Private Label Competition Stronger Than Ever In Chocolate


The CEO of Portuguese confectionery producer Imperial Produtos Alimentares has said that price sensitivity in the chocolate category is at a high ebb. This does not come as a great surprise, in our opinion, given Portugal's challenging economic environment.

Manuela Tavares de Sousa said in an interview with confectionerynews.com that consumers are ' more focused on price than ever before ', a development that corresponds with the sever e fiscal austerity measures in effect in Portugal. Indeed, with unemployment continuing to rise , having climbed above 15% in Q212 , and private consumption still in firm contraction mode, it is a fertile climate for private label products. Now , more than ever, differentiation is absolutely essential for branded producers such as Imperial , one of Portugal ' s leading confectionery producers. In our view, confectionery firms must work against the tide to remain as competitive as possible .

Ultimately, in an environment where trading down is so prevalent, innovation is hugely important for companies such as Imperial. Interestingly, it is believed that about a fifth of Imperial's business involves selling private label chocolate to retailers ; in that sense , this part of the business is probably benefiting somewhat from the downturn . However, producing branded confectionery generates much higher margins, and in Imperial ' s case forms a greater proportion of its business . Therefore, there is potentially a lot more to lose than gain from the private label trend if market share and volumes decline in branded confectionery. However, Imperial has been doing well , having grown sales by 3% in 2011 and 18% in the first six months of 2012.

Imperial is also believed to be keen to expand its export business , with a particular focus on Portuguese - speaking countries such as Angola, Brazil and Mozambique. I n our view it probably has better chances of making headway in these countries than in most of the emerging world . Indeed, competition is fierce , with Mondelez International, which owns Cadbury, able to call on much more powerful brands that in many cases are already well established.

This article is tagged to:
Sector: Food & Drink
Geography: Portugal, Angola, Brazil, Mozambique

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