Summary

Introduction...............................................................................................................................2
Origins and history of the company & overall strategy........................................................3
History....................................................................................................................................................3
Overall strategy......................................................................................................................................4
Internal diagnosis......................................................................................................................6
SBU (Strategic Business Unit).................................................................................................................6
Key success factors.................................................................................................................................6
Competitive advantage..........................................................................................................................6
Edith Penrose.........................................................................................................................................6
BCG Matrix.............................................................................................................................................7
ANSOFF Matrix.......................................................................................................................................7
External Diagnosis....................................................................................................................8
Porter five’s forces model......................................................................................................................8
Porter’s value chain..............................................................................................................................10
PESTEL..................................................................................................................................................11
Definition of strategic direction.............................................................................................13
SWOT...................................................................................................................................................13
Direction of Haribo’s strategy..............................................................................................................14
Conclusion...............................................................................................................................15
Sources.....................................................................................................................................15

1
Introduction
As part of the Master of Accounting, Control and Audit at the IAE of Lyon we had to write a
strategic review on a company in the agri-food industry. This work aims to help us assimilate
the theoretical knowledge that has been delivered to us throughout the semester by applying
them to a concrete case.
We chose Haribo because we wanted to work on a familiar family business with a rich
history. This allows us to analyse its strategy throughout its existence. Moreover, this
company has many values, which makes this case very interesting.

Haribo is a candy company founded in Germany, in 1920 by Hans Riegel Senior. The name
of the company is an acronym for HAns RIegel BOnn. After finishing school, he learned the
job of confectioner and worked in several candies workshops. He decided to create his own
one in 1920.
The company produced its first gummies, the gummy bears, in 1922. Those bears would
become their most famous candies around the world.

Haribo is operating in the confectionery sector. Because of some secrets around the
company’s results, we can only have confidence in the estimations made about its business
revenue, which are around 2 billion dollars/year. In Germany, Haribo owns at least 60% of
the market share.

First, we will present the origins and the history of the company along with its overall
strategy.
macro-environment with
Next, we’ll develop its external diagnosis, which means its
a PESTEL framework, its sector environment, including a PORTER framework, and
its competitors and markets.
Then, we’ll make an internal diagnosis of the company, analysing the strengths & weaknesses
(with a SWOT matrix), the skills & resources (Porter’s value chain) and using a BCG
matrix.
We’ll end this presentation by proposing some strategic orientations and giving some of the
major concerns for the company’s future.

2
Origins and history of the company &
overall strategy

3
History

The story begins in Bonn, Germany in 1920. At this point and from what the company says, it
was created with only a bag of sugar in its capital. The first workshop was located in a house
and equipped with a brass cauldron, a marble plate, a stool, a brick kiln and a rolling pin. For
10 years, the production stays handmade and the creator of this brand focuses on creating new
ranges of products (for instance the stick of licorice in 1924).

In the early 1930’s, the main building of the company is constructed and used as the new
production plant. Meanwhile, a brand-new sales system is inaugurated for the German market.
Haribo already employed 130 workers at that point and faced a huge and rising demand.

After this 10 year-period of development in Germany, Haribo starts to expand its brand
throughout Europe. This process begins with Denmark in 1935 when the company cooperates
with local business partners in Copenhagen.

During World War II, the production decreased, essentially because of a lack of raw
materials. There were 30 employees left in 1945! But 15 years later and until now, Haribo
hasn’t stopped its expansion across the world, thanks to Hans Riegel’s sons.

In 1961, Haribo absorbed a Dutch company to develop its influence in the Netherlands. The
company carried on this method to expand throughout Europe. In 1967, Haribo bought shares
in a French sweet manufacturing called “Lorette de Marseille” and renamed it “Haribo-France
S.A.”. Twenty years later, this company will merge with “Ricqlès-Zan”, a manufacturer from
the south of France. From that moment on, there were 3 production plant in France: Marseille,
Uzès and Wattrelos ( that is now closed).
After France, Haribo chose to expand on Sweden (through distribution channels) and Austria
(where Haribo bought a local company, again) during the 1970s. In 1972, the company
bought share in the English firm Dunhills (and took control of the firm in 1994).

