4 March 2009 - As consumers are increasingly shifting from food manufacturer A-brands to private label brands, but, at the same time, are continuing to spend on chocolate, one company is certainly benefitting from this double trend.
Chocolate specialist Natra, who is headquartered in Spain, not only has 95% of its production going towards private label, but is also boosted by the fact that chocolate consumption traditionally increases during crisis periods.
"Currently there is a conservative consumption, therefore an impulse to consume products to 'take home'. Chocolate, in general, is in that group", says Natra's CEO, Ignacio Miras.
With regards to private label brands though, Miras stresses that the consumer does not buy them only for their lower prices, but also for their quality, innovation and multiple offerings.
"In these decisive moments, the brands that are in second, third or fourth position will tend to lose the fight while the battle will remain between A Brands vs. PLB", argues the CEO.
The company's name may not be familiar to those not involved in the food industry, but Natra sells 175 of its own and private label brands of cocoa and chocolate products across Europe in supermarkets owned by 25 of the 30 largest European retailers, such as Carrefour, Metro Group, Tesco, Lidl or Groupe Auchan. Its products are also present in 60 countries worldwide.
On March 2nd, the company reported that its Cocoa and Chocolate sales in 2008 increased 32.5% to 303.1 million euro compared to 2007.
Stollwerck and Geographical Expansion
Having produced 117,000 tons of chocolate products last year, the company maintains its focus on expanding its activities to reach emerging markets and continues its growth strategy despite the ongoing recession, which is negatively impacting other food producers.
In addition to promoting its organic growth, "Natra wishes to carry out new acquisitions that will allow us to widen our range of products and to get into new markets", the company recently told FLEXNEWS.
The company's main middle-term objective is simply to become the 'first European Private Label and Business to Brands chocolate producer' by 2010.
Now it seems that Natra’s wishes have materialised under the form of yesterday’s joint announcement with Swiss chocolate manufacturer Barry Callebaut.
The firms have signed a memorandum of understanding regarding the possible integration of Barry Callebaut's European consumer chocolate business Stollwerck into Natra.
Established in 1839, Stollwerck is a leading German confectionery company, which not only has a good presence in Germany, but generates sales from Eastern Europe and other export markets across the world.
Besides its best-selling brands Alpia and Sarotti, Stollwerck has specialty brands, such as Schwarze Herren Schokolade, Eszet-Slices or Alprose. The company’s international brands include Jacques.
“The combination of the two businesses would create a significant private label and third-party chocolate products maker in Europe with estimated annual sales of around €850 million, according to pro forma combined figures for 2008, a share of 2% of the entire European cocoa and chocolate market and a pro forma production output of around 215,000 tonnes in 2008”, both companies said.
Thanks to the deal, Natra would be able to secure future growth in consumer PLB and third-party branded chocolate and benefit from Barry Callebaut’s geographical presence, and product range.
“The transaction would follow a strong industrial logic and would create value for both parties … It would bring together two entities which are highly complementary in terms of geographical presence, know-how and product range”, Natra said in yesterday’s announcement.
It is also expected that Barry Callebaut, as part of a long-term outsourcing contract, will supply 85,000 tons per year of liquid chocolate to Natra, guaranteeing the supply of this ingredient for the Spanish company.
Barry Callebaut is also expected to become a minority shareholder of Natra.
The parties foresee to be able to execute the transaction in summer 2009.
Not only is Natra enjoying access to many geographical markets via its current clients, the company is also developing its current sales volume in USA, Canada and Russia.
In September last year, Natra opened its first sales office in China and its second office in the US.
China represents less than 1% of the total world consumption of chocolate products, according to Euromonitor data. However, annual growth is expected to remain above 10%. Meanwhile, AC Nielsen estimates that the US Private Label confectionery product market will grow 27% in 2008.
Commenting on the US market, Mr Miras says: "We’ve been present in North America for a while and via some important distributors. It is a market where the PLB is growing. We foresee North America as a fast growing market for PLB".
Growing Portfolio
Natra, thanks to its five business units - Chocolates Belgium origin, tablets, spreads, Count lines/Chocolate bars, and cocoa products - is constantly investing in product innovation.
At the ISM business fair for the confectionery industry held in Cologne, Germany earlier this month, Natra presented its innovation portfolio, mainly consisting of premium range chocolate products. The company also highlighted two of the most important trends in the Chocolate Arena, the demand for individual portions and for indulging & luxury chocolate products.
"In this regard, Natra investigates permanently in its five excellence centres specialized on cocoa, tablets, bars, spreads and Belgium Chocolates in order to offer to retailers one of the widest portfolios of cocoa and chocolate products available in Europe aimed to cover their needs on private label products," said the company.
In addition, Natra also showed attendees its latest ranges of the successful Vital'Crusty snack bar, which will be introduced during 2009.
"This innovation chocolate bar is working pretty well in markets such as Austria, Switzerland and Germany, amongst others ... We strongly believe in this product and its future development in new markets since market reaction so far has been very satisfactory", says Miras.
"These innovation products respond to the fact that people are increasingly searching for ways to feel better in all aspects of life, including food. This feeling has been the driver of the increase of offer for a lot of new functional products. Consumers are increasingly looking to boost their health in different ways and cocoa is perceived as a healthy ingredient".
"The chocolate industry has responded to consumption patterns by producing chocolate products with various health benefits and private label is doing so. This trend happens especially in countries with higher consumption per capita, such as Germany, Benelux, UK, France, US...", adds Miras.
A significant move by Natra in the functional food domain was made in October last year. The company, indeed, developed its first range of functional chocolate bars specially directed to private label brands and began a new business line in collaboration with biotechnological group Natraceutical, in which it currently has a 50.27% stake.
"As a result of this collaboration in research and innovation, Natra develops new cocoa and chocolate products with functional ingredients, active principles and nutritional supplements for the final consumer; it is a range of products which adapts to private label brands (PLBs) and is still to be fully developed", the company said at the time.