Kägi: Exports, the main problem for Swiss companies (cross-border guide)

Context

In a nutshell

• Exports account for almost 50% of Kägi's turnover, but they face critical obstacles
• Strong Swiss franc erodes competitiveness on foreign markets
• US duties at 10% from 2026 and falling demand in China aggravate the situation
• The costs of raw materials (cocoa, milk) and labor in Switzerland penalize producers

Key facts

• What: Export challenges for Kägi, symbol of 'Swiss made'
• When: Problems that have emerged in the last 18 months (2024-2025)
• Where: Headquarters and production in Lichtensteig (St. Gallen)
• Who: Cédric El-Idrissi, CEO since 2024, former Olympian
• Critical markets: USA (10% tariffs from 2026), China (declining demand)
• Costs: Raw materials +20-30% (cocoa, milk), Swiss labour among the most expensive in the world

<### The structural challenges of 'Swiss made'> Cédric El-Idrissi, CEO of Kägi since 2024, does not use half measures: "The biggest problem is exports," he says in an exclusive interview. The company, an icon of Swiss chocolate wafers, sees almost half of its turnover come from foreign markets. But this vital channel is under siege.

The first obstacle is the strong Swiss franc. "It automatically makes our products more expensive abroad," explains El-Idrissi. Added to this are the labour costs in Switzerland, among the highest in the world, and the soaring prices of raw materials: cocoa and milk have increased by 20-30% in recent months. 📊

<### The Double Clamp of the US and

Operational details

The systemic impact on Swiss manufacturers

Because Swiss costs are a unique burden

While foreign competitors absorb the increase in raw materials thanks to lower labor costs, Swiss companies like Kägi are under double pressure. "We have to choose between raising prices and losing customers, or absorbing costs and reducing profits," admits El-Idrissi, CEO of Kägi. This scenario is particularly acute for export-oriented Swiss SMEs, which account for 70% of Swiss exports. For example, a small food packaging company in Lugano has seen its costs increase by 25% in the last two years, due to the increase in raw materials and wages.

The paradox of 'Swissness'

The regulations on the use of the Swiss cross impose strict standards. Kägi must use Swiss milk and cocoa even if they are 30-40% more expensive than European alternatives. “It's the price of credibility,” El-Idrissi says, “but it makes it impossible to compete on price.” This problem is particularly evident in the canton of Bern, where regulations on the use of the Swiss cross are particularly stringent. The 2020 law stipulated that only products using Swiss ingredients can use the Swiss cross, further increasing costs for companies.

Limited alternatives

Reduce production in Switzerland? Unthinkable for Kägi, where 80% of employees work in the

Useful tools to protect your net income

To reduce FX leakage, compare CHF-EUR exchange options and banks for cross-border workers.

Key points

What can companies (and workers) do now?

Survival strategies for export

1. Market differentiation: Swiss companies can focus on countries less sensitive to prices, such as the Gulf Cooperation Council and Singapore. For example, a Swiss food company might find a more favorable market in Singapore, where the cost of living is lower than in Switzerland. This approach allows them to maintain competitiveness on the global market.

2. Operational efficiency: Automation and digitalization are essential tools for reducing non-labor costs. For instance, the company Nestlé has invested in automation of production lines in Switzerland, reducing operational costs by 15% over the past two years. This approach not only reduces costs but also improves product quality and precision.

3. Premium pricing: Communicate the value of 'Swiss made' to justify higher prices. For example, the Swiss Army brand has always emphasized the quality and innovation of its products, justifying higher prices compared to less distinctive competitors. This approach can be particularly effective in markets where perceived value is high.

Implications for Swiss workers

For employees of exporting companies, cost pressure translates into:

• Salary stagnation: Limited salary increases to preserve competitiveness. For example, in the Canton Ticino, one of Switzerland's main industrial centers, salaries were increased by 2% in 2023, but this is considered a limited increase compared to cost pressures. This can lead to frustration among workers who expect a more significant increase.

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