Factors Behind the Swiss Chocolate Success

Picture by Andrew Bossi
Switzerland is famous for mountains and chocolate. Picture by Andrew Bossi

Switzerland is known for the Alps, watches, banks, neutrality, four national languages, cheese and of course chocolate. In 2014  Swiss chocolate manufacturers sold 183,738 tonnes of chocolate of Swiss origin and had a turnover of 1,728 million Swiss francs (Chocosuisse). Famous Swiss chocolate brands are for example Frey, Toblerone, Milka, Lindt & Sprüngli, Suchard and Cailler. Nowadays Toblerone, Cailler and Milka belong to the multinational food giant Mondeléz International and Cailler to another giant Nestlé. While they are not independent anymore, they are well established brands. Lindt & Sprüngli operates 20 subsidiaries worldwide and eight production sites in Europe and the USA. In 2014 the sales of Lindt & Sprüngli were 3.39 billion Swiss francs. In order to find factors behind the Swiss chocolate success story one has to look back in history. Switzerland did not have colonies in cacao producing countries and Switzerland is a relatively small country in terms of area and population. There are however key factors such as innovations, constant developing of manufacturing process, quality, competition, mergers, protectionism, geography, domestic demand and tourism behind the success. Typical of the Swiss chocolate industry is that while there has always been competition between the manufacturers, they have worked together when necessary which has made the industry strong.

LINDT & SPRUENGLI GESCHICHTE
Early advertising by Lindt & Sprüngli ((PHOTOPRESS/Chocoladefabriken Lindt & Spruengli AG.)

There are several important inventions by the Swiss chocolate makers: the mixer which combined sugar and cocoa powder, milk chocolate, the conch which made much smoother chocolate, the tempering process to prevent the formation of crystals on the surface of chocolate, filled chocolate and hazelnut chocolate. Many of the inventors had connections to each other. In 1819 François Louis Cailler opened the first mechanised chocolate production facilities. Because he was able to automate some parts of the chocolate making process, the price of chocolate could be lowered considerably. He also developed smooth chocolate that could be made into bars. In 1826 the versatile entrepreneur Philippe Suchard invented a mixing machine which could mix cocoa powder and sugar more efficiently. In 1875 milk chocolate was invented by Daniel Peter whose wife was the daughter of François Louis Cailler . Peter combined cocoa with condensed milk which had been developed by Henri Nestlé, Peter’s neighbor. This invention made chocolate less bitter and more nutritious. It reduced the need of expensive cacao. Chocolate lovers can thank Rodolphe Lindt for smooth and melting chocolate. In 1879 he developed a conch,  a longitudinal grinder in which chocolate mixture was processed with cocoa butter for days. The result was a fine liquid which could be easily poured into moulds instead of pressing the chewy paste with hands. (Swissworld)

A video about Lindt’s invention by Lindt Chocolate World:

LINDT Aachen
Lindt’s conche. (PHOTOPRESS/Chocoladefabriken Lindt & Spruengli AG.)
at Lindt & Sprüngli factory in 1900.(PHOTOPRESS/Chocoladefabriken Lindt & Spruengli AG.)
Workrooms at Lindt & Sprüngli factory in 1900.(PHOTOPRESS/Chocoladefabriken Lindt & Spruengli AG.)

Switzerland’s geography helped the success of the chocolate industry. The country is centrally located and crossed by many trade routes and therefore raw materials like cacao and sugar could be easily imported, and chocolate exported. There were also excellent sources of flowing water which provided the energy needed in the factories which were often located on the river banks. (Swissworld)

The Swiss economy and the chocolate industry developed positively after the inventions. Between 1888 and 1910 the number of chocolate factories changed from 13 to 23 and the number of people working in them increased from 528 to 5547. In 1918 Switzerland produced 40 000 tonnes of chocolate out of which about 75 percent was exported. Around this time the Swiss share of the world chocolate export market was about 50 percent. As the demand grew the facilities had to be improved and modernized. And when bigger factories were built, the manufacturers had to focus more on marketing to keep the bigger business profitable. (Chocosuisse 2001, Farrer 1908)

While the quantity of chocolate produced rose the quality was not forgotten. Rudolphe Lindt, for example, was from a wealthy family and he could afford to pick his customers from the elite and to put the emphasis on the quality. Among the rich consumers were tourists who came to see Switzerland at the beginning of the 20th century which was the golden age of Swiss tourism. This helped to increase the popularity of the chocolate as the visiting opinion formers enjoyed the high quality Swiss chocolate and told about it at home. (Swissworld)

