Swiss bakery predicts further growth in 2005
helped Swiss baker Hiestand to predict it will beat its own
earnings targets for 2004. But the company's biggest challenge is
deciding where to go next, writes Chris Mercer.
Hiestand announced its sales rose by 20 per cent during 2004 with solid performances across the board, especially in its primary Swiss and German markets but also at the group's emerging businesses in Poland and Japan. Even the firm's south east Asian business is forecast to break even for the first time after reporting a 10 per cent sales growth.
René Weber, market analyst for Switzerland-based Equity Research, said the group's most important markets would remain in Switzerland and Germany over the next two years. Hiestand's number one position on the Swiss market and self-groomed reputation for using "high quality, wholesome ingredients" to make a range of breads, pretzels, snacks and croissants recently led to the start of a joint venture with the country's biggest retailer, the Co-op.
In Germany, the company is now the only baker which can rapidly supply and fulfill the needs of retailers, from shops to petrol stations, across the whole country, after doubling production capacity in 2004 and buying up German the distribution company Back and Friends.
Weber predicted Hiestand would grow by a further 15 per cent in Germany and 10 per cent in Switzerland during 2005, on the back of its current set up and through new products which appeal to consumers increasingly concerned with convenience, quality and health. But he warned that the firm would likely hit the ceiling of this growth after 2006 and must think about where to go next to avoid a slow-down.
One possibility is a greater concentration on Poland, where the company used a new focus on business-to-business supply to turn a 5 per cent sales drop into 7 per cent growth between 2003 and 2004.
Increasingly fast-paced lifestyles among Poland's urban populations, with working hours above the EU average at 40 hours per week, has led to a rise in demand for quality convenience foods; a similar trend in Germany helped Hiestand's selection of frozen and fresh baked goods to prosper there.
And Poland has already become an important base for Hiestand because the company can produce goods there more cheaply than in western Europe and then transport them easily to its vital German market.
Weber said that Hiestand was also likely to develop alongside its Irish shareholder company IAWS, which owns the Delice de France business in the UK as well as Groupe Hubert in France. IAWS has a 22 per cent stake in Hiestand and Weber believes a logical next step for both companies could be a move into Spain.
