Alfred Ritter GmbH & Co. KG, the family-owned chocolate brand Ritter Sport based in Waldenbuch, Germany, has long prioritized sustainability, integrating it into its commercial strategy over the past few years. Under the leadership of Chief Financial Officer Michael Lessmann, Ritter Sport has evolved its approach, viewing sustainability not just as a cost but as an opportunity to enhance the brand value. The brand proudly sources 100% certified cocoa and has achieved climate neutrality by significantly reducing its carbon footprint.

In recent years, societal shifts around climate awareness prompted Ritter Sport to elevate its sustainability messaging, transitioning from traditional communications to engaging media campaigns. Their straightforward messaging resonated well with consumers, who appreciated the brand's light-hearted take on serious sustainability issues. We collaborated with Ritter Sport to help them on this journey.

Looking forward, Ritter Sport faces challenges such as rising cocoa prices and new regulatory requirements but remains steadfast in its commitment to sustainable practices. The company continues to foster a culture of open communication and collaboration, ensuring that sustainability remains at the heart of its mission.  

Voice over
I think it's important that sustainability has already been there before we integrated it into the commercial strategy. We started understanding sustainability not only as a cost effect in our profit and loss (P&L) but also as an opportunity to increase the brand’s premium appeal.

Martin Schulte
Welcome to Waldenbuch, Germany's capital for premium chocolate. We are here at the headquarters of Ritter Sport, a leading global chocolate brand. I'm Martin and I'm joined by the CFO of the company, Michael Lessmann, thanks for hosting us today.

Michael Lessmann
Martin, thanks a lot for coming to Waldenbuch.

Martin
We are here to talk a little bit about sustainability, and your sustainability journey, but before we start, maybe help us a little bit about the background of your company, the great logo we see and also the logo we see right behind me.

Michael
Ritter Sport has been a family-owned business for more than a hundred years. It is located here in Waldenbuch, south of Stuttgart, and for us, sustainability has always been a very important part of the company's agenda, especially on our key brand Ritter Sport, which you just mentioned, which is one of the biggest chocolate brands in Europe. We're very proud of all the efforts we're doing around that.

Martin
So, Michael, I know that sustainability has been at the heart of Ritter Sport for over a decade, many, many years, but you've started to step things up over the last three to four years. Maybe take us through this journey and how and why you decided to basically take it even further than you had in the recent past.

Michael
Yeah, thanks for the question. I think it's important to embed it into the overall story of the company and sustainability was very, very important many years ago when the family started 30 years ago to source cocoa from Nicaragua and 20 years later started the first own farm, also in Nicaragua, which led to a climax in 2018, 2019, where we started to only source100% certified cocoa. There's a second dimension, which is very important among a lot of other projects, which is basically the reduction of our carbon footprint we reduced our carbon footprint to a degree that we became a climate-neutral company, so we compensate for the remaining energy required with gold standard certificates.

Martin
Now, if we zoom into the last three, or four years, where I believe I perceive a lot has changed, not only the packaging, but I'm sure you’ll get to the packaging at some point. What did you change exactly over the last couple of years and what was the reasoning to step things up another notch or even two notches?

Michael
In the last five, or six years, a few things happened in society and also with our consumers. During the last election in Germany for the first time, climate became a central part basically of all parties, and that was a time when we also decided to step up our communication about sustainability. Beforehand, we have been communicating via blogs and PR only, and in 2021 we went on air with out-of-home POS and packaging communication and also in TV communication to communicate our sustainability efforts.

Martin
I can imagine that there are a number of dimensions which you adjusted internally, and externally, what were the internal things you changed and how long did it take to change these things?

Michael
It took quite a while. I think it's important to bear in mind that the organization had sustainability topics within the culture for many years, but understanding this also as a part of the commercial strategy was new at that point in time, which means we did decent research, we observed the public debate and therefore integrated the sustainability topics, which we have been working on into our strategy also for the brand and for the commercial strategies.

