Cloetta to give up on “unprofitable” Candyking business in Poland

Confectionery industry news : Sweden-based confectionery manufacturer Cloetta has revealed its intentions to exit its Candyking business in Poland after finding it to be unprofitable.

Candyking is a Swedish company that manufactures and markets pick and mix confectionery products across Sweden, Finland, the United Kingdom, Norway, Estonia, Latvia, Lithuania, Poland, Denmark, and Ireland. Last year, it was acquired by Cloetta for SEK 325 million ($ 41.24 million).

While Cloetta is still in the process of integrating Candyking in its group, it does not see the latter’s operations in Poland to bring it profits though, and has termed it to be loss making.

A decision on its closure by Cloetta was made while announcing its fourth quarter 2017 results.

Cloetta’s sales for Q4 2017 grew by 20.2%, which was helped by the acquisition of Candyking, which made up 20.8% of the group’s sales.

Candy King, a subsidiary of Cloetta, manufactures and markets pick and mix confectionery products. Photo courtesy of Cloetta AB (publ).

According to Cloetta, the sales of Candyking moved up 14% during the same time, courtesy of a very positive development on all confectionery markets barring Poland.

Cloetta says that the spike in Candyking’s sales was in particular strong in Finland and even in Norway where an increased sugar tax is set to be introduced.

Henri de Sauvage-Nolting – President and CEO of Cloetta said that the integration of Candyking is going on as per plan and that the new integrated organization is being implemented across all markets.

The Cloetta CEO added: “We have decided to exit the loss making Candyking business in Poland since we do not see a profitable business going forward.

“Insourcing activities, although short-term affected by the fire in the factory in Belgium, are progressing in line with plan. The insourcing activities will be more substantial in 2018 and 2019.

“Negotiations with some retailers for renewals of pick & mix contracts have now resulted in us being able to renew all existing large Candyking contracts, except for one contract that still is under negotiation. In addition, we have been able to gain several smaller contracts. This demonstrates the strength of the Candyking concept.”

The acquisition of Candyking was not the only major deal clinched by Cloetta last year as it also struck a deal to divest Cloetta Italy, its Italian operations for a price of SEK 450 million ($57.1 million) to Katjes International.

Cloetta has been saying that it wants to concentrate more on its business in North-Western Europe and this includes the 2017 acquisition of the Candyking confectionery business.

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