Ricola Ltd

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Ricola Ltd.

P.O. Box 130
CH-4242 Laufen
Telephone: (+41) 0 61 765 41 21
Fax: (+41) 0 61 765 41 22
Web site: http://www.ricola.ch

Private Company
Incorporated: 1930
Employees: 350
Sales: CHF 350 million ($171.00 million) (2003)
NAIC: 311330 Confectionery Manufacturing from Purchased Chocolate; 311311 Sugarcane Mills

Ricola Ltd. has been soothing the throats of over three generations of consumers. The family-owned company is based in Laufen, near Basel, Switzerland, where it produces its famous herb-based throat lozenges and related products. Ricola's flagship product remains its Ricola Swiss Herb Candy, a hard candy based on a blend of 13 herbs found in the Swiss mountains and created by company founder Emil Richterich. The company also produces two sugar-free variants, Fresh Pearls, a chewier version, and Lozenges, a hard-boiled drop candy. Each of these products is available in a range of flavors, including the original herb flavor, menthol-eucalyptus, lemon-mint, orange, and cherry mint, the last-named flavor having been developed specifically for the U.S. market. In the early 2000s, Ricola added new flavors based on elderberry flowers. It also extended its product offerings to include teas and other herbal preparations, such as the range of Ricola Herbal Health Dietary Supplements introduced at the turn of the century. Ricola's production remains focused at its Laufen facility, which employs nearly 400, and the company's candies and herbal products are sold in more than 50 countries worldwide. Raw materials come from some 200 farmers in Switzerland, who provide Ricola with organic herbs grown according to company specifications. Ricola remains wholly owned by the founding Richterich family and is led by Felix Richterich, grandson of the founder. In 2003, the company posted sales of approximately CHF350 million ($170 million).

Herbal Success in the 1940s

Ricola's success began with Emil Richterich, who acquired the Bleile bakery in the small town of Laufen, near the city of Basel, Switzerland, in 1924. Richterich carried on the bakery's candy making, cooking toffee candies in a kettle over a wood fire. He later expanded the business to include some 100 different confectionery types, including "fünfermocken," a traditional caramel candy that had long been popular in the region. Richterich himself handled sales and delivery, riding his bicycle throughout the local area to deliver candies to customers.

Richterich also began developing confectioneries based on herbs found in the mountainous region around Laufen, where herbal preparations and remedies had remained widely used. In the late 1920s, Richterich developed a cough drop, Hustenwohl, based on herbs.

The bakery's products gained increasing recognition in the region, and, with demand rising, Richterich turned to the full-time manufacture of candies and confectionery. In 1930, he created a new company, Confiseriefabrik Richterich & Co. Laufen, and added more modern production equipment, such as a coal-fired stove, cooling tables, presses, and molds.

Richterich continued working on new recipes and finally hit on the formula that was to turn the former bakery into a globally operating company. In 1940, he debuted his "Swiss Herb Candy"a blend of 13 herbs, including peppermint, sage, thyme, as well as ribwort, horehound, burnet, mallow, yarrow, and others. The candy's unusual flavor, and its ability to soothe minor throat irritations (later proven clinically), quickly became a company flagship product.

The new drop, with its own distinctive shape, became a popular product in the region before spreading throughout much of Switzerland. In order to keep up with demand, Richterich built his first factory in 1950. Joining the company then was Richterich's son, Hans Peter, who recognized the potential for a new product line. Customers had taken to dissolving the Ricola drops in hot water, creating a herbal tea. In the 1950s, Richterich extended its product range with its own herbal tea blend based on the original Herb Candy formula.

During the 1960s, the Richterich family company remained focused on the Swiss market. When Hans Peter Richterich took over the company's leadership during that decade, he turned to conquering the international market. As part of that effort, the company changed its name, combining the first two initials of Richterich & Co. Laufen to form Ricola. The company also converted its status to that of a joint-stock company, although shares remained controlled by the Richterich family.

Whereas Emil Richterich had focused on inventing candies for the local market, Hans Peter Richterich's interests lay in developing the company's business and sales operations, turning the company toward the international market by launching sales initiatives in nearby Germany, Italy, and France.

Ricola now prepared to establish itself as a global brand. At the end of the 1960s, the company, which had continued to manufacture a wider assortment of candy and confectionery products, decided to focus its production around its herb-based flagship product. The company phased out its non-core products, then built a new factory just outside of Laufen. The expanded production enabled the company to enter new markets. Success in the German, Italian, and French markets came swiftly during the late 1960s, and by the early 1970s the company's 70 employees were producing more than 90 tons per year.

International Growth Continues: 1970s1990s

The longstanding European interest in herbal products and remedies gave Ricola fertile ground to grow its sales throughout the 1970s. The popularity of herbal preparations in Asia also led the company to expand into that market during the decade. In the early 1970s, Ricola began selling its throat lozenges in Japan through a partnership with family-owned trading house Nisshoku. Hong Kong also became an important market for Ricola's products. At the same time, interest in herbal formulas had also been growing in the United States in the 1960s, and Ricola entered that market on a modest scale, with sales remaining limited to the health and natural foods retail channels.

