Ladies and gentlemen, welcome to the Lindt & Sprüngli Leadership Change Conference Call. I am Valentina, the call's operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Dieter Weisskopf, Interim CEO. Please go ahead.
Thank you very much, Valentina, and all participants, thank you very much for attending, and good morning. Earlier today, we announced a change in the leadership of Lindt & Sprüngli. The board of directors has decided that the company needs new leadership for its next phase to deliver its full potential and to return to consistent, strong growth in all its markets globally. Dr. Adalbert Lechner will leave the company, and we thank Adalbert Lechner for his important contribution to Lindt & Sprüngli over his 33-year career with the company. He has helped shape the group's growth trajectory over many years. We are grateful to him for his leadership and achievements, and we wish him all the best for the future. The board is convinced that this leadership change will drive future growth, and the board and its chairman carry the responsibility for it.
Our brands and our market positions are strong, and our focus remains on exceptional products and experiences for our consumers and on profitable growth for our shareholders. The strategy does not change. A very important conclusion and message here. The board has started the search for the CEO of the next growth phase. The search compares to the best qualified people, internal and external, and the board expects to appoint the new CEO in the second quarter of 2027. Until then, I lead the company as interim CEO. I know the company and its people well. I joined in 1995 as Group CFO and led the company as CEO from 2016 to 2022. The Group Management reports to me with immediate effect. An important focus in the coming months is to return our European business to growth.
In the first half, organic sales in Europe declined by 2.1% after growth of 17.7% a year earlier, and volume mix across the group fell by 7.5% against price increases of 11.8%. The market has been most demanding in Germany, Switzerland, and Austria. We have already lowered prices in selected markets and adjusted our price and pack portfolio, and we invest significantly in our brands while improving profitability. It takes time until these measures show fully in volumes, and we see first positive effects. Today, we also announced in Germany and Austria changes. Michal Spiller, CEO in Germany, leaves the company after 23 years, and we thank him very much. Ali Kulein, currently CEO Austria, becomes CEO Germany, and Fabian Reinhardt, Head of Global Sales, becomes CEO Austria, both from 26th of October. Both will report to me. The interim period is a period of execution, not of waiting.
The budget, the rolling forecast, and the incentive plan for 2027 proceed on their normal timetable. We execute our strategy. My task is to hand over to the next CEO a company with renewed momentum. With that, I hand over to Martin for the financial part.
Thank you, Dieter, and good morning from my side. I will be brief because there is nothing new in the numbers today. Nothing changes in our financial framework. The outlook of the 29th of September stands. Organic growth of 0% to 2% and an EBIT margin improvement of 20 to 40 basis points for 2026. We confirm our medium-term targets of 6% to 8% organic growth and an annual margin improvement of 20 to 40 basis points, applying from 2028. Today's decision does not change the basis on which that outlook was set. The operating picture is the one you know from the first half. Europe, almost half of group sales, declined organically by 2.1%. North America, 37% of group sales, grew by 12.7% with continued share gains in the U.S. The rest of the world grew by 10.2%.
The EBIT margin rose to 11.2% from 11.0%, supported by cost discipline and efficiency gains. Balance sheet is solid, with an equity ratio of 53.7% at the end of June. Earnings were weighted to the second half, and the seasonal business decides the year as every year. The leadership change has no effect on our capital allocation. The share buyback program of up to CHF 1 billion continues as published. We will not comment today on trading since the half year. The next publication is the net sales figure for 2026 on the 19th of January 2027 at 7:00 A.M. Central European Time, and we will give you our view on 2027 with the full year results in March. That is all from my side. We are ready for your questions.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time. The first question comes from Joern Iffert from UBS. Please go ahead.
Thank you very much for taking my questions. There would be two, if it is okay. The first one is, please, when you look at year-end 2026, the important Christmas season, have you or will you now change a couple of things versus your initial plan you had three, four months ago on pricing, on marketing promotions, or is it remaining unchanged for the Christmas season? The second question would be, please, you mentioned there is no change to strategy. Just to double-check, there is no entering into ice cream, biscuits, or anything else. Also here, are you happy with the current innovation pipeline for the next one or two years, or is it also something where you need to boost a little bit? Thank you very much.
I would like to say, Martin, can you take the first one because that-
Sure
three weeks ago.
