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Jacobs Suchard AG

Jacobs Suchard AG

Seefeldquai 17
8008 Zurich
Switzerland
(01) 385-11 11

Public Company
Incorporated: 1982
Employees: 16,700
Sales: SFr 6.3 billion (US$4.2 billion)
Stock Index: Zurich

Jacobs Suchard has its origins in three spirited entrepreneurs: Philippe Suchard and Johann Jakob Tobler, confectioners; and Johann Jacobs, a coffee merchant. The Suchard and Tobler companies joined forces in 1970 to form Interfood, which Jacobs coffee company joined 12 years later to form Jacobs Suchard. Today this company is one of the fastest-growing international confectionery corporations in the world, with 12 of the European chocolate market.

Philippe Suchard opened his small confectionery shop in Neuchâtel, Switzerland in 1825. The next year he expanded his business by opening a chocolate factory in Serrières. Before trying the candy business, though, he took part in founding a shipping company on the Rhine River, attempted to raise silkworms to make silk scarves, and tried to establish a Swiss colony in the United States, near Carthage, New York. Later he provided housing for people working in his Serrières factory at a time when they did not have a union to voice their needs and demands. Suchard soon had built his business into the leading Swiss chocolate maker. Four years before his death, the Suchard Company opened its first plant outside Switzerland, in Lörrach, Germany in 1880, the first in a series of international expansion efforts. In 1901 Suchard established the Milka chocolate brand, one of Europes oldest and most popular brands of milk chocolate.

Suchards son-in-law, Carl Russ, led the business into other countries, opening another factory in 1888, in Bludenz, Austria, two factories in France in 1903, one in Spain in 1909, one in Italy in 1923, and one in Belgium in 1929. Although the chocolate industry fell on hard times during World War I, by 1931 Suchard had begun to move into sugar confectionery, under the Sugus brand. This venture helped the company weather the Depression. After World War II, Suchards chocolate business again flourished and the company enjoyed relatively stable success.

The Tobler company, which merged with Suchard in 1970, began in 1867 when Jean Tobler, formally Johann Jakob Tobler, opened a small shop called Confiserie Special. A year later, he opened a confection factory in Bern. An avid traveler, Tobler was involved in various ventures while continuing to build his chocolate business, which prospered quickly. In 1908 Jean Toblers son, Theodor, put the Toblerone chocolate bar on the market. One of the most valuable additions to the Tobler line of chocolates, it is Toblers hallmark product.

In 1922 Tobler first expanded outside Switzerland, to Paris. It was not until 1951, however, 29 years after moving into France, that Tobler made its second international move, this time into Stuttgart, West Germany. In 1967 Tobler extended into Great Britain. Tobler and Suchard continued to develop their respective chocolates and businesses until 1970, when the companies merged to become Interfood.

The joint effort focused on internationalizing business operations and broadening product lines. In 1980 Interfood acquired Andes Candies, based in the United States, and in 1982 it acquired Callebaut, a well-known Belgian producer of candy coatings and other products.

The Jacobs coffee company, based in Bremen, West Germany, can be traced to Johann Jacobs, born in 1869. This third industrious entrepreneur in Jacobs Suchards story opened a shop offering chocolates, tea, biscuits, and coffee in 1895. Jacobs opened a roasting plant of his own in 1906, and seven years later registered the Jacobs brand. In 1929 Johann Jacobs handed over the leadership of the company to his son Walther.

Much of Jacobs subsequent growth is attributed to a vital marketing decision made by Walther Jacobs: the company began delivering freshly roasted coffee directly to retail shops. After World War II, this system of direct delivery was stepped up, along with production and sales, until in the mid-1960s more than 1,000 vehicles delivered Jacobs fresh-roasted coffee to over 60,000 shops. In 1966 Jacobs began marketing different brand names of its coffee products, beginning with Krönung and growing to include Tradition, Privat, and Edel Mocca.

Klaus Jacobs, Walthers son and the third Jacobs generation to lead the company, took over in 1970. Jacobs had expanded into Austria in 1961 and into Switzerland ten years later. The company, under Klauss leadership, had plans to expand further into non-German-speaking countries and needed a home office to operate from. In 1973, a management and consulting subsidiary was established in Zurich. Subsequently, Jacobs moved into Denmark, France, and Canada during the 1970s by acquiring roasting and production companies in those countries. Jacobs acquired Jacques Vabre in 1973, and then again set it sights on France and bought Cafè Grand Mère, in 1982.

By this time it seemed to Interfood and Jacobs leaders alike that a merger was in order. Both companies had ambitious goals for international expansion. Chocolate and coffee, though hardly the same business, offered some scope for cooperation, and a merger would bring both companies economies of scale. The merger, which created the public company Jacobs Suchard, was accomplished in 1982. Its head office was established in Zurich, since Interfood was determined to stay Swiss, and Klaus Jacobs (whose family controls 55% of the company) was made chairman of the board, since Jacobs was by far the larger of the two companies. In the companys logo, a J and an S combine to form a T, for Tobler.

Jacobs Suchard immediately began to cut costs; Jacobs eliminated most of the companys middle management positions, and used capital it raised by selling shares to acquire many established and successful businesses. One of the most prominent of them was the international Monheim Group, which Jacobs Suchard took over in July, 1986. Included among Monheims subsidiaries was Van Houten, a West German company manufacturing consumer chocolate, cocoa, industrial cocoa butter, and cocoa powder. Another Monheim member was General Chocolate, in Belgium, which marketed specialty sweets under the Meurisse brand. Jacobs Suchard Belgium now handles Van Houtens and General Chocolates consumer business; its industrial affairs were absorbed into Jacobs Suchard in Zurich.

