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, including through the investment in a new greenfield facility.
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.
We adjust our prices based mainly on fluctuation 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 packages. 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.
In an inflationary environment, we believe that price increases in combination with cost savings remain the only sustainable strategy and during 2022 , this strategy has enabled us to protect our profit despite the increasing input costs. We are taking further pricing actions during the beginning of 2023 to address the continuing inflation.
Cloetta has evaluated a wide range of alternatives for a sustainable manufacturing that meets the future consumer demand. The conclusion is that investing in a new greenfield facility in the Netherlands and closing three existing plants is the most attractive alternative for Cloetta’s future development, as it enables significant cost savings, facilitates further growth and reduces greenhouse gas emissions.
Russia’s war in Ukraine 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.
For those seeking an alternative to products with sugar, Cloetta offers options such as nuts, chewing gum with xylitol and pastilles. Additionally, we are offering candy with lower sugar and no sugar. We also believe that the major challenge in this context is hidden sugar that is found in various food and beverages. Cloetta’s products are among the most honest, since all consumers are aware that they contain 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 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.
Palm oil in and of itself is a very good oil. 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.
If we no longer sell a product, this is unfortunately often due to insufficient demand for the product in question. In certain cases, it could also be because the product’s profitability has been too low or even negative. 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 be profitable.