Why the Swiss Matterhorn Matters

During 2016, Toblerone expanded the space between its triangles. Making the chocolate bar 10 percent lighter in the UK, it diminished the elite aura surrounding the candy. As a quintessential Swiss product, with permission from the Swiss government, Toblerone uses the Swiss Matterhorn on its label.

You can see the before and after space sizes:

Now, Toblerone is slightly less Swiss.

Toblerone Swiss Chocolate

The Matterhorn on your label distinguishes you from other chocolates. It signals quality, taste, and Swiss oversight. It also echoes the shape of the chocolate.

The Matterhorn:

Toblerone Chocolate has been around since 1908 when Theordore Tobler, a Swiss confectioer, first combined his name with torrone, the Italian word for nougat. But then, a century or so later, a 2017 “Swissness”  law was passed. The law mandates that at least four-fifths of raw materials have to come from Switzerland. Also, the product needs to have been processed in Switzerland.

And that is the problem.

Mondalez, Toblerone’s parent company, decided to outsource some of the Swiss production to Bratislava, the Slovak capital. where they could pay lower wages and access cheaper raw materials. (The company says the reason was rising demand.) As a result, they will have to replace the Matterhorn on the label with a new mountain and say “established in Switzerland” rather than “of Switzerland.”

Our Bottom Line: Competition

Somewhat like the European Union’s protected designation of origin (pdo) or the British monarchy’s selected products, Swiss chocolate can differentiate itself. For the pdo, we have a long list of products that includes Champagne, Feta, and Parmigiano cheese. Meanwhile PureWow doggy food has the royal seal of approval in Great Britain..

On the following competitive market structure continuum, a company’s goal is moving to the right. Companies want to get to the places on the market structure scale where they have some price making power. A Swiss identity helped Toblerone sound more elite and move to the right. The Swiss government says its moniker can add a 50 percent price premium.

Now, we can ask if they have moved slighly to the left toward perfect and monopolistic competition where the market is more of the price maker than the firm.

Below, in the oligopoly slot,we would find Apple, Coca-Cola,  and  most auto makers:

My sources and more: Thanks to Bloomberg Radio for altering me to Toblerone’s plight. From there, Insider descroibed the 2016 Shrinkflation situation while WSJ and NPR and the BBC had more of the facts. We should note that Toblerone reversed its 2016 respacing decision.