Martin
Typically, a critical element is how you implement the trade. I can imagine the trade is to some extent sticky. They may be suspicious, is Ritter Sport real about their ambition? How did you manage to successfully implement your strategy towards your trade partners?

Michael
Yeah, I think it's a time when we met for the first time, we started introducing sustainability as part of our commercial strategy, which means in our discussion with retailers, we not only looked at the cost-saving of logistics terms and conditions, but we also looked at the sustainability effect of these terms and conditions. And as a second part, we went to all customers to explain to all of them why sustainability is not only an important topic, which they obviously knew but how it also fits our brand and basically the premium that our brand is justifying in the market. I think it's important that sustainability has already been there before we integrated it into the commercial strategy, but we started understanding sustainability not only as a cost-effect in our P&L but also as an opportunity to increase our brand’s premium appeal. And that was also the element that was very interesting for retailers because obviously they justified a different price positioning.

Martin
Now the consumer is another critical element. They need to accept new price points. They need to accept different packaging. I also feel there are so many certificates out there. I saw some research that there are over 230 different sustainability logos and certificates. How did the consumers respond to your step up in sustainability? What was the response from the market?

Michael
Yeah, we made it very simple. We decided on a one-core message, which we featured on the packaging, at point of sale (POS) and in out-of-home and TV campaigns. We were very happy when consumers saw the lighthearted, funny, Ritter Sport communication about sustainability. On social media, we received prompted responses where they were clearly happy about the funny jokes we basically made around sustainability while understanding the serious background.

Martin
We've now been talking a little bit about the implementation journey. You changed your packaging, communicate a lot to the trade, and also reached out to consumers. Tell us a little bit about the implementation journey, how long it took, some of the positive surprises, but also what made it more cumbersome to obviously implement such a journey. It sounds like it's a walk in the park, but typically it's not. It's a major undertaking.

Michael
I think the most positive surprise was actually a customer meeting where we stepped into the meeting, wanted to present, and were basically asked by the buying department when we would start to talk about sustainability finally, and this was the best entree we could have to such a customer conversation. Obviously, most of the customer conversations were more difficult and that's why also we were working together that to develop a commercial strategy to implement sustainability also in our terms and conditions and also into our overall strategy with the trade. We were basically convincing them of the premium the brand justifies via sustainability and also how to embed sustainability into the overall terms and conditions scheme.

Martin
Now we've been talking a lot about the journey in recent years. You guys have always been a front-runner in the industry on sustainability, so I'm sure there's something next and there's again a next stage for your sustainability journey. So what's ahead of us and what's ahead of you to the extent you can obviously disclose this already?

Michael
I think it's a long-term journey and there are two key elements which are at this point in time changing. On the one side, there's the new German Supply Chain Due Diligence Act, and this will basically level the playing field. So also, all our competitors will have to disclose their sustainability progress, and we are quite confident that many of them will have to step up their efforts, which means they're sort of level in the area of cost with regard to sustainability. There's a second key element because since the end of last year, the cocoa price has more or less quadrupled in the market, and we are very happy about the long-term relationship with our cooperatives in Africa. However, also for us, the cocoa cost is going up dramatically, which needs implementation into our new price schemes for the future.

Martin
Very good, maybe last personal question if you allow, we are here in Waldenbuch, a wonderful company, the logo you carry around with you on your shirts every day. What do you like most about working with Ritter Sport?

Michael
That's a very broad question. I think the most important part around Ritter Sport is the people because whomever you meet here, you will have an open communication, you will have an open door, you have an honest and direct discussion, and everybody's really serious about what we want to achieve with our brand in the business, but also with regard to sustainability.

Martin
Sounds like an exciting journey ahead. Thanks for taking the time. Thanks for hosting us.

Michael
Thanks a lot for coming to Waldenbuch.

Martin
Thanks a lot, Michael. And thanks everybody for watching.

