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As consumers seek solace in small luxuries amidst a cost-of-living crisis, the Swiss chocolate maestro behind Christmas and Easter favorite Lindor pralines defied supply-chain woes to boast record sales growth in 2023.
However, the sweet triumph comes with a bitter twist—the company achieved this feat by passing the costs onto its devoted customers, reigniting the heated debate over corporate 'greedflation' tactics."
Amidst sky-high energy and grain prices fueled by Russia's Ukraine invasion and lingering COVID-19 disruptions, turning a profit in the chocolate industry seemed like an impossible feat. A cocoa crisis in Western Africa further darkened the outlook.
But Lindt & Sprüngli managed to post a 10.3% rise in sales in 2023, according to its latest results.
Despite major pressures on the cost of key input cocoa, the group said it was able to offset some costs through improved efficiency at its factories.
The rest of the costs fell on the group’s sweet-toothed customers.
“Through close collaboration with our trade partners, we subsequently passed on the remaining costs through price increases,” Lindt & Sprüngli said.
The price of cocoa increased to 44-year highs toward the end of 2023 as a climate change-induced rot lay waste to farmers’ crops across the Ivory Coast and Ghana.
The world’s biggest chocolate manufacturers, including Nutella-maker Ferrero and Cadbury-owner Mondelez, have all felt the pinch from these higher raw material costs, as have their customers.
Analysis by consumer group Which? Found the price of some chocolates has risen as high as 67% in U.K. supermarkets as a result of these cost pressures.
While Lindt only revealed sales data in Tuesday’s release, the group said it expected to improve its profit margin compared with last year thanks to its price rises. The chocolate maker also expects sales growth as high as 8% and further profit increases in 2024.
Lindor pralines, the group’s famous spherical chocolates, drove sales for Lindt with double-digit growth in all of its regions.
Customers' continued appetite for Lindt's candies despite hard-to-swallow markups could be a sign of shoppers turning to small luxuries during a cost-of-living crisis that has made bigger outlays difficult to justify.
The phenomenon, known in economic circles as the "lipstick index," would make Lindor's pralines, which retail at more than $7 a box, prime candidates for a mini splurge among cash-strapped consumers.
While those customers might bristle at backing up Lindt’s record sales, investors cheered the group’s ability to defy weakening consumer sentiment, which had been battered by months of high inflation and rising interest rates.