Chocolate Industrz Strategic Analysis Microsoft Word 文档.docx

Chocolate Industrz Strategic Analysis Microsoft Word 文档.docx

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ChocolateIndustrzStrategicAnalysisMicrosoftWord文档

ChocolateIndustrzStrategicAnalysis

IndustryandStrategicProject:

Lindt&SprüngliAG

BerlinSchoolofEconomicsandLaw

StrategicSkillsII

Prof.Dr.TimothyPett

May20,2009

ByAshuSingh,CarmenMedrano,ChristinaKreul

TableofContent

1.0ExecutiveSummary3

2.0CompanyOverview4

3.0TheChocolateConfectionaryIndustry4

3.1KeyIndustrySegments7

3.2Porter’sFiveForcesModel7

3.3TrendsintheEnvironment11

4.0Lindt&SprungliStrategy14

4.1ValueChain15

4.2Resources18

5.0FinancialAnalysis20

6.0Conclusion24

7.0Recommendations25

8.0References28

9.0Appendix30

1.0ExecutiveSummary

Lindt&Sprüngliisengagedinproducinganddistributingpremiumchocolatesaroundtheworld.Thecompanyhasachievedasalesgrowthrateofmorethan10%overthelast5yearsandin2008recordedrevenuesofCHF261.5millions.RegardlessofthecurrentfinancialcrisisanddifficultmarketenvironmentLindt&Sprünglimanagedtogrowaboveaverageandoutperformeditscompetitors.

Thechocolateconfectionaryindustryhasbeengrowingatarateof6%inthelastfouryearsandthetopfiveproducersaccountfor50%oftheglobalmarket.Sincethechocolateindustryisconsideredtobemature,theCompany’sprimarystrategytoovercometheenvironmenthasbeentofocusontheexclusivepositioninginthepremiumchocolatesegmentwithconcentrationoninnovationandsystematicexpansionintohighpotentialgeographies.

Lindt&Sprünglihasfullcontrolofallstagesofproductionofthechocolateproducts–fromqualityselectionofpremiumcocoavarietiesfromthebestcocoaplantsintheworldtomanufacturingthroughtoelegantpackaging.Thefirmhasbeensuccessfulutilizingitstangible,intangibleresourceanditscapabilitiestohaveacompetitiveadvantageanddifferentiateitself.

ThepremiumstrategyofLindt&Sprünglihasbeenpayingoffinthelastyear.ThetrendsinthechocolateenvironmentindicatethatthecompanyshouldenterwithamoreaggressiveapproachintotheEmergingMarketstocapitalizeonthewindowofopportunitythatthesecountriescurrentlyoffer.Moreoverthecompanyshouldfollowadiversificationstrategyandbroaditssourcesofrevenuesbyforwardintegrationofthedistributionchannels.OnerecommendedstrategyistoopenCaféshopsinhighgrowingmarkets;thisconceptwillenhancedbrandawareness,aswellasofferconsumersnewinnovativechocolatebasedproducts.

2.0CompanyOverview

Lindt&Sprüngli,fromnowonreferasLindtorLindt&Sprungli,isaSwisshomebasedandgloballyactivecompany,producingandsellingchocolateproductsinthepremiumqualitysegment.Lindt&SprungliGrouphasitheadquarterinSwitzerland.Thecompanyhassubsidiaries（manufacturingsites）inFrance,Germany,Austria,ItalyandtheUS,alongwithsalesordistributioncompanieslocatedinCanada,Poland,UnitedKingdom,Spain,Australia,Sweden,Mexico,HongKongandDubai.ThecompanyhasplantsacrossEuropeandtheUnitedStates.

Thefirm’sproductsincludechocolatebars,chocolatetablets,chocolateboxes,pralinesandtruffles,itsbrandsincludeLindt,Ghirardelli,Caffarel,HofbaurandKuefferle.Thecompanymarketsitsproductsthroughitsownspecialtystoresandboutiques,aswellasthroughretailoutletsandcatalogsales.AccordingtoBordier&Ciethecompanyholds4%ofthechocolatemarket（Bordier&Cie,2009）.In2008with7,712employees,thefirmtotalsalesamountedUS$2.5billion.ThesharesofLindt&SprungliarelistedontheSwissandGermanStockMarket.

Thecompanywascreatedin1845inthecentreofZurichbyMr.Sprungliandhisson,bothconfectioners.In1899theSprünglifamilytookovertheSwisschocolatemanufacturerLindtandthecompanyreceivedthenameLindt&SprüngliAG.TodayLindthasacquiredaglobalreputationasthemostcreativeandinnovativechocolatier,specializinginpremiumqualitychocolate.

3.0TheChocolateConfectionaryIndustry

Lindt&Sprunglisalesgrowthofmorethan10%andaROICofmorethan15%onaverageoverthelastfiveyears,callstheattentiontowardsthechocolatebusiness.Thesefiguresmightbetheresultofanattractiveindustry;tofindmoreaboutthereasonsofthesefiguresananalysisofthechocolateconfectionaryindustryisnecessary.

Thechocolateconfectionaryindustryhasbeengrowingatarateof6%inthelastfouryears,thetopfiveproducersaccountfor50%oftheglobalmarket（CadburyAnnualReportandAccounts,2008）.Sincechocolateisaregionalbusiness,whereconsumersofeachregionseekaparticulartaste,fragmentationinthemarketandcomplexitiesinproductionexists.

