The Euro bite
Cadbury-Wedel, which produces the bulk of its confectionery products here under the 150-year-old Wedel brand name, is looking to weather the country's economically trying times and maintain its leading market share through further product diversification and promotion.
But like others in the sweets business, even the owner of the Wedel brand, with its high level of recognition among local consumers, is having to come to terms with the effects European Union membership will have on sugar prices.
"With EU accession, maybe in the beginning there will be some problems with sugar prices," said Józef Rutkowski, vice president. "The EU could influence our prices because we expect the sugar price to go up."
He explained that gradually the price of sugar produced locally would rise in line with that of other EU members, and that the cost of producing chocolate and other candy products could increase by as much as 12%.
"There are different prices in other countries," Rutkowski said. "In Poland, it's cheaper."
He said he is uncertain just how quickly prices would rise, and that the costs could be taken out of Cadbury-Wedel's margins, transferred to the consumer, or a little of both.
Nonetheless, Rutkowski said he doesn't expect, as many other companies anticipate for their own products, that EU accession will open up any doors for the Wedel brand, since it's a local product. "We are concentrating on the local market," he said. "It would be difficult to export our product to other countries; they're for the Polish community."
Any products that are exported are usually sent specifically to Polish communities abroad, such as in the UK and the US.
Cadbury-Wedel is the leader on the chocolate products market. The company has more or less been able to maintain its market share because of the traditional view nationals have of the name, despite the economic difficulties, Rutkowski said.
"Everybody expected more of a rise every year in revenues," he said, referring to all companies based in the country. "I remember when some of the biggest companies in the world bought Polish companies because Poland is a very attractive market, and I remember a 5%-10% planned rise in revenues every year. Now I think it's 1%-2%."
Cadbury Schweppes, the UK-based sweets and drinks group, bought Wedel's chocolate business for €71 million in 1999. Pepsico bought Wedel after its privatisation in 1991. Then Pepsico, in the late 1990s, broke up Wedel, and most of it was sold to various international investors, while Cadbury bought the core business.
For everyone, Rutkowski said, "the economy is very bad now. But our position and our results are good at this time compared to the economy. In future, the economy will grow."
He declined to divulge the company's revenues.
But EU membership notwithstanding, Rutkowski was very optimistic that if the economy gets worse before it gets better, the company's bottom line would not suffer further blows.
"I say every time that if people are poor, it is still nice to eat pieces of chocolate or candies," he said, adding that with upcoming promotions and new products, consumers will have quite a bit to choose from.
But like others in the sweets business, even the owner of the Wedel brand, with its high level of recognition among local consumers, is having to come to terms with the effects European Union membership will have on sugar prices.
"With EU accession, maybe in the beginning there will be some problems with sugar prices," said Józef Rutkowski, vice president. "The EU could influence our prices because we expect the sugar price to go up."
He explained that gradually the price of sugar produced locally would rise in line with that of other EU members, and that the cost of producing chocolate and other candy products could increase by as much as 12%.
"There are different prices in other countries," Rutkowski said. "In Poland, it's cheaper."
He said he is uncertain just how quickly prices would rise, and that the costs could be taken out of Cadbury-Wedel's margins, transferred to the consumer, or a little of both.
Nonetheless, Rutkowski said he doesn't expect, as many other companies anticipate for their own products, that EU accession will open up any doors for the Wedel brand, since it's a local product. "We are concentrating on the local market," he said. "It would be difficult to export our product to other countries; they're for the Polish community."
Any products that are exported are usually sent specifically to Polish communities abroad, such as in the UK and the US.
Cadbury-Wedel is the leader on the chocolate products market. The company has more or less been able to maintain its market share because of the traditional view nationals have of the name, despite the economic difficulties, Rutkowski said.
"Everybody expected more of a rise every year in revenues," he said, referring to all companies based in the country. "I remember when some of the biggest companies in the world bought Polish companies because Poland is a very attractive market, and I remember a 5%-10% planned rise in revenues every year. Now I think it's 1%-2%."
Cadbury Schweppes, the UK-based sweets and drinks group, bought Wedel's chocolate business for €71 million in 1999. Pepsico bought Wedel after its privatisation in 1991. Then Pepsico, in the late 1990s, broke up Wedel, and most of it was sold to various international investors, while Cadbury bought the core business.
For everyone, Rutkowski said, "the economy is very bad now. But our position and our results are good at this time compared to the economy. In future, the economy will grow."
He declined to divulge the company's revenues.
But EU membership notwithstanding, Rutkowski was very optimistic that if the economy gets worse before it gets better, the company's bottom line would not suffer further blows.
"I say every time that if people are poor, it is still nice to eat pieces of chocolate or candies," he said, adding that with upcoming promotions and new products, consumers will have quite a bit to choose from.