In 1980, a new production plant was built to receive: jellified sweets, licorice and chewing
gums. From that moment and until now, Haribo established factories and sales offices in the
USA (1982), Greece (1984), Spain (1985), Norway (1989), Italy (1990), Finland (1992),
Belgium (1996), Czech Republic (in 1998 and because of a rise of the demand in Europe),
Ireland (1999) always using the same approach.

With the beginning of the new century, Haribo continued to conquer new countries: Hungary
(in 2000 with a new production site), Turkey (2001), Poland (2002), Russia (2003), Slovakia
(2004), Australia (2005), Singapore (2012), China (2013) and the last one: Brazil (2016).

Today, the Haribo’s head-office is still located in Bonn, Germany.

4
Here’s a map presenting all of the countries in which Haribo is established (factories and sales
offices combined).

Overall strategy

The particularity of Haribo is its ability to use its own financing to help its growth (that’s why
the company looks “out of the age” sometimes). The company is still the property of the
family who founded it and never signed up for a loan. The current head of the company, the
patriarch, struggles to leave the management: he knows everything that happens in his
company, his desk offers a stunning view of the inside of the plant. He refuses to use
computers and favours face-to-face communication.

On the other side, he takes care of its 6 000 employees: the wages are higher than the ones in
the sector and he enjoys organizing parties in the company. He uses a very paternalistic
approach.

Haribo is the leader in candies in France. As we saw in the previous part, the company used
an internal growth first, in the 1920’s. Hans Riegel chose to develop new products and then to
invest in a new plant in Germany. When his company was well established in Germany, a
new type of growth began: the external growth. Haribo bought shares in existing quality
brands across the world. The chosen companies are qualitative firms, matching the brand
image of Haribo. Those companies were also well established in their own countries, helping
Haribo to settle more easily and quickly (rather than having to get known in each new country
of establishment). This method helped Haribo to learn about the tastes of the local population
in order to propose appropriate candies to every new market. Haribo expanded its product
range (at least 300 different products are currently developed).

5
Because of a tough competition in the sector, Haribo uses a strategy of differentiation and
tries to be in constant innovation: the company creates new products to satisfy the tastes of
children and adults around the world. Haribo stays the leaders of the sector, which means its
competitors follow each time a new product is out on the market: Haribo created the
marshmallow for example, yet today every candy brand has a marshmallow product in its
range.

In order to improve its international notoriety, Haribo takes part in several sponsoring
operations (to show a festive and sportive image): Olympic Games, Football World Cups,
night club parties, … Since December 2014, Haribo tries new distribution channels by selling
its products on the Internet and via online sales platforms. Associations were made with Oasis
or Dop to improve the company’s image with children. The brand also tries to communicate
more with its website.

The main goal of Haribo is to maintain its leading position on its current markets and also to
expand its brand into new countries, by creating more and more new products, designed
especially for the tastes of each person.

6
Internal diagnosis
SBU (Strategic Business Unit)
- Confectionery
- Derivatives products
- The Haribo candy museum

Key success factors

- Be able to bring the consumer back to his/ her childhood by creating some nostalgia.
- You need to have a balanced and innovative commercial offer: no product should
weigh more than another on turnover.
- Innovation is very important to attract more and more consumers by launching new
products (flavours, textures, colours and forms of the candies) or by communication
means based on new technologies (a significant budget is needed).
- Today: High level of quality with Development of responsible sweets (organic candy,
environmentally friendly, removal of certain ingredients) but also development of
"halal" or "kosher" sweets.
- Communication on innovations should be playful because it concerns mostly children.

Competitive advantage
The company Haribo sells high-quality sweets. It has a unique know-how clearly perceived
by consumers.
Its competitive advantage is based on the fact that each new product becomes the benchmark
of the market. The strength of Haribo is to create products that then become standards. To
achieve this, the company relies on a strong capacity for innovation and communication and a
large marketing budget (packaging, advertising, etc.)

Resources: Edith Penrose

The analyse classifies the firm’s resources into tangible and intangible.

Tangible resources: threshold seuil core unique

7
 Equipment: Haribo owns 15 production plants in Europe and 2 in France located in
Marseille and Uzès.
 Financial resources: Haribo’s huge profit allows it to rely on internal financing, they
reinvest each year approximatively 10% of the turnover on advertising and 10% on R&D.
The turnover is estimated around 2 billion euros.
 Human resources: Haribo counts 7000 employees throughout the world and more
specifically 750 in France.

