Cologne At the world’s largest manufacturer of chocolate Santa Clauses, the line rarely stands still: the chocolate Easter bunnies for next spring have been produced since the beginning of October. There are 75 million figures each year made from sustainable cocoa. “We would have finished the Christmas season much earlier if we had had enough raw materials and materials,” says Claus Cersovsky, head of the third generation of chocolate producers, Rübezahl.
“We had to fight for powdered milk for the fourth quarter, and cardboard has become just as scarce and expensive.” Cocoa beans are also hard to come by. “The harvests were good, but there are no containers to transport cocoa to Europe.”
The global logistics problems are also causing concern when it comes to exports, which otherwise make up 40 percent of business. “We hardly find any containers to ship our Santa Clauses to America – and if only at prices that go beyond all calculations,” says Peter Riegelein, a second-generation chocolate manufacturer. “Whom do our chocolate Santa Clauses use when the party is over?” The 63-year-old is happy that the two chocolate manufacturers are jointly coping with the corona crisis. “Our merger has already helped us to assert ourselves in the market and to get hold of scarce material.”
For 66 years, Riegelein and Rübezahl were bitter competitors in the market for “whole milk chocolate hollow bodies”. The family businesses merged in April 2019. Because the competition grew steadily. Large international companies such as Mondelez (Milka), Ferrero (children’s chocolate) and Lindt have discovered the business of Easter bunnies, Santa Clauses and chocolate advent calendars for themselves.
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In addition: “Our companies were often played off against each other by retailers – and their purchasing power is growing steadily,” said Riegelein. “As a medium-sized company you need a critical size in order to be able to continue playing in the market.” Cersovsky adds: “Every company alone was not big enough for the future.”
The former competitors Claus Cersovsky von Rübezahl (left) and Peter Riegelein have joined forces: “Every company alone was not big enough for the future.”
Owner-managed family businesses are increasingly joining forces in competitive markets: The sausage manufacturers Reinert and Kemper merged to form The Family Butchers in 2019. Because big slaughterers like Tönnies operate with the Zur-Mühlen Group in the low-margin market. The bookstores Thalia and Mayersche came together in 2019 under the leadership of Thalia, and Osiander joined in 2020. Together they want to assert themselves better against the online retailer Amazon.
“Union of equals on an equal footing”
Peter Riegelein took the first step towards the merger of the chocolate producers shortly before Christmas 2018. His company had made losses in 2017, and he proposed a merger to the Cersovsky family. “We were in agreement by Easter, we knew each other from the market,” says Cersovsky, 58. Both companies came together under the Gubor umbrella. The Black Forest chocolate brand had bought the Cersovsky family from bankruptcy in 2008. Gubor holds 100 percent of Rübezahl and 51 percent of Riegelein.
From a purely legal point of view, Gubor has taken over the majority of Riegelein. “But a union among equals on an equal footing is lived,” emphasizes Cersovsky. He is the board member of the Gubor management team and heads the private label business. Together with Rüdiger Bonner, Peter Riegelein strengthens the Gubor committee and, as managing partner, is responsible for the branding business. “Everyone does what they do best,” says Riegelein.
Rübezahl is based in Dettingen unter Teck near Stuttgart. Founder Josef Cersovsky came from the Giant Mountains and named his chocolate company after the mountain spirit in 1949. In 1994, the founding grandsons Claus and Oliver Cersovsky wanted to make themselves more independent of the seasonal business – for example with chocolate-coated puffed rice that their grandfather had already made. Today Sunrice has a market share of 40 percent. In the case of seasonal goods, Rübezahl had primarily specialized in private labels. Before the merger, the world market leader for chocolate figures had a turnover of around 180 million euros with 700 employees.
Riegelein and Rübezahl want to become more independent of the seasonal business with puffed rice and chocolate raisins.
Riegelein was founded in 1953 in Cadolzburg near Nuremberg. In 1991 the Saxon chocolate factory Kathleen was added. In 2014, the company entered online trading with a majority stake in Chocri in Berlin. Germany’s largest online confectionery is the market leader for hand-sprinkled manufactured chocolate. “Chocri is our ideas laboratory,” says Riegelein. “The market rightly demands more innovations.” Before the merger, the brand manufacturer employed around 800 people with a turnover of 120 million euros.
From seasonal to year-round items
“Two good entrepreneurs have teamed up,” says Bastian Fassin, managing partner of Katjes. “When you’re taller, you definitely have advantages on the cost side, but also on the sales side.” “We complement each other like ying and yang,” says Riegelein. “I’m more of a spontaneous gut person,” says Cersovsky about himself. “Peter Riegelein is more of an analyst.” Purchasing, marketing, sales, IT and logistics are now running together.
“Internally, integration is hard work, not everything is going smoothly,” said Riegelein. Downsizing was inevitable, say both entrepreneurs. On the one hand with double functions, on the other hand with two non-sustainable Riegelein plants. The location in the Czech Republic with around 100 employees was closed in March, followed by the Kathleen chocolate factory in Niederoderwitz, Saxony, with around 160 employees in April 2022.
The closings were not easy for the entrepreneurs, but were announced two years in advance. There were also job vacancies in other factories in the group. “The factory is getting on in years and the business is too dependent on the season and export,” says Cersovsky, explaining the step.
“In order to be able to utilize our employees all year round and to drive automation forward, we need more annual articles,” he emphasizes. In addition to puffed rice, chocolate-coated peanuts and chocolate raisins are already being sold as trademarks and cat’s tongues.
After all, Germans eat chocolate all year round – an average of 9.2 kilos, according to the Choco Suisse Association. The chocolate manufacturers recently took over the majority of the ice confectionery manufacturer Eichetti. Print manufacturer Lambertz has shown how to make its range more seasonally independent. Today the Aacheners are Germany’s largest organic biscuit baker.
Year-round articles only bring in 20 to 25 percent of the turnover of the Franks and Swabians. That fell to 280 million euros in the 2019/2020 financial year. The operating profit was on the zero line. “This year we at least made up for a lot,” said Cersovsky.
The skyrocketing costs are putting pressure on the traditionally low-margin business. The Easter deal has been negotiated for a long time. Price talks with retailers will soon begin for Christmas 2022. “It doesn’t work without decent price increases in the high single-digit, if not even in the double-digit range,” says Cersovsky. The trade wants to buy cheap. “But we manufacturers want and must at least generate our additional costs.”
Because Rübezahl and Riegelein should remain in family hands in the future: “Even if the chocolate business is no picnic.”
More: Mondelez CEO Van de Put: That’s why chocolate and biscuits are becoming more expensive.