“The Romanian products don’t have a constant quality, though I believe the Romanian agriculture has a huge potential,” according to Vondenhoff.
Heidi production facility, which is held by Swiss group Laderach and employs 380 people, is one of the only two chocolate manufacturing companies that are operating on the Romanian market. The other one is Kandia Dulce, while the rest of chocolate products sold on the local market are imported.
“Between 2009-2010, chocolate consumption significantly decreased and remained rather stable since then. In Romania, chocolate consumption is tightly connected to the income. When having a high income, one does not buy products such as milk, but pleasant things such as chocolate or travels.”
With a high purchasing power, only 12% of the income goes to food acquisition in Switzerland, compared with 70% in Romania, he added.
According to Vondenhoff, the chocolate market increased 2% by value and 4% by volume in January-September compared to the year-earlier period.
How Heidi Penetrated 42 Countries
When Vondernhoff was named head of the company, he had substantial growth plans for Heidi business, namely to double the sales of the chocolate manufacturer. Thus, four years ago, he targeted sales of RON80 million for 2012, while now he expects RON72 million for this year (EUR14.5 million). In 2013, the company aims 10% higher sales.
In 2011, Heidi Chocolate posted RON52 million sales (EUR12.4 million) and EUR1.4 million losses, with exports being the growth engine, according to the data on the Finance Ministry’s website.
In 2008, only 10% of Heidi chocolate went to export on markets from Italy, Moldova Republic or Iran. Four years later, in 2012, Heidi’s exports widened to 42 countries, including Austria, Russia, Brazil, Taiwan or Thailand.
Currently, half of the chocolate manufactured by the company in Romania goes to export.
Under these circumstances, Vondernhoff said that leu depreciation in 2012 has not affected the company’s business but, on the contrary, it increased its gains on half of the production going to export.
Despite of a price increase of the cocoa beans during the last period, one should know how to make speculations on the market and not change the end-price of chocolate. The key is anticipating how chocolate price will evolve and buy large quantities when the price is low, according to Heidi general manager.
“This could be also enforced on the coffee and tea market, it is hard to anticipate when the price goes downwards and by how much. None is kept away from this risk and the real problem is when facing 50% price variations not 1% or 2% ones. Besides this, there is still sugar and powder milk price.”
Vondenhoff said chocolate price increased by 6% per kilogram in 2012.
Private brands vs. premium products
“Private brands push the price downwards,” said Heidi’s representative. This is one of the challenges faced by all the companies in the fast moving consumption goods.
Romanians will not give up to their preferred chocolate brands despite the higher price and to the fact the private brands are significantly traded in all hypermarkets, according to Vondernhoff.
“Chocolate is often bought as a gift and people don’t want to give someone a cheap present, it’s a matter of reputation; chocolate is very sensitive at that aspect,” he added.
Heidi has a market share of 5%-6% of the total chocolate market and of over 30% o the premium chocolate segment.
“In Romania, the premium segment means making a lot of advertisement and that everybody knows you, while abroad premium means higher quality, unique products, good-quality ingredients,” said Vondenhoff.
As far as the marketing investments are concerned, he says the company does not invest more in advertisement annually but grounds on the PR and sampling, choosing to invest in new products.
Handmade products
The average salary of Heidi’s employees starts from RON800 to RON900 per month, but could increase based on performance. “Based on performance, they get a monthly bonus reaching to RON150.”
As for the way of manufacturing chocolate, Vondenhoff said some of the production is handmade.
“We have three teams of four-five persons each handling only the florentines (caramelized almonds used in preparing some chocolate assortments). It is very normal these products are handmade, on containing much sugar the same as the caramelized almonds and being prone to breaking up very quickly during machine processing,” he added.
(English version by Manuela Panescu)