This transcript has been edited for clarity
 

Alfred Ritter GmbH & Co. KG, the family-owned chocolate brand Ritter Sport based in Waldenbuch, Germany, has long prioritized sustainability, integrating it into its commercial strategy over the past few years. Under the leadership of Chief Financial Officer Michael Lessmann, Ritter Sport has evolved its approach, viewing sustainability not just as a cost but as an opportunity to enhance the brand value. The brand proudly sources 100% certified cocoa and has achieved climate neutrality by significantly reducing its carbon footprint.

In recent years, societal shifts around climate awareness prompted Ritter Sport to elevate its sustainability messaging, transitioning from traditional communications to engaging media campaigns. Their straightforward messaging resonated well with consumers, who appreciated the brand's light-hearted take on serious sustainability issues. We collaborated with Ritter Sport to help them on this journey.

Looking forward, Ritter Sport faces challenges such as rising cocoa prices and new regulatory requirements but remains steadfast in its commitment to sustainable practices. The company continues to foster a culture of open communication and collaboration, ensuring that sustainability remains at the heart of its mission.  

Voice over
I think it's important that sustainability has already been there before we integrated it into the commercial strategy. We started understanding sustainability not only as a cost effect in our profit and loss (P&L) but also as an opportunity to increase the brand’s premium appeal.

Martin Schulte
Welcome to Waldenbuch, Germany's capital for premium chocolate. We are here at the headquarters of Ritter Sport, a leading global chocolate brand. I'm Martin and I'm joined by the CFO of the company, Michael Lessmann, thanks for hosting us today.

Michael Lessmann
Martin, thanks a lot for coming to Waldenbuch.

Martin
We are here to talk a little bit about sustainability, and your sustainability journey, but before we start, maybe help us a little bit about the background of your company, the great logo we see and also the logo we see right behind me.

Michael
Ritter Sport has been a family-owned business for more than a hundred years. It is located here in Waldenbuch, south of Stuttgart, and for us, sustainability has always been a very important part of the company's agenda, especially on our key brand Ritter Sport, which you just mentioned, which is one of the biggest chocolate brands in Europe. We're very proud of all the efforts we're doing around that.

Martin
So, Michael, I know that sustainability has been at the heart of Ritter Sport for over a decade, many, many years, but you've started to step things up over the last three to four years. Maybe take us through this journey and how and why you decided to basically take it even further than you had in the recent past.

Michael
Yeah, thanks for the question. I think it's important to embed it into the overall story of the company and sustainability was very, very important many years ago when the family started 30 years ago to source cocoa from Nicaragua and 20 years later started the first own farm, also in Nicaragua, which led to a climax in 2018, 2019, where we started to only source100% certified cocoa. There's a second dimension, which is very important among a lot of other projects, which is basically the reduction of our carbon footprint we reduced our carbon footprint to a degree that we became a climate-neutral company, so we compensate for the remaining energy required with gold standard certificates.

Martin
Now, if we zoom into the last three, or four years, where I believe I perceive a lot has changed, not only the packaging, but I'm sure you’ll get to the packaging at some point. What did you change exactly over the last couple of years and what was the reasoning to step things up another notch or even two notches?

Michael
In the last five, or six years, a few things happened in society and also with our consumers. During the last election in Germany for the first time, climate became a central part basically of all parties, and that was a time when we also decided to step up our communication about sustainability. Beforehand, we have been communicating via blogs and PR only, and in 2021 we went on air with out-of-home POS and packaging communication and also in TV communication to communicate our sustainability efforts.

Martin
I can imagine that there are a number of dimensions which you adjusted internally, and externally, what were the internal things you changed and how long did it take to change these things?

Michael
It took quite a while. I think it's important to bear in mind that the organization had sustainability topics within the culture for many years, but understanding this also as a part of the commercial strategy was new at that point in time, which means we did decent research, we observed the public debate and therefore integrated the sustainability topics, which we have been working on into our strategy also for the brand and for the commercial strategies.

