and operates a small network of branded retail outlets in several key markets. However the economic slowdown persuaded the group to close more than half of its 80 retail outlets in the US in early 2009. By the end of 2016 there were around 370 branded shops worldwide including a number of Lindt Chocolate Cafes, serving hot chocolate, ice cream and other snacks.

The group's marketing has been centred for several years around its "maitres chocolatiers", expert chocolate-makers who oversee production in all its global production sites. In 2009, the company took a new tack, naming Swiss-born tennis star Roger Federer as its first-ever - and still only - global brand ambassador. That relationship was renewed for a further term in 2017, though terms were not disclosed.

Financials

Lindt & Spruengli is publicly quoted in its home country. However, the group's controlling shareholder is its pension fund, which controls 20% of equity. Despite general stagnation in the global confectionery market, Lindt & Spruengli has enjoyed solid growth in recent years by concentrating on the top end of the market. For 2016, revenues rose 7% to a record CHF 3.90bn (€3.58bn). Net profit rose 10% to CHF 420m (€386m).

The US is the company's single biggest market, accounting for 37% of sales in 2016, or CHF 1.5bn (approx $1.5bn), followed by Germany (CHF 505m), Switzerland (CHF 356m), France (CHF 351m), Italy (CHF 223m) and the UK (CHF 155m).

Preliminary figures for 2017 showed a further increase to CHF 4.09bn (€3.7bn). Organic growth for the group as a whole was 3.9%, but was dragged down by weak results from Russell Stover. Excluding Russell Stover, organic growth would have been 5.9%.

Background

Inspired by the work of Switzerland's confectionery pioneers such as Cailler, Suchard and Daniel Peter in the 1870s, Rodolphe Lindt developed a secret process for making high quality chocolate. His complex and laborious system involved rolling a special blend of cocoa and additional cocoa butter through a shell-shaped trough known as a "conche" for as long as 72 hours before allowing it to solidify. The result was an exceptionally fine chocolate "fondant" which didn't have the bitter taste and crumbly texture then common to all other types of eating chocolate. The product was widely admired, making Lindt arguably the most celebrated confectioner of his time. However he had no interest in mass production, and in 1899 he sold the business to the Spruengli family, already well established as confectioners in Zurich. David Spruengli-Schwarz had set up in business in 1845 with his son Rudolf, but the firm expanded rapidly towards the end of the century under the control of Rudolf's two sons.

Following the purchase of the Lindt business in Bern (which continued to be run by Rodolphe Lindt until 1905), the company adopted the new name Lindt & Spruengli. Exports of Lindt chocolate and other products soared over the following years, before collapsing in the 1920s in the face of international trade restrictions and the World War II. During the late 1940s, the group ventured back into the international market, establishing licensees in Italy, Germany and France. As business began to grow, the group gradually began to expand further, eventually buying out its licensees during the 1970s and 1980s, as well as various suppliers of cocoa butter and other ingredients. The group also began to acquire other small manufacturers of fine chocolate such as Hofbauer of Austria in 1994, Caffarel of Italy in 1997 and The Ghirardelli Company of San Francisco in 1998.

Last full revision 30th January 2018

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