Yes. The 2026 Christmas season is basically, from our viewpoint, basically negotiated, is agreed with the trade. We communicated that especially for Germany, we had less orders from the trade because they are nervous about the seasonal performance from the last two seasons. That is why they ordered less, and that led us also to this new guidance of 0%-2%. Apart from that, the Christmas season basically is the strategy set, the pricing set. Of course, you have always some room from a promotional pricing point of view. That is what we do every year, right? Depending on how the sales flow is going, we can react a bit. In general, there is no change compared to what we communicated on the 29th of September .
Then I come to the second question, and I think that is strategy. I think they are very, very important. A lot of companies and as well managers always think there are areas and categories that are much easier to get in and to manage and have success. I think Lindt & Sprüngli, it is a company that for the last at least 150 years, and even more so now since 1993, when the new management at that time came in, we focus clearly on premium indulgent chocolate at the premium and as well high-priced area or in the whole high-priced product. I think there is no plan whatsoever to go into ice cream or to go into biscuits or to go into anything else that is maybe close to our turf here.
But we made one kind of product, but that is a wafer, so please don't call that a biscuit. It's really high-end, high quality, and high chocolate wafer. But I think that's it for the time being. No change to strategy.
Thank you very much. On innovation for the pipeline, just to double-click on this one quickly. Do you feel comfortable? Do you also think on innovation that needs a little bit of additional booster?
That's an ongoing target and an ongoing goal. If you look at it, then the big goal will be for 2027, will be the global launch of that wafer I just mentioned before. Then you have to as well look at our whole assortment, where I think and I believe that we still have the one or the other good product that is underdeveloped, where we still can make much more efforts and as well sales. That is for 2027 goal. So basically strengthen what we have. Strengthen Lindor and Excellence seasonal. That's absolutely clear. The next thing will be to roll out the wafer on a global basis. Then again, the next is review our existing portfolio of products and, I don't know whether you tasted already the one that is called NUXOR. It's a little bit an orphan line that this product has. It's a great one.
Then we have another one. We talk about the squares and the Lindt square. There are a lot of things that are still underdeveloped we can push. And of course then, during the year, we are looking at, ongoingly, at opportunities where we can come out and surprise. As you have seen last year, we surprised a lot, mainly with the Dubai . That was a hit. We were lucky. We came out well, but you cannot expect that we have on an ongoing yearly basis such a nice success.
Thank you very much.
The next question comes from Jon Cox from Kepler Cheuvreux. Please go ahead.
Yeah. Good morning, Dieter. Welcome back. Good morning, Martin. A couple of questions for you. Just in terms of the timing of this announcement and why it's happening now, maybe rather than a couple of weeks ago when you did the warning, because clearly the market's worried that maybe some of the improvements that you were saying you were seeing in Germany and Switzerland aren't coming through, and maybe there's even more of a serious issue at the company. I wonder if you can just talk through that. That's the first question. Second one is just really on the commitment, if you could just reiterate, on the 6%-8% top line growth and the margin improvement. I guess any external CEO would have to buy into those targets.
Just a bit of an add, I think Dow Jones is reporting that the global marketing chief has also left. I wonder if you can just confirm that. Thank you.
Ladies and gentlemen, please hold the line. The connection with the speakers has been lost. The conference will continue shortly. Thank you. Ladies and gentlemen, the connection with the speakers is here again, so we can proceed with the conference. Mr. Cox, you can proceed again with your questions. Thank you.
Yes. Good morning, guys. Welcome back, Dieter. A couple of questions for you, if I can. Why now? Why is this change happening now rather than, say, a couple of weeks ago when you did the profit warning? Clearly, the market's worried that things are a lot, maybe worse than we know so far. Maybe the Swiss and the German improvements aren't as good as you initially expected. First question. Second question, Dieter, on the 6%-8%, I guess any new external CEO needs to buy into the ability of the company to continue to grow 6%-8% over the medium term with margin expansion. Can you just confirm that and your thoughts about the 6%-8%? Just a last add-on, I think Dow Jones is reporting that your chief global marketing head has also left. I wonder if you can just confirm that. Thank you.
I first get to the timing. Now the timing, Jon, you are aware of the Swiss Stock Exchange regulations, and as soon as management and the board is informed about a guidance not being fulfilled, I think we have on a monthly basis, we have so-called rolling forecasts. On that rolling forecast, that we got in the day before we had to go out with the sales warning. We were in a situation that was really news to board as well the management here. So within 24 hours, you have to go out if you have a news that is, or could affect the share price. I think at that time, that was really a surprise to us.
