Due to the rising costs of production, Wedel increases the prices of its products by an average of approx. 20% this fall and does not rule out another increase at the beginning of next year, according to managing director of the company Wedel Maciej Herman. The CEO is not afraid of a drop in revenues, but expects the margin to decline by “a significant number of percentage points” this year.
“Increases are inevitable – this applies to virtually all food producers in Poland. Producer inflation in the first half of the year was around 30%, which is the cost increase that affects us. It is still growing. Of course, we must take into account how much is ready. pay the consumer for the assortment, especially for food products,” Herman said.
“In order for us to compensate for the cost increases that have already affected us, we would have to raise prices by 40-50%. Therefore, producers raise prices in various ways, but certainly more than in previous years. This is at least a dozen, sometimes twenty-several percent. For some producers it is another hike this year, with us it is the first one, because we had the previous one. last year. However, further increases – it depends on how the situation develops,” added the managing director.
In order to offset the effects of rising costs, Wedel is looking for optimization “wherever it can”, Herman pointed out.
“For us, the quality of our products is inviolable, so we will certainly not cheapen the recipes, we do not take it into account. We will limit, for example, meetings of employees outside, we do most meetings in the office. Hybrid work also helps a bit,” calculated the CEO.
At the same time, the recovery of the market after the pandemic may contribute to mitigating the impact of recent market changes on Wedel’s financial results.
“Now the restrictions are smaller, and consumers are happy to return to stores, so already in 2022 the value of the market will be much higher than in the previous two years. In the following years, the growth will be greater, because it will be additionally driven by higher inflation,” he announced.
According to forecasts presented by Wedel, the value of the global chocolate confectionery market will increase to USD 119.3 billion in 2022 from USD 115 billion a year earlier. In 2023, the market value will increase to USD 128 billion, in 2024 – to USD 136.3 billion, and in 2027 – to USD 159.1 billion.
“When it comes to revenues, there is no major problem at the moment. The category of chocolate sweets this year is growing by approx. 10%, so there is no problem with sales,” said the CEO.
“However, it cannot be denied that this cost impact affects the margin level and this cannot be improved in a few months” – he also pointed out, adding that this year’s margin will decrease by “a significant number of percentage points”.
The Polish chocolate confectionery market at the end of the year ended June 2022 was worth PLN 8.48 billion (July 2021-June 2022), i.e. 10.9% more than the year before.
In terms of volumes, the Polish chocolate confectionery market grew by 5.6% y / y to 200.6 thousand. tonnes (July 2021-June 2022).
According to the data presented by Wedel, a statistical Pole consumes approx. 5.6 kg of chocolate / head per year, and in 2023 this may increase to 5.8 kg. In turn, the German (in 2021) 8.5 kg, the British 7.3 kg, the Bulgarian 6.1 kg, and the French or the American 4.4 kg each.
Wedel is one of the three largest producers of chocolate sweets in Poland. Together with Mondelez and Ferrero, they jointly own about 45% of the Polish chocolate confectionery market.
Source: ISBnews
