Potatoes over Paradeplatz
The Swiss Insider 16.02.2020 #insidersdoitsmarter
Dear Insider,
Which would you choose - a bank or a barn?
The former certainly seems more appealing - both for asthetics and business opportunities.
But with Swiss banks behaving (rather) badly these days…and market performance to match…it might make more sense to investigate the value of the latter of the two.
Of course, the Swiss dairy industry as well as the chocolate industry has long been renowned world-wide. No need to preach the praises of Swiss barns on that front.
But what about potatoes? Not so impressive?
Au contraire.
As Nestle has proven, and in particularly over the past 5 years (see The Briefing below), Swiss foodstuffs are a powerhouse business across the board.
This week we take a closer look at Zweifel Pomy-Chips AG, the family-run firm that pioneered fresh potato chips in Switzerland in 1958 and recently celebrated over 60 years of success with record turnover - and with its founders being recognized among the 300 richest people in Switzerland.
Maybe there is a lesson to be learned in their success, one that becomes even more important in the face of the recent Coronavirus outbreak:
Homegrown companies do best…in their home market.
It’s a lesson that the bankers may do well to remember too…
What to Expect
A brief run-down of what to look for in this week’s edition of The Swiss Insider:
Potato Profile - a closer look at one of the most successful family businesses in Switzerland - the Zweifels, whose roots extend back to the 1950s and whose business of fresh, Swiss potato chips is clipping along at a record rate even in the age of health food.
The Numbers Game - the most important (and at times audacious) numbers to be had in Swiss business over the last week. (Look for largeness…because size matters.)
The Briefing - snippets of news designed to make you smarter and keep you abreast of the latest developments across the wide Swiss business landscape.
The Place - where is the best place for quick business chat in Zurich? If you have passed through Haubtbahnof at any point in time, you know this spot: Time Lounge.
The Potato Profile
An in-depth look at a typical Swiss success story - the Zweifel family business, purveyors of potato chips and snacks, but also wine and other products.
Christoph Zweifel - in charge of marketing and sales for the family firm
The story of the Zweifel family business is one of innovation.
Not the the kind involving a disruptive new technology, smartphone or the like, but one that mirrors Swiss pragmatism and solidity.
The first innovation was the move to potato chips themselves. Zweifel & Co. as a company predates the launch of Zweifel Pomy-Chips by several generations. The mother firm was built on a more traditional basis - producing fine wines and drinks since, as its logo today suggests, 1898.
However, when the opportunity came along to add potato chips to the portfolio in 1957, founder Hansheinrich Zweifel did not hesitate.
Today, the firm has nearly 65% of market share in Switzerland and recently increased turnover significantly (6% year on year) to 228 million CHF, with a workforce of 380 employees.
From then to now, there have been numerous other innovations.
One in particular helped cement the Zweifel brand in the market. In 1962, Zweifel Pomy-Chips set out to conquer the country with its fleet of orange buses, carry fresh chips into every corner of rurual Switzerland. It was this “direct-to-people/customer” approach that helped push the company into the public eye and grab such a significant place on the market.
The process behind this vast operation was no small feat. Its success led to Hansheinrich Zweifel being inducted into the Swiss Supply Chain Hall of Fame in 2015.
Even more recently, the company was honored by the Swiss Venture Club with its top prize for its unique “fresh service” approach and dedication to quality.
Keys to Success
What lessons can Paradeplatz take from the success of Zweifel?
Recognizing a product with a future - sticking to a more traditional line such as wine would have forever prevented Zweifel from becoming the powerhouse it is today.
Getting the right mix of product and service - as the story goes, it was a 3-month honeymoon trip to the US that convinced Hansheinrich Zweifel how important top-quality service was for his new venture. Ever after, “always fresh” became the name of the game.
Going to the people - as mentioned, taking Pomy Chips out into the villages and far-away corners of the country with a clearly distinct brand was key to establishing a close connection between his superior product and the people who would consume it.
Investing wisely in infrastructure - the fleet of orange buses was only one part of the super supply chain story. Zweifel has also invested heavily in its production facilities, with 40 million CHF going to modernisation, even as it recorded record turnover in 2019.
Bottom line - a strong brand never sleeps. And never stops shipping…potatoes or whatever it may be.
Happy to be Inside?
Share what you now know…
The Numbers Game
In which we serve up some of the more interesting numbers in Swiss business…
30 million
After last week’s bombshell news about Thidjane Thiam’s departure from Credit Suisse, the follow-up information was equally as shocking. Thanks to his strong shareholder support and performance over the last five years, Thiam is likely to leave with a majority or all of his 30 million CHF severance package. Parachutes don’t come more golden than that…
71 Rappen
According to a recent study conducted by Touring Club Switzerland (TCS), the cost of running an electric car could be as much as 20 000 CHF cheaper over a 10-year period (or 150 000 km of driving) than using a regular gas-powered vehicle. The main reason? The running costs - a mere 71 rappen/km for an electric automobile. Good news for Tesla?
