Ask Cloetta

We adjust our prices based mainly on fluctuations in raw material costs and exchange rates. Historically, we have managed to offset headwinds from raw material and currency through pricing. Sometimes we also adjust prices in conjunction with initiatives such as new product launches or changes in packaging.

In a high inflationary environment, Cloetta’s strategy is to protect its profitability by compensating for all input costs in absolute terms, also including packaging, freight and energy costs, through price increases towards its customers as well as cost savings and reducing overall energy consumption.

We believe that price increases in combination with cost savings remain the only sustainable strategy and this strategy has enabled us to protect our profit during periods of increasing input costs. We continue to execute on our previously communicated pricing strategy, which is to seek fair pricing in line with increased input costs.

Russia’s war in Ukraine the war in the Middle East entails risks of further impact on the global economy, further cost inflation, and disruptions in supply chains. While Cloetta does not have any significant direct financial exposure to any of the countries involved, the company is being impacted by rising input costs and global supply chain challenges.

We aim to pursue selective acquisitions that are consistent with our current product portfolio. This means that we acquire brand driven companies within the same categories, preferably in countries where we are already active. We may also acquire brands within our categories but in countries that are close to our main markets.  The most recent divestment of Nutisal was part of Cloetta’s previously communicated plan to continue streamlining the brand and product portfolio to reduce complexity to support the long-term goal of an adjusted EBIT margin of at least 14 per cent. Nutisal represented approximately half of Cloetta’s total nuts category, which represents 2 per cent of the company’s total net sales. Cloetta continues to provide nuts in the Pick & mix segment.

Within our Sustainable Sourcing programme, we focus on improving the performance of our suppliers and sourcing raw materials in a way that protects or improves the environmental and social impacts in the supply chain. Cloetta only purchases 100 per cent certified cocoa and palm oil by third parties where biodiversity protection is a central requirement in these certification programmes. Furthermore, we work together with suppliers and third-party organisations who are driving social and environmental projects connected to the different raw materials such as Rainforest Alliance and Global Shea Alliance.

When setting our science-based targets we committed to reducing our absolute scopes 1, 2 & 3 emissions by 46 per cent by 2030, with 2019 as our baseline year. To fulfill our commitment, we engage with key stakeholders to set their own reduction targets as well as increasing their share of regenerative agriculture methods by 2030. Additionally, during 2023 we collected data related to carbon emissions from our key suppliers, to gain a better understanding of their ongoing efforts and assess their impact on our carbon footprint.

For those seeking an alternative to products with sugar, Cloetta offers options such as chewing gum with xylitol, pastilles and nuts. Additionally, we are offering candy with lower sugar and no sugar.

Cloetta’s strategy is to give the consumers the opportunity to choose by providing alternatives in the form of sugar free products, products with less sugar and products that are naturally free from sugar. In general, we have to count on the possibility that different countries will both introduce and abolish sugar and confectionery taxes from time to time. When different taxes are introduced, it naturally affects our sales, but typically only initially and to a fairly minor extent, since our products are of a type that consumers want, and can afford to treat themselves to, despite price increases.

It is very effective for surfaces and has excellent properties for food production. To prevent negative environmental consequences, Cloetta only uses RSPO-segregated palm oil, which means that the oil is produced sustainably and does not contribute to destruction of rainforests. We will continue to use sustainably produced and certified palm oil in our chocolate products and where more sustainable alternatives are not yet available.

We continue to work towards more circular packaging, with our goal of 100 per cent recyclable packaging by 2025. Plastic-free, less packaging, and renewable sources are important focus areas in our Less and Better Packaging vision. One of our ongoing projects that addresses this is our PlantPack innovation. It replaces up to 50 per cent of the fossil-based plastic with plant-based plastic, and thereby improving the packaging climate footprint.

If we no longer sell a product, this is unfortunately often due to insufficient consumer demand for the product in question. In certain cases, it could also be because the product’s profitability has been too low. The launch of new product types can sometimes be difficult if we lack a brand that can carry them, and at the same time the necessary marketing investments can be so high that the products would not reach a sufficient profitability.

The long-term goal of an adjusted EBIT margin of at least 14 per cent will be achieved by recovering the impacts from Covid-19, including volumes and value within Pick & mix as well as profitable growth and product mix within Branded packaged products. In addition, we will continue to drive cost savings and efficiency activities throughout the entire value chain, such as discontinuing products when needed and continuing to streamline our brands and product portfolio to free up capacity and reduce complexity. This also includes  the investment in a new greenfield facility.

From our strong market position, we have good opportunities to develop the category and thereby drive profitability and growth. In the first two quarters of 2024 we delivered in line with our target of the EBIT margin of 5–7 per cent and continue to focus on creating sustainable value within the segment, through a combination of pricing, continued margin enhancing initiatives and volume growth.