Lindt is heading for its worst quarter in 17 years amid price rises and falling volumes
Short positions in the share have more than doubled since March, a sign that a significant proportion of investors are betting on a further fall in the share price.
by Mo.D.
Key points
There is a limit beyond which even the finest chocolate ceases to be irresistible. Lindt & Sprüngli has learnt this the hard way: the Swiss group, a global byword for quality in the confectionery sector, is heading towards its worst stock market quarter since 2009, with its share price having lost 29 per cent of its value over the last twelve months of trading, despite a technical rebound from four-year lows attempted last week.
The group is paying the price for the commercial decisions it made last year, when it decided to increase the prices of its products by 20 per cent to cope with rising raw material costs. Faced with an unprecedented surge in cocoa prices on international markets, the company had opted for the most direct approach: passing on the cost increases to consumers by raising prices by almost a fifth. A defensive move to protect margins, which proved detrimental to sales volumes. Customers, in fact, responded by leaving the product on the shelf and opting for cheaper alternatives.
Aggressive repricing has therefore eroded the very price elasticity that the brand’s premium positioning was supposed to guarantee. And the paradox is that now, with cocoa prices back at more sustainable levels – given that futures have fallen by almost 60 per cent from their all-time highs in December 2024 – Lindt finds itself facing a double whammy: procurement costs will not fall before 2027, due to the multi-year contracts already in place, but retail prices must fall immediately to bring consumers back into the shops.
Revised guidance and geopolitical pressures
In March, the group had revised its short-term growth ambitions, adjusting its estimate for organic sales growth in 2026 from the previous range of 6–8 per cent to a more cautious 4–6 per cent. This is due not only to weak domestic demand, but also to the conflict in Iran, which has driven up transport and packaging costs, whilst widespread geopolitical uncertainty has eroded consumer confidence on both sides of the Atlantic.
“A premium positioning does not protect the business when prices rise by 19 per cent over twelve months. If anything, it delays the recovery in volumes: those who switch away from a high-end brand take longer to return to it,” comments Svetlana Menshchikova, an analyst at Morningstar, who nevertheless rules out any structural deterioration of the brand. In her view, the company’s current stock market performance is cyclical: Lindt’s perceived value remains intact, and once retail prices normalise, Sales should therefore gradually return. A sign pointing in this direction comes from Barry Callebaut, an industrial supplier of processed cocoa, which has already indicated an expected recovery in volumes over the next eighteen months. If the industry as a whole moves in that direction, Lindt could ride the wave in the second half of the year.