Intangible resources:
 Brand image: Haribo benefit from a good brand image appreciated by children and
adults. Haribo mostly relies on its famous candy: Tagada, Chamallows and Dragibus that
are now a reference for consumers.
 Corporate culture: the working atmosphere is family-oriented, employees identify with
the company.
 Reputation: Haribo has a good reputation, forged over time by its long history, the brand
is associated with a quality image.
 Partnerships: Haribo has partnerships, notably with the Tour de France, but also with ski
resorts or even with sports competitions.

Skills
 Innovation: Haribo has a strong capacity for innovation (36 new candies since 2009)
thanks to a strong investment in research and development. The brand has been able to
innovate throughout its history. They spend 10% of their turnover in R&D.
 Identify the customer's need: Ability to identify customer needs and modes but also to use
new technologies to promote its innovations.
 Seize opportunities: by using new technologies, by seeking to develop the brand
constantly creating new candies, Haribo adapts to the environment in which the brand
evolves (Dynamic Capacity).
 Partnerships: Ability to develop partnerships with sporting events that convey the image
of the brand.
 Know-how: Ability to transmit know-how and produce high quality products

Porter’s value chain

8
Porter’s chain of value describes the categories of activities within and around an organisation
which together create a product or service.

Haribo most important primary activities are:

- Marketing and sales: it is a source of value because Haribo is a well-known brand
thanks to their efficient marketing service. In fact, approximatively 97% of people
between 15 and 49 years old know the German brand and their catchy slogan. Plus,
Haribo was elected the favourite brand of French people last year. Haribo uses
different marketing tools as advertising, sponsoring, partnerships. From the sale
perspective Haribo is present on almost all king of distribution channels: supermarket,
wholesalers that redistribute to bakeries, kiosks, gas station…, their own shops and
online sales.
- Outbound logistics: As its distribution is diversified Haribo’s logistics is very efficient
and performing.
- Operation: Haribo is proud of its European production, there are 16 plants in Europe
which include 2 in France (Uzès, Marseille). Haribo is the leader on French market
with 52 000 tons of candies produce each year.

Haribo most important support activities are:

- Technological development: Haribo invests 10% of its turnover in research and
development. The company is constantly trying to improve its product and launch new
ones. As an illustration when the Tagada strawberry was aging, a couple years ago,
Haribo decided to release 2 new flavours and a new packaging. Since 2009 Haribo
have created 36 new candies.
- Infrastructure: the infrastructure is the support system and it allows Haribo to maintain
its daily operations.

BCG Matrix

STARS Question Marks

Haribo pik Tagada purple
Dragibus soft (with new colors) and Bicool Smurfs Marshamallow
Tagada pink
Cash cows DOGS
Tagada None
Marshamallo
Gold bear
Dragibus
Schtroumpfs
Hari Croco
Licorice

9
ANSOFF Matrix

Market/Product Existing Product New Product

Existing Market Reinforcement of the Launch of sour version of
original product: Dragibus orignal candies: CrocoPik,
with new colors, Tagada Invaders Pik, Dolcetto (for
Pink and Purple adults)
New Market / Launch of other products
than sweets such as
decoration object: unrelated
with the candy production

10
External Diagnosis
Porter five’s forces model

Competitors: 3/5
The confectionery market is fairly concentrated since few groups share the market. These are
the characteristics of an oligopolistic market where a few offenders respond to an infinity of
applicants.
Haribo has to fight against big groups (Chupa-Chups, Nestlé ...) but has market shares
superior to those of its competitors in France or in Germany for example.
Haribo has to face the hard discount, channel where he cannot settle. But the barriers to entry
are numerous for brands wanting to compete with the group (differentiation, quality, notoriety
...) and its leading position is not questioned.
Bigger competitors are:
- Kraft food (Kiss cool, Hollywood, Kréma)
- Ferrero (Nutella, Tic tac, Kinder)
- Chupa chups
- Cadbury Schweppes (La pie qui chante)
- Wrigley (Airwaves; Skittles)

The threat of substitutes: 4/5

The threat of substitutes is important. In fact, there is various alternatives to candies like
biscuits, crisps, pop-corn, chocolates. Those kinds of product satisfy the same needs.
Moreover, the cost is matching which means that consumers tend to switch from one product
to another easily. Buyers have a high propensity to substitute.

