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Could emerging markets be Lindt's new sweet spot?
December 20, 2012 -- Updated 1924 GMT (0324 HKT)
- Swiss chocolate maker Lindt is expanding into the U.S., China and Russia
- The Swiss company's profits are being hit by the strong franc
- Boutiques and coffee shops are central to Lindt's expansion into emerging markets
(CNN) -- Swiss chocolate maker Lindt is expanding into the U.S., China and Russia as it seeks to combat the impact of the country's strong franc and the eurozone crisis.
The franc, seen as a safe haven currency, has been appreciating as the almost-three year old financial crisis continues to weigh on countries using the euro.
The strong currency eats into the company's bottom line, leaving Lindt -- which turned an operating profit of $52 million this year -- struggling to maintain financial momentum.
According to Lindt chief executive Ernst Tanner, sales growth is falling short of targets and some of the company's markets are now in decline. Appreciation of the Swiss franc cost Lindt an estimated 9.5% of profits in 2011.
"We have grown from approximately $800 million twenty years ago to $2.5 billion [in sales] last year. But those $2.5 billion would be more than $4 billion at exchange rates that we had 20 years ago," Tanner said.
Lindt still makes all its chocolate in Zurich, but its expansion plans now include opening boutiques and coffee shops to promote its brand. But the company, famous for its Lindor balls, continues to face challenges in emerging markets.
"The chocolate consumption is relatively low and the Lindt brand is unknown [in emerging markets]," Tanner said. "With a boutique we can best demonstrate our values, our quality, our breadth of products. This is a vehicle with which we have really established our brand."
CNN's Arvid Ahlund contributed to this report.
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