There was no time to think about something that the board already has discussed before, whether and how and when such a change should be made and should be announced. I think it was planned before the budget meetings, and the budget meetings happen now in November. That means there was no chance to combine the two in the previous call. Sorry for that, but I think it has to do with the core set we have here, of regulations. Now we get out with, again, a news that has been planned already for some time, that we just say we need leadership change. The leadership change mainly as well in view of the retirement age of [inaudible].
We need now new talents and new CEOs that will lead that company not only for three, four years, but I think we are looking at a leader that goes on for the next six to eight years. I think that is the reason for that ugly, I have to admit, ugly timing on how we get out now here. The next one is whether we can stand two commitments, and if we look at 2028 commitment 6%-8%, that is something when you look at the last years, what Lindt could do and what Lindt has achieved, then this is something we aim to get back. We deviated from that in the past, in years where we had basically no inflation at all. If you remember back 2016 - 2021, we had no impact from price, and we had to grow via mix and volume.
That's the reason we took it back a little bit to 5%-7% at the beginning and then came back with 6%, 8%. If I look now at 2028 and I call it now after the big changes that nobody really has managed before of price increases in cocoa sixfold, then I assume now a little bit quieter area and a quieter performance in raw materials. Having said that, it still leaves the price that maybe can be done in 1%, 2% price. We have 1% mix we are sure we can achieve. Then if we talk about 6% - 8%, then I am absolutely persuaded that we should reach at least 3% in volume back in 2028. Now that is, of course, we are talking in today's environment already one and a half years out.
So take that as well as a little bit kind of, I don't say warning, take it as basically a prudence. Now the new CEO, external, internal, has to buy in into that goal, and that is definitely as well part of the assessment process we have to do over the next years. That is definitely easier when we have already experienced internal candidates. By the way, we have really good candidates. It's not that we are missing any. But I think given the importance that we really have a long-term strategic decision with somebody that is continuing the track we have, we take our time. That's the reason I come in here. Now the CEO, the new CEO, has to buy into strategy and as well set up structure of Lindt, and that will be announced as soon as we have made the decision there.
Now the last point you had, that is the news that came out today on the fact that our Daniel Studer has left the company. He was group management member, and he has left in September. His leave is not related to today's announcement and is not related to the announcement we had during the last ad hoc information. The fear that you might have that now there is a change and that there may be now a change in the strategy in marketing, I can really assure you that is not the case. It's even, let's say, even I can make the importance that it continues even more so than in the last years. It continues on the track of Lindt. As you know, the Lindt from the past.
Thank you.
The next question comes from David Roux from Morgan Stanley. Please go ahead.
Morning, Dieter and Martin. Just one question from me. Obviously, it's been an unprecedented time in the cocoa cycle, but I guess with the benefit of hindsight, where does the board think leadership or the business in general could have better managed the past few years? How do you think this may alter Lindt's strategy going forward?
I think as you mentioned that, and rightly so, looking back is always an easier task than looking ahead. I am now, of course, the aged guy here in the room. I think I joined Jacobs Suchard in 1987, and at that time, Jacobs was just going as well through turmoil in cocoa. Because if you look at the cocoa development, we had there a guy that was in the 1980s, who was as well squeezing the cocoa unsuccessfully so, but the price went up like crazy. But the good news was it was only for a short period. Since then, we never had any big issues with raw material prices. They behaved, sorry, brackets. They behaved quite well within a certain bracket and could be well managed by the whole industry.
If you look at it now, what happened then, that has been unchartered territory for all managers being in cocoa and being in chocolate. I think suddenly you had to assess over the whole globe, you had to assess what is the elasticity of my product in the market, given as well, let's say now, geopolitically, kind of not easy environment. I think, at hindsight, looking back, this is now easy, but the decisions managers had to take at that time was a difficult one, and I think we are fully aware, and the company is aware of that. Meaning of the words, I think we admitted, I think, already last time when we had the sales call, we admitted already that in some countries we misjudged the reaction and the elasticity of the market and the readiness of the consumer to pay it.
We then as well realized the first hit in November, December was the Christmas, a lot in Germany, and then again in Easter. I think, since then, we are moving fast in a sense that we say how to meet certain price points, how to get packaging sizes, and not the tricky one, just putting less products in. We really are always open with the consumers. I think we clearly declare what is in, if in case we make a change. I think that's packaging change, and at the same time as well, we look at the Christmas assortment now already the coming one in 2026, and then, of course, Easter next year.