Threat of new entrants: 2/5

The main threat of entry of new competitors is local SMEs that produce local specialties with
unique products that may decide to diversify. There is also the risk of new firms which, on the
other hand, have higher entry barriers, due to the investment costs of production tools.
Moreover, there is entry barriers thanks to economy of scale.
Haribo does not seem to be really threatened by new entrants as the market is highly
concentrated and occupied by large companies, in fact Haribo have a great brand identity it
enjoys a high reputation and its brand is associated with a notion of quality. Moreover, Haribo
have a international dimension than some of others competitors don’t have (like local SMEs).
Eventually, Haribo has strong financial resources, and is capable of merger or acquisition if
the brand feels threatened by a competitor.

11
Customers: 3/5
We must separate B2C market from B2B market. In B2C the customers’ bargaining power is
low because they are numerous and buy small quantities. Moreover, candies consumption is
not affected by crisis, children and adults keep buying candies regardless the economic
climate. On the B2B side, the bargaining power is really high because there are various
suppliers to choose from and many substitutes available, the switching cost is low.

Suppliers: 1/5

There are some ingredients used in the candy industry:

• Sugar
It is a fluctuating industry: if the price of sugar raises, the margins of the company decrease
(supposing that the company doesn’t decide to rise the prices of its products). However,
Haribo:
- Can easily change its sugar suppliers (low switching costs)
- Is price sensitive
- Purchases sugar in very high volume
So its suppliers’ bargaining power is weak.
Sugar prices:

• Gelatine, Aromas and Colorants:

There are a lot of suppliers for these 3 ingredients that’s why those suppliers also have a low
bargaining power.

+1 State: 4/5
The sector is highly regulated. The fight against obesity and oral health is an important issue.
The state can influence:
- Manufacture of sweets (Ban of certain colorants and gelling agent)
- Taxation (For example: the VAT can affect the consumption)
- Recyclable packaging
- Advertising (For example: in England, the advertising for sweets is prohibited)
- Health: The fight against obesity and oral health is an important issue.

12
 Porter's Five Forces
Competitors
5
4
State 3
Threat of substitutes
2
1
0

Suppliers Threat of new entrants

Customers

13
PESTEL

http://freepestelanalysis.com/pestel-pestle-analysis-of-nestle/

Politics: companies are working in diversified communities and must face change in
regulations in different countries and some products are not allowed in different countries due
to various reasons. The global regulations are changed time to time.

Economics: In 2016, the amount of turnover in the sweet market is 1050 million euros.
There are 228 tons of candies consume each year in France, that is 3,5kg by person. For
comparison it is 6,6 kg per person in Denmark, 5,5 kg in Germany and 5,5kg in England.
Indeed, in France we are not the bigger consumer of sweets.
From an economic point of view, the market of sweet is rising while the chocolate market is
declining. From 2009 to 2016 the sweet market in France have increased by 2,6%.
In France, Haribo sells for 37% of the sweets in France.

Social: Now that the education level in most of the developed countries is increased and
people have great awareness about the quality of the products, they ask for the healthy food,
which are prepared with wholesome ingredients. The social media has given awareness to
people about the uses of some ingredients in various products of the food companies and now
they want to probe in to the manufacturing process of the product.

Technological: Now the consumers want to know about the products, their ingredients and
want to make interact with the firm. E-commerce is massively used for the supply and
production of the products and people are adopting the new behaviour to understand the
nature of the products.

Environmental: Environmental concerns from consumers including some over

packaging/recycling.
Increased attention directed towards corporate social responsibility
According to « 60 millions de consommateurs », many candies contain nanoparticles that are
carcinogenic.

Legal: In 2002, the European Parliament and the Council adopted Regulation (EC) No
178/2002 setting the general principles and requirements of food law.
It lays down general principles, requirements and procedures that underpin decision making it
matters of food and feed safety, covering all stages of the production and distribution.

