How Lindt Stands Within the Industry

Industry overview (2-3 pages)

• How Lindt stands within the industry.
• Analysis tools: Porter’s 5 forces, SWOT analysis, etc.

Financial analysis (10 pages)

• Quantitative adjustment: leases, R&D adjustments, etc.
• Profitability: ROE, ROA, Gross profit margin, Net margin.
• Liquidity: Current ratio, quick ratio, Inventory turnover, interest coverage ratio, cash conversion cycle, operating cycle.
• Leverage: leverage ratio.
• Cash Flow Analysis.

Industry overview

How Lindt stands within the industry

Lindt & Sprüngli is engaged in producing and distributing premium chocolates around the world. The company has achieved a sales growth rate of more than 10% over the last 5 years. Regardless of the last financial  crisis and difficult market environment Lindt and Sprüngli managed to grow above the average and outperformed its competitors.

The chocolate confectionery industry has been growing at a rate of 6% (check) in the last four years and the tope 6 producers account for 60% of the global market.

-During 2016, Lindt and Sprüngli had a 5.1% of the worldwide market share. And the market share went from 3.7% in 2012 to 5.1% in 2016.

-The total sales worldwide of Lindt have gone from 2,579.3 in 2010 to 3,900.9 million CHF in 2016.

-The retail consumption of chocolate confectionery worldwide from 2012 to 2018 has grown from 6,946 to 7,696 (in 1,000 metric tons).

Porter’s 5 forces:

Bargaining power of suppliers: (Moderate)

Increase the number of the suppliers.

Supplier does not pose a threat of forward integration.

Premium chocolate firms buy cocoa beans direct from farmers.

Undifferentiated raw materials

Threat of New Entrants: (low)

High initial capital is required, specialized equipment.

Incumbents? Have competitive advantage due to brands and accumulated technical know-how.

Economies of scale.

Need special requirements and regulation for the food industry.

Wide range of products needs experience and knowledge

Complicated supply channels.

Threat of Substitutes: (moderate?)

Non-chocolate snacks, chips and fruits.

Healthier alternatives.

Low for premium chocolates

Bargaining Power of Buyers: (low)

Increase the volume of the buyers.

Low switching cost.

Industry Rivalry: (high)

Advertising battle

Price wars

Differentiated

Unequal size.

Required high quality.

High fixes costs and storage.

SWOT Analysis Lindt:

Strengths:

1. Brand Value
2. Quality:

•  The foundation for the incomparable taste comes from the careful selection, in-house processing and blending of only high quality beans from the world’s most renowned origins. Commited to sustainability, Lindt & Sprungli Farming Programs support cocoa farmers and their communities.

1. Unique features and taste:

•  Lindt Chocolates are known for the difference in taste and texture. Some of the unique features include the conch which increased the smoothness of chocolate and the unique process of tempering which cuts down the formation of crystals on the surface of the chocolate and the technique of creating chocolate fillings.

1. Global Presence: Company has a huge infrastructure that connects them to countries across the world. Lindt has around 24 subsidiaries worldwide and 12 production sites in Europe and the USA.

Weakness:

1. Low sales in the US
2. Increase in raw material costs: There is a steep increase in the price of cocoa beans which is the primary raw material for chocolates.
3. High price, mostly premium products.
4. Not easily available in all countries.

Opportunities:

1. Growth potential in India: The focus is now on Asia, and in India market is expected to grow at 15%-23% per year.
2. Potential in Russia, 2nd market.
3. Open Cafe Shops in high growing markets.

Increase target base.. the company has many fans spread across developing nations.

It could enter FDI markets by tying up with various local brands and limiting their access in production of product.