Bewildering internal structure of German chocolate industry

Germany is voted as the largest exporter of ready to eat chocolates globally. With a grossing of USD 9.7 billion and a quantum bracing a million tonnes it is truly remarkable for her to steal the thunder from erstwhile competitor Swiss Chocolate. Yet, there is bewildering internal structure.

This blog accompanies you unravelling this bewildering structure of German chocolate saga under FASA denoting facts, analysis, synthesis and decision.

Facts

1. Once favourite, Switzerland as chocolate giant has faded away and new entrants gleamed in. Top of the billing goes to Germany, Belgium, Poland and in that order. Others include Italy, Netherlands and France. This is as regards to ready to eat chocolates. But the devil is in the details.

2. The fifth placed Netherlands, however has delivered a hat trick. She exports much more than what Germany does. German total value of chocolate exports is round € 11.4 billion whereas Netherlands grosses € 12.4 Billion. How comes? It is not as simple as it appears. Whereas Germany concentrates on finished chocolates, Netherlands supply the world’s largest quantity of chocolate butter & cocoa powder. In fact, these stuff amount to 2/3^rd of the Dutch exports

3. Top rung companies Alfred Ritter has  annual turnover of USD 833 Million,  and August Storck KG, ranges between 2 to 2.5 USD Billion, where major part of their manufacture is consumed within Germany.

Analysis

1. Alfred Ritter GmbH & Co. KG sells the most popular brand within Germany called “Ritter Sport” whereas the widely popular “Milka” both in Germany and across Europe is manufactured by the German subsidiary of Mondelez International of USA reaching more than 1.1 million tonnes, valued at over USD 6.2 Billion

2. Germany imports raw cocoa from African countries like Cote d’lvoire & Ghana amid wide spread protests in these countries as cultivation of cocoa leads to deforestation therein

3. German share of world’s chocolate exports hovers around 11% while imports of cocoa and semi-finished goods such as cocoa butter & powder accounts for about 9.7%. Please note, major part of imports is sourced from Netherlands.

Synthesis

1. Domestic consumption is increasing steadily resulting in quantum of finished chocolate available for export is seen dipping over time

2. The exploitation by multinational company Mondelez International of USA using Milka as captivating brand both domestically and abroad is detrimental to the German Chocolate industry as a whole

3. Unlike in the case of Netherland whose industry structure favours manufacture and export of semi-finished products in the form of cocoa butter & powder, German manufacturers are too pre-occupied with ready to eat chocolate stunting growth in export volume.

Decision

1. The concept of chocolate as optional & indulgent treat need be re-assessed

2. Structural changes are brought in the chocolate industry to enhance growth of both ready to eat chocolates and semi-finished products levelling at 50:50.

Navigating strategy amid geoeconomics mandates German administrators look at their chocolate industry with fresh mind!

 

Cheers!

 

Muthu Ashraff

Strategy Adviser

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Strategy Adviser

 

 

 

Germany in slippery slope in petrochemicals

Undoubtedly, petrochemicals are vital compounds used in manufacturing of wide ranging materials used in everyday life. You know about the plastic revolution that has replaced paper almost in its entirety.

Germany’s petrochemical industry is massive, covering billions of Euro.  The downside is Germany is slipping in this sector. Let me explain basis facts, analysis, synthesis and my counsel on this geoeconomics threat facing Germany today:

Facts

1. Petrochemicals are derived primarily from crude oil and natural gas during refining and processing. This base material is then used to turn out plastics, synthetics, detergents, pharma, aromatics, solvents, pesticides, and most importantly fertilizers of various hues

2. Germany has Europe's largest, petrochemical industry grossing over €170 Billion in turnover. Heavily concentrated in Rhine- Ruhr and concentrated heavily in hubs like Rhine-Ruhr. Notable firms include BASF, Rosneft Deutschland, PCK Refineries, and BP.

Analysis

1. Approximately chemical & pharma sector accounts for one third of the industrial output of Germany and is steadily growing

2. Germany depends on countries like Netherlands to route through the imports of processed petrochemicals being the world's 3rd largest petrochemical importer

3. Iran is one of the Middle East's largest petrochemical producers, having an installed capacity of around USD 100 million tons per year. Other than Iran Saudi Arabia supplies almost 7% of worldwide supply out of the Gulf Cooperation Council’s share of 13% of the world’s petrochemical output.

Synthesis

1. Outside importation of processed petrochemical, Germany has her own processing industry which once again is dependent upon imported crude oil to produce foundational commodities like ethylene & methanol within her shore.

2. Global supply chain issues could disrupt the importation of both processed petrochemicals as well as crude oil & gas. The closure of Hormuz Strait exacerbates this issue.

My Counsel

Therefore, Germany must quietly make friendly overtures to Iran following the examples set by Spain & Italy and even by France to some extent.

Time to amend German foreign policy so that navigating strategy amid geoeconomics is carried out without further delay!

 

Cheers!

 

Muthu Ashraff

Strategy Adviser

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Strategy Adviser

 

 

 

What Germany seeks today, is not lebensraum but domination

German geographer Friedrich Ratzel coined the word Lebensraum in 1901 to denote geographical area where a nation could live and grow. The Fuhrer made this as central focus in his campaign to expand Germany. But it failed. Today Germany looks for domination not land. Here is the framework how Germany gets about on her vision.

Facts

Being the country with the 7^th largest land mass in Western Europe, Germany possesses land area of 135,000 square mile along with watery area of about 3.000 square mile. Hence, there is sufficient land for her population of 83.5 million to be accommodated smugly. Yet there are political and economic dimensions. Franco-German rivalry is historical and cannot be erased or forgotten. Therefore, domination is necessary to steer the Western Europe including France to play subordinate role. This can only be done by making Germany an economic and geoeconomics power house.

Analysis

1. Power spectrum has three components: political, economic and military. So far Germany has left France as the Gendarmerie of Europe as the latter has nukes in her possession. France is also a veto carrying nation in Security Council and has a strong political will to compel other European nations to toe her line

2.  Yet, France lacks economic muscle: in GDP, Germany boasts above USD 5 Trillion while France is to be satisfied with about USD 3.2 Trillion. France has a weak spot in state wise generation of jobs. Unemployment rate continues to hover between 7 to 8 percent whereas Germany straddles in lower range of 3 to 5%.

3. Germany ranks third largest exporter after China and USA with a boon of USD 1.75 Trillion compared with French figure of USD 700 billion which is meagre compared to the German quantum.

Synthesis

The following parameters would define where Germany should concentrate in order to safeguard her lead position in terms of geoeconomics:

1. In addition to further integrate within Europe she needs to expand her geopolitical, geoeconomics and geostrategy relationship with China led Third World and Russia

2. Work for further stabilization of European political spectrum with special emphasis placed on Hungary and other Slavic nations

3. Take a neutral view in the case of steaming flow of immigrants mainly from the Middle-East, North Arica and South Asia

4. More than anything else maintain the position as major political and economic centre along with investing in the domestic military hardware complex.

My Advice

To avoid losing the grip as the leading power in Europe, Germany must navigate strategy amid geoeconomics by adopting innovative policies!

 

Cheers!

 

Muthu Ashraff

Strategy Adviser

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Strategy Adviser