During the World Wars and the Great Depression the sales of Swiss chocolate went down. Despite this, the industry benefited from the crisis. New products with unrationed ingredients like nuts and preserved fruits and honey were developed, and as the army was given chocolate in its rations, chocolate became more widely accepted to be consumed by men and not just women and children. The competition between chocolate makers was fierce which meant that the price of chocolate came down and chocolate was more affordable to a wider group of people. (Chocosuisse 2001, Swissworld)

The domestic demand for chocolate is relatively big in Switzerland which has helped the industry to grow. In 1999, The Swiss ate 11,5 kilos of chocolate when Americans ate only 5,4 kilos. The amount is huge even though 20 percent of it is estimated to have been bought by tourists. (Chocosuisse 2001)

While there is competition between the Swiss chocolate manufacturers, they have worked together for a long time. Co-operation has meant, for example, that mergers and takeovers have been part of the Swiss chocolate industry from the beginning. They have kept the industry going. In 1899, for example, Lindt sold his business to Rudolf Sprüngli, and in 1929 ”Peter, Cailler and Kohler” was taken over by ”Nestlé and Anglo-Swiss”. Another example of these chocolate marriages is ”Suchard A.S.” and ” Chocolat Tobler AB” coming together under the ”Interfood” banner in 1970. Joining forces has resulted in a better chance of surviving and expanding. (Chocosuisse 2001)

The Swiss chocolate manufacturers have always wanted to protect their common interests. For this purpose, the Association of Swiss Chocolate Manufacturers, Chocosuisse, was founded in 1901. Today there are 18 companies as members, and they deal with matters like foreign trade, agricultural policy, labor law and continuing education. One of their key missions is to protect themselves against the misuse of ”Swiss Chocolate” label. According Chocosuisse ””Swiss chocolate” is a completely conched chocolate or chocolate mixture made of cocoa beans, cocoa mixture, cocoa butter, sugar and in some cases milk, manufactured entirely in Switzerland.” If any processing of chocolate has been outside of Switzerland, it has to be clearly stated. (Chocosuisse) Chocosuisse has managed to trademark the terms ”Swiss” and ”Switzerland” in the EU, the USA and Canada. The Swiss protect their chocolate the same way as the Italians protect their Parma ham and the French their Champagne. Chocosuisse is very active in the process and willing to spend money on the lawyers’ fees. Compared to the Belgians the Swiss are better at protecting the reputation of the national chocolate. (Blenkinsop 2013)

A famous victory for Chocosuisse was when the British chocolate company Cadbury was forbidden to sell ”Swiss Chalet” bars after a legal battle in 1997. The ruling stated that “the words ’Swiss chocolate’ have acquired in England a distinct reputation” and that Cadbury was unfairly benefiting because of the misleading name and packaging. (Beveridge 1997)

Chocosuisse is not alone in the defense field for the ”Swiss made” label. The Swiss watch makers, for example, have the same goal because protecting is important to the industry’s image and profitability. Being Swiss made can double the price tag. (Koltrowitz 2013)

The result of the Cadbury case shows the strength of the Swiss chocolate industry. Multiple factors explain the Swiss chocolate success but co-operation is something that is seen throughout history. By protecting the Swiss chocolate brand the Swiss chocolate manufacturers respect the past achievements: the high quality and reputation that they have gained over the years.

References

Beveridge, D. (1997, October 29). Cadbury Told to Stop Marketing ’Swiss’ Chocolate Bars. Associated Press. http://www.apnewsarchive.com/1997/Cadbury-told-to-stop-marketing-Swiss-chocolate-bars/id-7c31cc0a9fe59252bb19394175c8cf7d

Blenkinsop, P. (2013, March 27) Belgian chocolate makers seek protection from copycats. Chicago Tribune. http://www.chicagotribune.com/entertainment/dining/sns-rt-us-belgium-chocolatebre92q05m-20130327-story.html#page=1

Chocosuisse (2001). Chocology. The Swiss chocolate industry, past and present

Chocosuisse. http://www.chocosuisse.ch/chocosuisse/en/home.html

Farrer, A. M. (1908, March). The Swiss Chocolate industry. The Economic Journal Vol. 18, No. 69 pp. 110-114

Koltrowitz, S. (2013, March 4). What puts the Swiss in a “Swiss Made” watch?. Reuters.
http://mobile.reuters.com/article/idUSBRE9230KS20130304?irpc=932

Swissworld. http://www.swissworld.org/en/switzerland/swiss_specials/swiss_chocolate/switzerland_and_chocolate/

Advertisements

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s