Swiss chocolatier Läderach eyes expansion in India | Mint
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Business News/ Companies / Swiss chocolatier Läderach eyes expansion in India

Swiss chocolatier Läderach eyes expansion in India

CEO Johannes Läderach sees free trade agreement between India and Switzerland will help reduce complex import duties

Johannes Läderach, CEO of Swiss chocolatier Läderach.Premium
Johannes Läderach, CEO of Swiss chocolatier Läderach.

India's burgeoning appetite for luxury, particularly Western-inspired trends, has caught the eye of Swiss chocolatier Läderach, which controls about 5% of the entire Swiss chocolate market. Landing in Delhi just eight months ago, the brand faces stiff competition and complex import duties, but still sees immense potential in the market and expects to open at least half a dozen stores in the next two years.

"India is a promising market and the reason we have come to India is because so many Indian consumers have discovered us in different parts of the world. There is immense opportunity in such markets. " Johannes Läderach, CEO of the family run luxury chocolate business, on a recent visit to India, told Mint.
"Though there is a free-trade agreement being negotiated between India and Switzerland which could be very helpful. This is because India is at the highest end of customs duties across the 20 markets we operate in. The duties are very complicated too based on varieties of chocolate being imported," he said. 

After 16 years of talks, India and Switzerland have inked a deal for a free trade agreement this year at Davos. While the outline has been agreed upon, the details of the agreement are being finalized. 

If the agreement comes through, it will be a breakthrough for the industry and a lot of progress has already been made on this front. It is likely to also reduce costs of imported luxury goods such as these, the CEO said.

India charges a basic duty of 30%, an IGST of 18% and an additional social welfare surcharge of 10% for items like imported chocolates. Läderach chocolates costs around 1,200 for 62g or about 2,000 per 100g in India. 

The company started in 1962 in Switzerland but only became popular in the early 2000s when it expanded its business globally. It specialized in having created a manufacturing procedure for chocolate truffles and acquired a patent for the technology in the 1970s. These had always traditionally been made by hand.

In 2021, Läderach signed asset purchase agreements to buy 34 Godiva chocolate stores in the United States, following an announcement made by the latter that it would no longer want to operate its close to 130 stores in the country. "This helped us to get a really good position there in the US," he said.

In terms of its size, it has a total of 180 stores, of which close to 50 are in Switzerland, and therefore, has its largest presence in its home country, followed by the US. 

Chocolate per capita consumption is highest in the central Europe and can go up to as much as 10 kilograms per year. In markets which are emerging like India and China, consumption is still lower, at about 300 grams. In Europe, the consumption is the highest in Germany and Switzerland. The US is a little behind at about 5 kilograms a year. But India functions quite differently. "Urban India consumption, if I was to look at the data for the last 8-months since we have been here, is heavily skewed towards western trends, " he said.

“India is a very promising market with a lot of potential driven by the wedding market here. Indians have been traditionally buying from us in other parts of the world too and even though Delhi is still a new market for us, we are likely to open 5-7 stores in the next two years," he said.

The company will also look to expand in other markets in Europe, China and other parts of the world. "I have been similarly impressed with the India and China markets and so there is a lot of growth potential," he added.

In August last year, tobacco-to-spices major Dharampal Satyapal Group Ltd (DS Group), had opened its first store as a franchise for the luxury Swiss chocolate brand Läderach in Delhi's luxury mall, Emporio. The company also has an ecommerce presence in Mumbai.
According to industry data, the Indian confectionery market is valued at approximately 23,000 crore, out of which, chocolates as a category dominate with almost 60% share at 13,800 crore. However, the luxury segment is a very select niche segment of this chocolate category.
Läderach competes with brands like Godiva, Ghirardelli and La Maison du Chocolat. As per a 2020 report by the Swiss chocolate industry association, Läderach had a market share of around 5% in the Swiss chocolate market. While the company is privately held, media reports said its turnover was around CHF 100 million in 2019, or about $104 million.

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Varuni Khosla
Varuni Khosla is a journalist with close to 14 years of experience in writing business news stories for mainstream newspaper companies like Mint and The Economic Times. She reports and writes on luxury and lifestyle brands, hospitality and tourism news, the business of sports, the business of advertising and marketing and alcohol brands.
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Published: 28 Jan 2024, 03:25 PM IST
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