I think that all is a learning out, but that learning had to be made out of decisions that were made in the past with a lot of uncertainty, and sometimes we overdid it, just kind of openly.
Thanks, Dieter. Just to follow up, if I may. You've reiterated the midterm guide from 2028 onwards, which I guess would imply that you remain confident in the position of the brand, and your relationship with retailers. What gives you such confidence that there has not been any damage done to the brand or those retail relationships, just given the fact that we have seen consumers pushing back on price and then also competition coming in the likes of private label, et cetera?
What gives you confidence? I think I joined 1995. I ended 2022, still followed very closely the development of the brand. If you look at the brand that has been built up now, the pillars of that brand, I think the quality of the product, the ongoing innovations, the image we have as well from a whole 30 years of advertising, in one direction and not changing all the time back and forth. There is one message, and that one message is indulgence, that one message is clear, the quality, and the message is innovation. I think for one year or one season in Christmas or one Easter, that is not going well, I'm absolutely sure a brand like Lindt is not taking damage in a sense of what you alluded to.
I think that brand is intact, and I think that's an important, let's say, fundament and platform where I'm sure that we will be back to higher growth.
Very clear. Thank you.
The next question comes from Ed Hockin from JPMorgan. Please go ahead.
Many thanks for taking my questions. I have got two, please. One is on the reiteration of the strategy and the midterm guidance, and how that squares with the comments in the release about convinced that the leadership change will drive future growth. I suppose what I am unsure about is what is changing. What are you looking for in a new CEO, that might not have been there before? What is it in terms of execution that needs to change over the coming quarters and years. Really looking for color on how do you see that path back to 6%-8% and what is it that is changing to get there. My second question, please, is on pricing and the balance of pricing versus volume. What is your view and the board's view on whether the company has got that balance right over the past two years?
Is there a view that pricing may have gone too high in markets beyond Germany, Austria, and Switzerland, or do you think that it is really restricted to those markets? Thank you.
Yeah, I think I take the second one first. I think we already admitted, I think at last discussion or last call, there were pricing decisions taken that were just going too high. That is being corrected now or will be corrected. The next one is our other markets as well in the same situation. I say they are other markets, never to the extent like in this DACH region. As well, the increases that have been taken in those markets were as well over our competitors, but never to the extent we did it in those Germany, Switzerland, Austria markets. I think, that is my point to that. If you look at the U.S., I can maybe make here the remark, Mr. Trump even helped us a little bit in January because we were close to increasing the prices again in the U.S.
But then, good news came in that the tariff people realized that there are no cocoa and coffee beans in the U.S., so they took back the tariffs on cocoa and coffee. That was good news for us, so we could basically give up the increase we have planned in January. So that put us in a much better position there. So that helped in U.S. and Canada. If you look at the rest of Europe, we took increases, but never to the extent as you have seen in Germany and Switzerland and Austria. To that point, are corrections possible? Yes, of course. We can as well, in line with the decline in cocoa and our coverage, we can take down as well in selected products and in selected countries, we can take down the prices.
Doing that, as well increasing our advertising and doing that as well served, very important for you all, we can as well maintain our outlook and guidance for the increase in profitability. So that is all unchanged. I think I just repeat what Martin as well said. Now, coming to your first question, we have to make the difference between strategy and what is said, leadership. If I say strategy, again, we continue, and that is just to inform you and as well to give you the assurance this strategy continues. Like first discussed this category, and that there is no idea of expanding in any new area or category. So we continue, and we continue high-end, we continue quality, and we continue as well the innovations.
But when we talk about leadership, then we are talking about the fact that we have a CEO that is basically age 65, that stayed here for the last four years, and the company and the board has to think about the mid long-term outlook, because we need in times where the company in the last 12 months definitely was under stress due to the measures taken and due to the fact that we had a declining chocolate market, and it became very difficult.
And in times of stress, in times of lots of hard discussions, it's sometimes better if you know already that a retirement is imminent, that you take the decision that you go out and you take a new leader that is coming in, and that is mainly as well now leading the budget discussions that are starting in two weeks, and is leading as well the midterm discussions, next five years that we as well have in parallel with those budget discussions. So I just say strategy unchanged, but knowing that a change will be imminent anyway sooner or later, that the company and the employees are basically just needing to look up to basically somebody else that is leading them into the future. I think that decision was taken now. I think it fits with the wording we have as well in the announcement.
