The Warsaw Voice
March 17, 1996
Changes Big or Small?
Ronald M. Nawrocki, director of financial operations at E. Wedel SA, Poland's largest chocolate producer, resigned on March 1. Company representatives say Nawrocki resigned so he could have more private time. John Wells, Wedel's general director, will act as interim financial director.
Wedel, 80 percent-owned by PepsiCo Foods (UK) International, has recently found strong competition from new companies on the market, such as Nestle, Jacobs Suchard and, most recently, Cadbury Schweppes.
The company's three-year tax holiday has expired, and raw materials costs have grown. That cut Wedel's 1995 accumulated fourth quarter net profits to zl.28.3 million, a drop of nearly 40 percent from the previous year. Company representative Marek Matysek blames rising materials, packaging costs and VAT tax increases for the fall in profitability.
According to a recent Amer-Nielsen market study, Wedel's share of the Polish chocolate market fell by 2.5 percent last year, to 21.2 percent at the end of 1995. At the same time, however, the company widened its lead over Chio, its nearest competitor in the potato chip market. Wedel controls 33.7 percent of the market with its Frito-Lay snacks.
Matysek refutes long-running speculation that PepsiCo plans to move Wedel out of chocolate production, its traditional line, and reorient it toward the more dynamic salty snacks sector. PepsiCo's most extensive experience is in chips and salty snacks production. Matysek says PepsiCo's new promotion campaign, which celebrates Wedel's 145th birthday, is proof that no overhaul is on the horizon.
Not everyone believes him. Jacek Dzierwa from London's Salomon Brothers says Wedel will have trouble keeping its market share given the ever-increasing competition. He also says the company did not do enough to prepare for the end of its tax holiday at the end of 1994.
For most Poles, Wedel is more than a company; it is also a cherished symbol of national industry. Experience has proven, however, that the company cannot count on sentiment alone to maintain its position in the growing Polish chocolate market.
Simon Cygielski