2,6%
While the SMI keeps on hitting record highs, the Swiss labor market has taken a hit to start the year. New figures released recently point to an increase to 2,6%. Swiss industry is starting to get hit by stagnation in Germany and a strong Swiss franc.
3,4 billion
Thidjane Thiam wanted it this way. His deal with the Credit Suisse board of directors allowed him the pleasure of presenting the final round of numbers for 2019 - a last victory lap for the man charged by Urs Rohner with turning the bank around. With a profit of 3,4 billion CHF, the outgoing boss got his wish. His replacement will need to do more to keep the pace.
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The Briefing
In which we digest business news from around Switzerland - bit by bit…
Clearly not going well at Clariant
The specialized chemical company, with its headquarters in Muttenz, has had a rough time of it. With a sinking cashflow, down 4% on the year, and a stagnated margin of 16,8 %, the company had no choice but to begin making cost-cutting measures. Its massive workforce of over 17 000 employees worldwide will be cut by 500-600 over the next two years. (Read all the details here.)
Good-bye Ermotti?
With the departure of Thiam at Credit Suisse, the obvious winner would seem to be UBS who not only managed to snap up Iqbal Khan, the rising wealth management star, but also a possible successor to CEO Sergio Ermotti. Now it would seem that Switzerland’s largest bank is playing a different game. Reports indicate that the bank’s board will begin searching for a replacement already this year. The news may be UBS’s way of underscoring its stability versus the scandal at CS - and of preventing Khan from moving up. After all - how would he vault to CEO less than a year after arriving in the WM division? (Read more here.)
Hit hard by Coronavirus
One small sickness - so much influence…also on Swiss industry. There are approximately 1 000 Swiss businesses with operations in China and the ongoing coronavirus outbreak is having an effect on them. With a drop of 20% year over year in goods transported between the two countries, the first crunch is starting to be felt, especially by such Swiss industry giants as elevator producer Schindler and engineering firm ABB, where China accounts for approximately 15% of its business. But supply-chain is, of course, not the only areas hit: Swiss watch and luxury goods will miss the steady stream of Chinese tourists…even if local residents will not. (Read the story here.)
Nestle CEO Mark Schneider
Nestle on fire
One company is not feeling any heat, anywhere. And the numbers speak for themselves. Nestle - that bastion of Swissness - posted a handsome turnover of 92,6 billion CHF, which translates into 12,6 billion in profit. That is a five-year high. How does Nestle do it? CEO Mark Schneider’s strategy of pumping as much profit out of high-margin business such as coffee and pet food. Meanwhile, the cooperation with Starbucks (which cost Nestle 7 billion CHF) has so far failed to bring in loads of cash. (Read the full run-down here.)
Not so neutral after all
A reputation for safety, security and neutrality have accompanied Swiss businesses for decades…if not centuries. That is getting upended (once again) with the revalation that Crypto AG, a supplier of encrypted communication equipment, was secretly owned by the CIA and West German intelligence. The story has sparked an outcry among privacy advocates even though officials claim that the secret “listening-in” on devices led to the prevention multiple terrorist attacks and other nefarious activity. Swiss lawmakers are already launching inquiries into the possible implicit involvement of Swiss intelligence forces. (Read the scoop here.)
The Place
Where should you go if you’re doing business in Switzerland? To the Place, of course…
Time Lounge - Zurich
The speed of business is not slowing down. Switzerland, for all of its conservative nature and old-fashioned style, also feels the time crunch. Swiss bankers rushing about town to meet their wealthy clients, entrepreneurs sitting down for a short chat with potential investors, remote teams coming together for a quick sync before a client pitch - chances are if they do business in Zurich, they have all met in Time Lounge at one point or another.
Propped up, high over the main tracks of Zurich’s Hauptbahnhof, Time Lounge is perfectly situated for a short coffee, a quick drink and chat or even longer discussions over food. It is, of course, crowded at times - so you may want to reserve a table. But be sure to arrive promptly, or the staff will give it away in a heartbeat.
Reservations can be made here.
The most desirable seats are the ones along the bank of high glass facing the tracks. Here you can enjoy a semi-private conversation, if only be virtue of the direction you are facing. The more communal, long table with high-chairs near the entrance also works in a pinch, but you are more likely to get squashed next to a neighbor and be forced to listen to their intense negotiations over the phone.
All in all, you can hardly beat the Time Lounge for your “time-essential” meeting needs.
And - if you need a toilet, the small bowl with tokens can be found on the bar at the far corner…