14
It also sets up an independent agency responsible for scientific advice and support,
the European Food Safety Authority (EFSA)
For instance, the food processing industry must do a nutrient list on food packaging. He has to
be clearly visible with the calorie label.
In the UK, there are special policies for the food processing industry to fight against obesity.
For example, the restriction of marketing in the amount
of unhealthy food advertised to children on television. Also, there are policies to reduce
portion sizes in unhealthy food.

http://www.wcrf.org/sites/default/files/WCRF-International-Law-and-Obesity-Prevention.pdf
https://www.gov.uk/government/publications/2010-to-2015-government-policy-obesity-and-
healthy-eating/2010-to-2015-government-policy-obesity-and-healthy-eating

15
Definition of strategic direction
SWOT
Strengths Weaknesses

- Advertising - Growing competition of hard discount

- Partnerships (Club Med, Mac Donald’s…)
- License agreements (ex: schtroumpfs
collection)
- Leader in terms of innovation in the sector
- 3 core products: Tagada, Ours d’or,
Dragibus
and a recognizable mascot (Hariboy)
- Strong notoriety in Europe and at the
international level
- Leader in France with an autonomous
production plant on the territory
- Products protected by patents
- Riegel’s family is the sole shareholder:
financial independence
- Sponsorship events with festive and sports
image (Olympic Games, parties in clubs,
World Cup 2002, “Tour de France” …)
stores and other jelly confectionery
- Consumption of sweets is low compared
to other countries.
- Children are not loyal consumers
- Image affected by management choices:
removal of jobs in France
(approximately a hundred)
- Imitation of products
- Unlisted family business: limits
investment
- Not the world leader
- Face difficulties to match the natural
and health trend (« clean labelling »)

Opportunities Threats

- Low exports - Volatility in the cost of raw materials

- Constant consumption of sweets in France
- Extremely broad target audience
- Dynamic and growing market in Europe
- Young generation looking for more diverse
products range
- Market with moderate elasticity
- Increase in quality of retailer’s brands
- Sanitary and legislative constraints
(nanoparticles, ecology, ...)
- Health issues
- Innovation market that require a lot of
investment to stay competitive.

Direction of Haribo’s strategy

Recommendations:
- The company should head to a diversification strategy
- Marketing Haribo’s flavoured chewing-gums and ice cream
- Developed derivate-products by associated with a clothing child brand
- Trying to conquer an emerging market
- Adapting products for people who want to eat organic or vegan

16
Conclusion
Haribo's analysis enabled us to become aware of the major issues that the managers could
face. Working on this business was interesting because we discussed the main notions
surrounding the strategy taught during this first semester.

In addition, the company's internal analysis, but also its history and development, enabled us
to understand how Haribo was able to acquire the skills necessary to remain a leader in its
industry for years.

We have also studied the environment surrounding society and identified the threats and
intensity of Haribo. This allowed us to understand how managers decide to guide the strategy,
based on a work of innovation, research and development.

We saw that Haribo is a well-proven company, mainly because of its paternalistic

management from the past. After the death of Hans Riegel Junior in 2013, the firm has tried to
diversify its range over and over. The company plans to open its first plant in the United
States of America in 2020, in Wisconsin; creating around 400 jobs.

Sources
 https://www.lesechosdelafranchise.com/dossiers/biscuiterie-et-confiserie-les-cles-
pour-se-lancer-en-franchise/biscuiterie-confiserie-quels-sont-les-ingredients-du-
succes-43284.php
 http://www.agro-media.fr/analyse/les-bonbons-innovent-sans-cesse-pour-ravir-petits-
et-grands-7938.html
 https://www.jesuisentrepreneur.fr/informations-sectorielles/commerce/confiserie-
chocolaterie/reglementation-confiserie-du-chocolat.html
 https://www.capital.fr/entreprises-marches/haribo-supprime-une-centaine-de-postes-
mais-va-pourtant-tres-bien-1180352
 https://www.lanutrition.fr/bien-dans-son-assiette/aliments/sucre-et-produits-sucres/
bonbons/pas-de-pitie-pour-les-bonbons
 http://www.confiserie.org/telechargement/fichier_chiffrecle/chiffres-cles-confiserie-
2015.pdf
 https://wesavoirfaire.com/magazine/haribo-un-bonbon-qui-vous-veut-du-bien/5810/

17