Swiss chocolate market grows 1% annually, despite challenging market conditions

Chocosuisse, the association of swiss chocolate manufacturers, has reported that the country’s overall sales for 2018 rose by 1% to 1.75 billion Swiss Francs, despite challenging trading and political conditions impacting on results.

The organisation confirmed that domestic consumption for last year fell by 3.4% (recording a  drop of 4.8% turnover), with a notably hot summer denting the sector’s performance, but exports increased by 8% to 138,153 tonnes (improving turnover 6% year-on-year, to 991 million), which offset the overall figures.

Switzerland is home to a number of key brands, with 17 key companies registered in the country, with Mondelez International (makers of Toblerone), Lindt and Barry Callebaut having their headquarters in the country.

According to Chocosuisse, the share of imported chocolate consumed domestically increased to 41%. The annual consumption per-capita in Switzerland fell by 200g to 10.3kg. This trend on the domestic market was accompanied by a long and hot summer, and Christmas business which was relatively sluggish at first. The share of exports continues to grow Exports once again generated pleasing results.

With a 10% increase in sales and 7% in turnover, the growth in EU countries was greater than in non-EU countries. Growth in sales (+2%) was recorded in non-EU countries, although a decline in turnover was also noted (-9%). Considerable drops were recorded in particular countries in the Middle East and South-East Asia.

However, countries like Australia, Brazil, China, Japan or Russia showed strong growth rates. Border protection provides increasing challenges In view of the market trend, ensuring internationally-competitive conditions for Switzerland as a production location is increasingly important.

Significantly, the organisation said that market conditions remain under pressure. This includes concerns over the abolishment of reimbursements for customs duties as per the “Chocolate law” at the end of 2018, and the introduction of a minimum border protection for sugar at the start of 2019. The succeeding private solution to reimburse customs duties is burdened by a partial misappropriation of the milk allowance.

The new minimum border protection for sugar will lead to extra costs of millions of Francs in the coming years. These politically-motivated cost factors make the competitive-ness of Switzerland as a production location worse. The trade agreement concluded in December with Indonesia expanded the important network of free trade agreements of Switzerland for the export-orientated chocolate industry.

Nevertheless,  Chocosuisse added that the risk of eroding competitiveness must also be kept in mind when accessing export markets. For example, the free trade agreement between the EU and Japan  that recently entered into force will lead to a gradual improvement in the position of chocolate producers from the EU compared to those from Switzerland in the coming years. In view of the much stronger export growth of competing chocolate nations like Belgium, Switzerland still faces challenges.

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