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Leadership
Let each generation write its own story
In this I by IMD interview, Johannes Läderach, CEO of the eponymous family-owned Swiss chocolate company, shares insights into the family’s approach to succession and supply chain strategy.
Now in its third generation of leaders, Läderach is a family-owned Swiss premium chocolatier with over 1,800 employees representing more than 50 nationalities. While many family-owned firms find it hard to make it past the third hurdle of succession, Läderach has endured, with its handcrafted products sold in about 180 “chocolateries” in 20 countries and through franchise partners in the Middle East and Asia. Keeping the brand independent, making bold strategic decisions, and enabling each family member to define their own path in the ecosystem have been key to its resilience – alongside the sensitive leadership approach required to navigate crises when they hit, no matter how close to home.
Läderach was founded in 1962. What were the decisive moments in your company’s history?
We had four major breakthroughs. The first one was in the early 1970s when my grandparents invented hollow truffle shells, a new way to facilitate truffle production that allowed our business to grow significantly.
The second breakthrough came in early 2000, when my parents made the bold decision to acquire a Swiss retail chain. Since Läderach had only been active in the business-to-business segment as a supplier to chocolatiers, one of the main fears was that this forward integration would put us in competition with our traditional customers. Initially, the challenges were significant, and my family had to reduce the number of stores from 41 to 27. But then, by focusing on a fresh product concept, they found a winning formula and a path to growth.
And you then took the leap to integrate upstream too, right?
That was the third breakthrough in 2012. We decided to buy cocoa beans directly from partner farmers in Latin America and Africa and produce our own liquid chocolate, called “couverture.” The goal was to better control the entire value chain while keeping all production in Switzerland.
For my generation, my brothers and I decided very early on that we wanted to be involved operationally and strategically.
And then came internationalization?
The fourth breakthrough: We have increasingly exported our winning formula. We now have around 180 stores in 20 countries.
You have survived through the “third generation” curse that affects so many family firms. Do you think it’s best for Läderach to remain a family-owned and family-run business?
Family-owned, yes. Läderach is not for sale. We think it is best for our employees as well as for our customers. And it is also much more fun to remain independent entrepreneurs. As for family-run, each generation must honestly assess what is best for them in terms of operational and strategic involvement. Alternatively, our successors could remain shareholders only. Each case has its pros and cons.
For my generation, my brothers and I decided very early on that we wanted to be involved operationally and strategically. We have also successfully attracted highly competent managers and independent board members who complement and enrich us very well and improve Läderach’s corporate governance.
Our attitude of never being satisfied is paramount.
You often emphasize that you control the entire supply chain. Why is that important?
Since our USP is the freshness of our products, the time between the cocoa bean harvest and consumption of the finished product must be extremely short. For example, our products should not remain on the shelves for more than three weeks. We believe the only way to achieve this short “cycle time” is to control the entire supply chain, from cocoa bean to store shelves, including all intermediate logistical steps. In fact, we have gained a lot of experience in all stages, and it is also important for Läderach to treat all our partners, including the cocoa farmers, fairly. Finally, our desire to remain an independent, family-owned company certainly encourages us to rely only on ourselves.
Läderach must offset rising costs with innovation. How do you innovate?
Our attitude of never being satisfied is paramount. We also take advantage of many sources of ideas: customer letters, the feedback we hear in our stores, ideas from my brother and his team, and even accidental discoveries.
Where do you see the greatest growth opportunities?
With 50 stores, Switzerland remains our main market but accounts for significantly less than half of our total sales and profits. The US and Germany are our next main markets, with 40 and 22 stores respectively. China is probably the market of the future. We currently have 17 stores there. It makes sense to be focused and take advantage of economies of scale. We also tend to think in terms of cities rather than countries. Outside Switzerland, we are very selective in choosing new cities for our stores. Because of our freshness strategy, we need quick turnover, so we only target high-traffic locations in very large cities such as Manhattan, Dallas, or Boston.
This interview was conducted in April 2024.
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