Thank you. Thanks a lot.
The next question comes from Pierre Tegnér from ODDO BHF. Please go ahead.
Yeah. Thank you. Pierre Tegnér from ODDO BHF. Hi, Dieter. Nice to hear you again. My first question is regarding the new CEO. What are the key criteria the board has defined when choosing the new CEO, be it external or internal, in term of, I would say, soft skills, backgrounds, and referring to your comments on leadership. The second question is much more concerning the board, because if I understand well, one of the catalysts behind this announcement this morning is the change of the guidance for the second time since the beginning of the year, but cautiousness was already there. So maybe can you share with us, in your view, what the board missed, what has been underestimated since the beginning of this huge price increase? Because we have seen the volume coming down, not on the very short-term historical view, but since the last 24 months.
At this stage, can we expect some changes at the board level, not in term of membership, but in term of mindset, having a look on the longer term? Thank you.
Yeah. I take the second one first here again. That is board, and first one was the board strategy. That is one thing, but then the execution of, we mentioned that the price increases by product, by market, by time, by season. That is not and cannot be a board decision. I think the board has to trust on how this is done in the individual markets. I think that is statement to that point. Then the other one is board and, clearly as well, we have seen comments this morning. The board is changing. You have seen that already the last two years. We have newly elected two ladies, young ladies or younger ladies, and the age of the board as such is definitely a discussion and is a topic.
That topic, I can tell you, is going on, and that topic will be resolved step by step, and you will see that as well in the next and the over next AGM. We will come forward here with as well same generation change as we are looking as well here for the CEO now. Of course, I cannot say any more details about that, but you will be informed in due course. But important is for all of you, I think that topic is taken care and will be taken care, and you will hear it in the next one to two years. Already one will be at the next AGM. So that's the board topic. Then we get to the CEO and the criteria.
Now, if you look at the Lindt company, and the Lindt company has, compared with other ones, has maybe one or two advantages, and that one advantage is we have, and that can as well be a disadvantage, but we have it. We have CEOs out there that can take decisions the best they can. They can introduce products. They can, as we mentioned before, they can set prices. They can directly talk to their customers, so they have a lot of responsibility. So it's a, to a big extent, decentralized setup that some of our peers even admire. I think that strategy is standing, or that setup is standing, and the new CEO has to fit in into that. So that speaks more for an internal than an external one, and I'm absolutely clear on that one.
Then the next advantage of that company is the premiumness, is the indulgence, is kind of the quality of the product. So what we need here is as well the knowhow on to do that and on how to fit in. Now, having said all that, you already realize that attitude is a very important feature that any future CEO has to bring with him. Attitude to recognize what is Lindt, what is special in Lindt, how are they organized, how are they structured. I think maybe we always think we are special, and maybe we are not that special. But I think really when you hear comments from the outside, I think we are highly appreciated as well by employees on what they can contribute and how can they themselves bring in their views in order to bring that company ahead.
It has to be somebody that has the attitude to accept history, set up decentralization, and as well a good team spirit in our company.
The next question comes from Sam Darbyshire from Goldman Sachs. Please go ahead.
Morning, and thank you for taking my question. I think most of them have already been answered, but just looking during this interim period, Dieter, could you give a little bit more color around how you're thinking about your priorities over the next 6 - 12 months? Just thinking, I know you've talked about elasticities quite openly and the price points quite openly, but what we're seeing is that the category is very dynamic at the moment. How do you think about potential risks from competitors coming through in 2027 around those price points, and how do you think about planning to react to those if you do find that the category becomes more competitive? Then just thinking about those budget planning meetings that you were discussing for November.
What are the key things that you're going to be focusing on when you speak with employees in November about the planning for 2027 specifically? I understand you've said a lot about increasing investments behind the brand and innovations coming through, but if you could perhaps provide a bit more color, that would be helpful. Thank you.
Okay. A full basket of questions. I try to do my best here. What are you trying to do? I think I mentioned that already before. In times like 2026 as we are in now, there has been a lot of pressure, stress on the organization. I think the first thing I really want to bring in is calm. Let's get the time to think it, let's get the time to discuss it, and let's prepare a real realistic, good outlook and budget for 2027. I think that is just coming in the next three weeks, and I'm looking forward, of course, because that's important. I get all CEOs coming in, and we can talk to them about their processes and about their programs. I think the first one is bring in tranquility, calm.
