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.

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.

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