AccordingtoDatamonitortheglobalchocolateconfectionarymarketreachedavalueof$43billionin2003,growingwithacompoundannualrateof4.1%intheperiod1999-2003.Duringtheconsecutivenextfiveyearsacompoundannualgrowthrateof3.7%wasexpected,themarketvaluewasforecasttogrowmoderateandreachavalueof$51.5billionby2008.Concerningthemarketvolume,itreached5.16billionkgin2003,growingatacompoundannualrateof2.1%duringtheperiod1999-2003（Datamonitor,2004）.

AlongwithdataprovidedbyReutersStockMarketsthefoodprocessingindustry,whereconfectionarychocolateislisted,has5Yr.Avg.ReturnonInvestmentof5.12%,1%and6%underneaththesectorconsumergoodsandtheS&P500indexrespectively.

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SincethechocolateconfectionarymarketismoreconsolidatedintheWesternregions,thestrongexpansionintotheAsianPacificmarketshasbeendrivingthegrowthinthisindustry.TheWesternmarketsareconsideredtobematureduetothestableconsumertastesandproductinnovation.However,theproductionofchocolateinAsiaPacifichasbeenincreasing,offeringanopportunityfornewmarkets.

TheglobalchocolatePotentialIndustryEarnings（PIE）areestimatedtoreach$76billionin2011,growingatacompoundannualrateof3.3%intheperiod2008-2011.ThemarketlargestshareoftheglobalchocolateconfectionaryindustryisexpectedtomovefromEurope,whichaccount46.40%in2003totheAsiancountries.In2011AsiaandOceanaareforecasttobetheworldchocolatelargestmarketwith34%,followedbyEuropewith25%andNorthAmericaandTheCaribbeanwith24%.Thepresenceofafirminthese3marketsenablesittocovermorethan80%ofthechocolatePIE（WorldOutlookforChocolateCandy,2005）.ThesedatarevealsthatthereisroomforthechocolateindustrytogrowasitexpandsintotheAsianPacificmarkets.

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Thechocolateconfectionaryindustrygloballyhasthecharacteristicsofamatureindustry;thegrowthprospectsarefew,growthratesgloballyareestimatedtokeepstable.Theaveragereturnofthisindustryinthefutureisalsoexpectedtobesteady.Moreoverthepriceearningsratiooftheindustry,anindicatoroftheinvestors’expectationsoftheindustryearningsgrowthinthefuturearemorethan10%lowerthantheS&P500.

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3.1KeyIndustrySegments

Inordertoanalyzeinmoredeptthechocolateindustryisnecessarytodivideitintosegments.Thisclassificationreflectsthemarketscovergenerallybythechocolatemanufacturesanditfollowstheindustrystandards.Themainchocolatescategoriesarepresentedasfollow:

•SeasonalChocolates

•BoxedChocolates

•MilkChocolates

•ExoticFlavors

•SugarFree

•LiquidChocolate

•PremiumChocolate

3.2Porter’sFiveForcesModel

Thismodel,namedafterMichaelPorter（1979）,canbelookeduponasaframeworktoanalyzeandstructureanindustry.Itisatheoreticaltooltoelaboratethepotentialthreatsbutalsothechancesofaparticularindustry.Portermentionsfiveforcesthathaveanimpactonanindustry;suppliers,buyers,potentialentrant,substitutesandtherivalryamongexistingfirms.Bymeansofthisanalysistheindustryattractivenesscanbedetermined.Thisanalysiswillbeappliedtothepremiumchocolatesegment,whereLindt&Sprungliisakeyplayer.

Bargainingpowerofsuppliers

Inproductionofpremiumchocolatetheprimaryrawmaterialiscocoabean,secondarysugar,andmilk.Concerningsugarandmilk,therearenumeroussuppliersofthesematerialsavailablearoundtheworld;thereisnoconcentration,neitheranecessarydifferentiation.Inthecaseofthesuperiorcocoabeansutilizetoagreatextentforthemanufacturingofthepremiumchocolate,itisimportanttoconsiderthattheycomefromthecacaotree,whichisgrowngenerallyinsmall,familyrunfarmsinWestAfrica,LatinAmericaandSoutheastAsia.

Thecocoaplantersselltheirproductsonlocalmarketstosocalled¨preparateurs¨,whocollectthebeans,weighthem,paytheplantersandresellthebeanstointermediates.Thecocoasupplychaincaninvolveupto12differentstepsascocoaismovedfromfarmingvillagetothechocolatemanufacturingfacility.Onlyinrarecasesdocompaniespurchasecocoafromthefarmers.Inthiscontext,localfarmershavenoinfluenceonthepricethattheyreceivefortheirbeans（AGuideforValueChainAnalysis,2004）.Moreover,sincethecocoabeansaretradedatthecommodityfutureexchangeinLondon,thefarmersarepricetakers.

GiventhesereasonsinadditiontothefactthataccordingtoCAOBISCO,thereare4.5millionofcocoafarmsaroundtheworld,towhomthechocolatemanufacturesareanextremelyimportantcustomer,thebargainingpowerofthechocolateconfectionaryindustrysuppliersisgenerallylow（CAOBISCO,2009）.Howeversincethefinegradecocoaproductionrepresentsasmallpartoftheworld’ssupply,thebargainingpowerofsuperiorcocoabeanssupplier’sincreases.Inadditionsomecocoafarmersformassociationstoconcentrateingroupsandbeabletonegotiat