Let's sit down, let's discuss, let's get to a realistic budget. The cornerstone of that budget we already explained before. I think I'm absolutely persuaded that with additional brand investments and as well price reductions, we bring our products again to a good volume growth. That is the short term. The next one, and that has been mentioned already at the beginning, I think it was Jon asking that question. What about the group management member that has left the company? I think we are there as well in the selection process on bringing in that person. Then as well looking at the countries they had before and organizing that changeover. That is another important one we will do in the next, let's say, two to three months. Then during the budget period, it is setting the priorities, which products.
I think here again, it is going back with the saying that we have our racehorses, and the racehorses is Excellence and the Lindor, and finally, the seasonal. I think that will be focused on really making sure we get these products and these three ranges well supported because they are as well unique and we are sure that as well we can work with elasticities. We know in the meantime, much better of these three products and of these three ranges. The next one is the innovation of the wafer that we bring in and as well will support priority there. Then, not to forget as well, we had plans and still have plans. That is for further expansion in Asia, where we go in the three, four countries where we start with our own shops.
At the same time, we have Latin America where as well, we have two countries where we start with our own shops. These are the things that need attention and need as well good preparation. I think that is what I can do as far as I can in six. Maybe if it takes longer, then it's a little bit more than the six months. Anyway, that's what you can do here in the company. It's just a company setting priorities, making sure we do the right things, coordinating everything. I think that is again indicating to you it's not an emergency job, it's not a reorganization job, it's not whatever, a headcount cutting job. It is really, the company is in good hands. The company is really doing well, and we have just 2026.
That has been a very challenging year for everybody, but we are sure that we get out of that in the next year. Don't know, you had a basket of questions, whether I answered all of it.
I think mostly it was just understanding how you think about elasticities in the context of competitors becoming more promotional. If you think about elasticities statically based on where we're at today, you could argue that price reductions may not be super important, but then if competitors continue to become more promotional, you could have higher risk of further volume share losses. Just wondering how you're thinking about that. Thanks.
Yeah. I think the issue is that the promotion you can do as an emergency measure, as happened this year, we have been really all over the place with some promotions left and right. But I think that is not the way to go forward, because if you continue with that over another two years, then definitely, a first question a colleague of yours asked before, then the brand, if you do that for long term, then the brand will take damage. That means now we have to get away from that, and I think even not wanted by any manager, we have to think about just taking the list prices down. That is as well what we are planning in the one or the other country or product next year. So we have to get away from this kind of really not that good, 40%, 30% down.
That has to stop. I think that has to stop with thoughtful thinking and planning and as well making sure that the right price point is reached again with measures of list, what can be done in promotion still, what has to be done in packaging, and all that comes together and it's, as I said before already, the life of a CEO is becoming more complex than it has been maybe 20 years ago or 10 years ago.
What I would also like to add, let's say if you look at some of our peers, yes, you mentioned price decreases by some of the peers. Many of our peers have decreased EBIT margin quite substantially, so we do not know how much room they really have, number one. Number two, private label, which is especially so in Europe, they typically are hedged relatively short. As you have seen, we have had this huge volatility in the market, so we do not know, of course, where they are exactly hedged private label, but they are normally closer to where the market is at this actual point. So I also have my doubts how much they can really further decrease prices, private label, with the short hedging.
Understood. Thank you.
The next question comes from Mikheil Omanadze from BNP Paribas. Please go ahead.
Morning. Thanks for taking my questions. The first one is on the actions that you have already undertaken. You mentioned that some of your measures are already resulting in some positive signs for your European sales trends. Could you please maybe elaborate on that a bit because there is nothing material that we see in the sell-out data. The second one is a follow-up on elasticities. Is it possible that in order to achieve positive volumes in 2027, you will need to cut prices in such a material way that you will end up with negative organic sales development in 2027? Can you rule out such a scenario? Thank you.
I think I take the first one that is actions in view and what happened already. I think if you take, and I am sure you have read already the September figures from Nielsen, and I think if you take them, you do not see a lot of progress yet. I think where we see first signs as well in hard copies of Nielsen. I think what we allude to is that we are talking about smaller package, lower price points of Lindor that has been introduced in Germany. We are talking about not only Lindor, we have then as well Excellence is doing again quite well. Is it price measures or a little bit better than what we had in August, September. I think that is what we basically report here. Now, remains to be seen.