Martin
Typically, a critical element is how you implement the trade. I can imagine the trade is to some extent sticky. They may be suspicious, is Ritter Sport real about their ambition? How did you manage to successfully implement your strategy towards your trade partners?

Michael
Yeah, I think it's a time when we met for the first time, we started introducing sustainability as part of our commercial strategy, which means in our discussion with retailers, we not only looked at the cost-saving of logistics terms and conditions, but we also looked at the sustainability effect of these terms and conditions. And as a second part, we went to all customers to explain to all of them why sustainability is not only an important topic, which they obviously knew but how it also fits our brand and basically the premium that our brand is justifying in the market. I think it's important that sustainability has already been there before we integrated it into the commercial strategy, but we started understanding sustainability not only as a cost-effect in our P&L but also as an opportunity to increase our brand’s premium appeal. And that was also the element that was very interesting for retailers because obviously they justified a different price positioning.

Martin
Now the consumer is another critical element. They need to accept new price points. They need to accept different packaging. I also feel there are so many certificates out there. I saw some research that there are over 230 different sustainability logos and certificates. How did the consumers respond to your step up in sustainability? What was the response from the market?

Michael
Yeah, we made it very simple. We decided on a one-core message, which we featured on the packaging, at point of sale (POS) and in out-of-home and TV campaigns. We were very happy when consumers saw the lighthearted, funny, Ritter Sport communication about sustainability. On social media, we received prompted responses where they were clearly happy about the funny jokes we basically made around sustainability while understanding the serious background.

Martin
We've now been talking a little bit about the implementation journey. You changed your packaging, communicate a lot to the trade, and also reached out to consumers. Tell us a little bit about the implementation journey, how long it took, some of the positive surprises, but also what made it more cumbersome to obviously implement such a journey. It sounds like it's a walk in the park, but typically it's not. It's a major undertaking.

Michael
I think the most positive surprise was actually a customer meeting where we stepped into the meeting, wanted to present, and were basically asked by the buying department when we would start to talk about sustainability finally, and this was the best entree we could have to such a customer conversation. Obviously, most of the customer conversations were more difficult and that's why also we were working together that to develop a commercial strategy to implement sustainability also in our terms and conditions and also into our overall strategy with the trade. We were basically convincing them of the premium the brand justifies via sustainability and also how to embed sustainability into the overall terms and conditions scheme.

Martin
Now we've been talking a lot about the journey in recent years. You guys have always been a front-runner in the industry on sustainability, so I'm sure there's something next and there's again a next stage for your sustainability journey. So what's ahead of us and what's ahead of you to the extent you can obviously disclose this already?

Michael
I think it's a long-term journey and there are two key elements which are at this point in time changing. On the one side, there's the new German Supply Chain Due Diligence Act, and this will basically level the playing field. So also, all our competitors will have to disclose their sustainability progress, and we are quite confident that many of them will have to step up their efforts, which means they're sort of level in the area of cost with regard to sustainability. There's a second key element because since the end of last year, the cocoa price has more or less quadrupled in the market, and we are very happy about the long-term relationship with our cooperatives in Africa. However, also for us, the cocoa cost is going up dramatically, which needs implementation into our new price schemes for the future.

Martin
Very good, maybe last personal question if you allow, we are here in Waldenbuch, a wonderful company, the logo you carry around with you on your shirts every day. What do you like most about working with Ritter Sport?

Michael
That's a very broad question. I think the most important part around Ritter Sport is the people because whomever you meet here, you will have an open communication, you will have an open door, you have an honest and direct discussion, and everybody's really serious about what we want to achieve with our brand in the business, but also with regard to sustainability.

Martin
Sounds like an exciting journey ahead. Thanks for taking the time. Thanks for hosting us.

Michael
Thanks a lot for coming to Waldenbuch.

Martin
Thanks a lot, Michael. And thanks everybody for watching.

This transcript has been edited for clarity