Ricola's emphasis on its niche specialty led it to begin developing new herb-based products. In 1976, the company released its first new major product line, the sugar-free Pearls. The new candy, which contained the same herbal formula as its predecessor, featured a gum arabic base, making it a chewy alternative to the Swiss Herbal Formula.

Ricola also began developing a wider assortment of flavors for its products. The original formula was soon joined by a range of flavors, including orange, menthol-eucalyptus, and, in support of the group's effort to increase its penetration of the U.S. market, cherry-mint.

Entry into the United States got underway in earnest during the mid-1980s. In 1986, the company decided to switch from its previous distributor, a specialty products group, to a more mainstream brokerage network with a commission-based sales force. Ricola also established a U.S. subsidiary in New Jersey in 1986. The company now expanded beyond the health foods retail channel to claim a position on the shelves and cashier counters of mainstream drugstore chains. By the beginning of the 1990s, Ricola had succeeded in placing its products in nearly all of the major drugstore groups in the United States. As in Europe, the company also began a drive to get its products into the still-broader supermaket channel.

Company Perspectives:

Ricola believe that success is not an end in itself and takes its responsibilities to its employees, to society, and to the environment seriously. The corporate philosophy embraces both the economic and non-economic aspects of the company's operations. One way of making these aspects a reality is to maintain and foster cultural values. As a company with close ties to nature, Ricola assigns top priority to first-class raw materials. Ricola only uses herbs grown under controlled conditions which do no harm to the environment. Such herbs are not only more aromatic; they are also endowed with the inner vital force of nature.

Key Dates:

Emil Richterich takes over a small bakery making candies and confectionery in Laufen, Switzerland.
Increasing sales lead Richterich to found a dedicated candy business, Confizerie Richterich & Co. Laufen.
Richterich develops a recipe for a new Swiss Herbal Candy, a throat and cough drop that features a blend of 13 herbs.
The company builds its first factory in Laufen; Richterich's son Hans Peter Richterich joins the company and backs the launch of a new herbal tea based on its cough drop formula.
The company changes its name to Ricola, converts to a joint-stock company, and decides to focus on its herbal products, building a new factory and ending other candy and confectionery production; foreign sales to Germany, Italy, and France begin.
Ricola launches new chewable Pearls candy based on its herbal candy formula.
The company establishes a U.S. subsidiary.
A subsidiary in Singapore is created to boost sales in the Asia Pacific region.
The company launches a cough syrup.
A new line of Herbal Health Supplements is introduced.
Ricola launches a new line of elderberry flower-based lozenges.

Supporting the group's expansion efforts was a new line of herbal candy, a sugar-free lozenge, prepared using hard-boiled isomalt. That product was launched in 1988. In addition to the United States, the company also began targeting the wider market in the Asia Pacific, where consumption of herbal-based remedies had long been integral to the lifestyle of the region. In 1992, the company established a new sales subsidiary in Singapore to service its growing sales in this market. That initiative was taken by the group's new CEO, Felix Richterich, who took over from his father in 1991. By then, Ricola had succeeded in introducing its products in some 40 national markets. Felix Richterich now took the group's strategy a step further and began working on developing the company's name into a recognized specialty brand.

Global Brand Focus in the New Century

In support of its new strategy, the company built a new marketing office in its Laufen home base and also constructed a packaging plant in Brunstatt, in the French Alsace region, not far from the Swiss border. The company then began work on expanding its product range.

Ricola rolled out a new series of products during the second half of the 1990s, including a throat syrup based on its herbal formula. The company also debuted its own Ricola-branded line of breath mints. In 1998, the company added to its line of throat and cough products with the release of a new range of echinacea-based lozenges. In another extension of its reputation for quality herbal products, Ricola debuted its own line of Herbal Health Supplements in 1999.

Ricola's brand expansion continued into the 2000s with the introduction of sage-based drops in 2001 and, in 2002, a new line of lozenges based on elderberry flowers. As part of that launch, the company participated in the planting of some 5,000 new elderberry bushes near its home base in Laufen, Switzerland. Ricola had by then become one of the world's most recognized herbal specialists.

Principal Subsidiaries

Ricola Asia Pacific PTE Ltd (Singapore); Ricola USA Inc.

Principal Competitors

Warner Lambert Co.; Hershey Foods Corp.; Richardson-Vicks; Nestlé S.A.; Cadbury Schweppes PLC; CSM N.V.; Meiji Seika Kaisha Ltd.

Further Reading

"A Balanced Approach," Supermarket Business, December 15, 1999, p. 55.

Gold, Daniel, "Ricola Cough Drops Hack away at a Crowded Market," Adweek's Marketing Week, February 19, 1990, p. 24.

"Ricola Adds New Formula," Chain Drug Review, May 22, 2000, p. 19.

"Ricola Introduces Throat Syrup," Chain Drug Review, June 23, 1997, p. 86.

"A Swiss Alpine Meadow in Your Mouth," Japan Times, August 2, 2002.

M.L. Cohen