The important time is definitely is Christmas, and as well there we get already an idea because by early November, those Christmas how you say, portfolios and as well displays will be already out, and we will see on how that is working. But it is just kind of first signs. It is not that I can confirm you X percent up or down. The second one I can leave to-
Yeah, I can take it. Look, your scenario that you painted here of negative net sales, we think it is highly unlikely. Why? What we have typically seen when we increased prices, at least the last price increase in some European markets had a negative elasticity of more than one. But if you just assume for argument's sake that the positive elasticity is +1, that already would bring us to a zero sales number, right? Especially because where we do price decreases, it is where we saw the biggest negative elasticity, right? So we should typically see a positive momentum. But if you assumed the elasticity was one, then in addition, we have an innovations wave that we roll out globally next year. We have additional retail stores that we open up in selected markets. We have new subsidiaries in India. We have a joint venture in Saudi Arabia.
We are just opening up Malaysia, for example. As Dieter mentioned, in Latin America, we are very active. So we have a lot of pluses as well. So at this point in time, it is difficult to think about a scenario where we would have negative net sales development next year. [inaudible]
That is very clear. Thank you.
The next question comes from Tom Sykes from Deutsche Bank. Please go ahead.
Yeah. Morning. Thank you. Sorry, I missed slightly or did not quite get some of the comments that you made on the strategic direction towards the beginning of the call and the expansion into other categories. I get that the history of the company is premiumization within chocolate, but we have seen categories with chocolate in or on grow much more quickly than solid chocolate, and that looks like it is taking consumers away from the category, and it is maybe difficult to lure them back again. Is that sort of just something that you do not think is a longer-lasting trend, or it is just not something that you feel that you would have a competitive advantage in? And does it not just affect some of the premiumization rates that you would be able to attain if people go down that route of consumption rather than sort of solid chocolate product, if you like?
Then just on the marketing spend, could you maybe just outline who actually would have primary responsibility now for spending, so I missed that as well, spending the increased amount of A&P it looks like you are going to spend and spend a significant amount. Who now has primary responsibility for those marketing plans and budgets going into 2027, please?
Yeah, the first one, that is the cookies. I think, you have seen already, as I say, that this is not a cookie, and we really have to make sure because our wafer is in the chocolate area. As well, it is still a chocolate. But if you look at cookies this year, or mainly, I would say the last two years, they definitely as well had some additional sales. That has been linked to the climate. Because if you are at 40 degrees, it is kind of difficult with high-end chocolate. I think, that has been definitely as well triggered that you see now the higher demand in cookies, and that has been that climate we had this year.
In general, if you look at a company, and I mentioned that before, if you have a mindset of a company that is on premium, that is on high-end, and it is on high-end indulgent chocolate, I think the difficulty is to bring that mindset into like another turf. Because a lot of times, we are always asked, "Why don't you do ice cream? Why don't you do cookies? Why don't you do hard candies?" I think, the sales guys, the marketing people, and all of them in Lindt, they are dreaming, they are sleeping, and they are thinking about one thing on how do I promote and how do I push this product in my category where I am accepted and as well seen as a certain leader.
I think for that reason, we still believe that a focused company with priorities on high-end chocolate, that is the best corner to be in for our company. Having said it, we look, of course, at it. We see it, what happens there. We do not think that the consumer for high-end chocolate is lost. We still believe that this high-end area where we are in is growing. Now, the cookie is not necessarily a premium indulgence. The cookie is a lot of times, but maybe I am wrong here, maybe I talk. The cookie is the little hunger, the little, I need something basically just because I am working the whole day, and then I need one of those cookies. I have seen myself as well using that, but it is not high-end, indulgent, high quality. It is not gifting.
I think, we are in an area where we say we still have a lot to do and a lot of opportunities in our area. We are active and do not want to leave that area because then you would as well have to change the whole setup of the company and the people you have inside.
Okay, thank you for that.
Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to the speakers for any closing remarks.
Okay. Thank you very much for your questions. To summarize, and that's very important, new leadership for the next phase, a clear process with a firm date, an unchanged outlook, and an unchanged strategy, and a strong base in our brands, our balance sheets, and our markets outside Europe. Martin and I will be available to you in the coming weeks and within what is published, and you will hear from us with the January sales figures. Thank you very much for attending.
Thank you.
Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.