By the end of 1986 Jacobs Suchard was operating quite successfully with its European additions. On the North American continent, however, save for Andes Candies, the company was doing very little business. So Jacobs Suchard set out to participate more aggressively in the lucrative American candy market.

In December, 1986 Jacobs Suchard completed a takeover of E.J. Brach. The American candy company, in existence more than 80 years, was the third-largest candy company in the United States. Jacobs Suchard saw this acquisition as a profitable enterprise in itself and, perhaps more importantly, as a door through which to introduce its goods to the North American market.

In March, 1987 the company took over the Belgian chocolate company Côte dOr. The takeover was controversial because the Belgian company was the last of its kind still owned by Belgians. From the late 1960s into the 1980s Belgian candy companies had one by one been bought by foreign interests, including Callebauts 1982 purchase by Interfood. Nestlé had also bid for control of Côte dOr, but the families who owned the Belgian national icon chose Jacobs Suchard. Jacobs Suchard, vowing to sustain the high quality of Côte dOrs chocolate, absorbed Côte dOr into Jacobs Suchards Belgian operations. Jacobs Suchard has also expanded its product market into Italy and Greece, in preparation for the integration of the European Economic Community in 1992.

In 1988 Jacobs Suchard bid for control of Rowntree, one of the United Kingdoms largest candy companies. In April that year Jacobs Suchard began buying the largest percentage of shares, 29.9%, allowed by British law without placing a bid for the whole company. Nestlé was on the scene again, eager to bid, but Rowntree was not eager to be bought by either Swiss company. Nestlé finally bought the company for about $4.5 billion, topping Jacobs Suchards offer by $400 million, when Jacobs Suchard decided to stop bidding after a two-month battle and sold its Rowntree holdings to Nestlé for $285 million.

Jacobs Suchard bought a Panamanian bank, Banco Aleman-Panameno, in 1985, and acquired the majority interest in West Germanys Ibero-Amerika Bank in July, 1986. Both have close ties to Latin Americas green-coffee business, upon which the company heavily depends. Direct participation in the banks is intended to provide Jacobs Suchard with greater knowledge about the green-coffee business.

Since the 1982 merger that created Jacobs Suchard, the company has seen three phases in its development. In the beginning only key areas, such as personnel and finance management, were integrated, in an effort to bring Interfood and Jacobs together while disturbing their individual operations as little as possible. In 1983 the company reevaluated techniques for marketing its chocolate and coffee products in light of one another and of the various countries in which they were sold and made plans to capitalize on its popular brands and the changing desires of consumers. With consolidation taking a firm hold in management and marketing, in 1986 Jacobs Suchard redefined its business structure to include three business units: core business, finance and trading, and diversification, focused mainly on North America.

Having spent approximately $1 billion in 1987 and 1988 on acquisitions alone, Klaus Jacobs plans to concentrate the companys European production in just six manufacturing centers by the end of 1990 (down from 22 in 1989); to streamline its European product line; and to improve European sales by strengthening its less expensive brands, like Milka.

Jacobs Suchard also hopes to capture a healthy portion of the growing Asian chocolate market. In 1989 the company hired 100 salesmen to push Milka chocolate in the Tokyo area alone. In North America Jacobs plans to cut Brachs array of candies by two-thirds and to spend $70 million to modernize its production facilities to gain better market position.

While looking for other takeover targets in confectionery or other related fields, Klaus Jacobs is focusing on making Jacobs Suchard uncommon among its competitors. It is with a certain refined aggression that he leads Jacobs Suchard into the 1990s.

Principal Subsidiaries

Jacobs Suchard Tobler AG; Ak-P tiengesellschaft Chocolat Tobler; Jacobs Suchard Management & Consulting AG; Taloca AG; Jacobs Suchard GmbH (West Germany); Jacobs Suchard Erzeugnisse GmbH & Co. (West Germany); Jacobs Suchard Berlin GmbH & Co. KG (West Germany); Jacobs Suchard Service GmbH & Co. (West Germany); Jacobs Suchard Manufacturing GmbH & Co. KG (West Germany); Suchard Schokalade Ges.m.b.H. (Austria); Jacobs Kaffee Ges.m.b.H. (Austria); Mirabell Salzburger Confiserie-und Bisquit-Ges.m.b.H. (Austria); Bensdorp Ges.m.b.H. (Austria); Jacobs Suchard France S.A. (France); Café Grand Mère S.A. (France); Jacobs Suchard S.R.L. (Italy); Jacobs Suchard Kaffe A/S (Denmark); S.A. Jacob Suchard N.V. (Belgium); Koffie Hag N.V. (Belgium); Cote dOr N.V. (Belgium); Jacobs Suchard/Côte dOr B.V. (Netherlands); B.V. v/h Fabrieken C.J. Van Houten & Zoon (Netherlands); Jacobs Suchard Ltd. (U.K.); Jacobs Suchard Espãna S.A. (Spain); Jacobs Suchard Pavlides S.A. (Greece); Jacobs Suchard Inc. (U.S.A.); C.J. Van Houten & Zoon (U.S.A.); Jacobs Suchard Canada Inc.; Comet Confectionery Ltd. (Canada); Suchard Argentina S.A.; Taloca Café S/C Ltda. (Brazil); Casa Exportadora Naumann Gepp S.A. (Brazil); German Merino y Cia, Ltda. (Colombia); Jacobs Suchard (Australia) Pty. Ltd.; Jacobs Suchard Japan Co. Ltd.

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