Barry Callebaut continues to benefit from outsourcing chocolate production trend

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Manufacturer of high-quality chocolate and cocoa products, the Barry Callebaut Group, has posted an acceleration in sales volumes for the first nine months of fiscal year 2018/19 (ended May 31, 2019). The Swiss giant grew its overall sales volume by 5 percent (+10.6 percent in Q3) to 1,589,181 tons. Sales volume in the chocolate business grew by 5.9 percent, well above the underlying global chocolate confectionery market. The growth comes at a time when more food makers are outsourcing chocolate production and follows a series of expansions, innovation milestones and sustainability strategies at the Group.

Sales revenue in the period under review amounted to CHF 5.5 billion (US$5.56 billion), an increase of 8.2 percent in local currencies. However, the increase in sales revenue was impacted by higher raw material prices, notes the company.

Cocoa bean prices fluctuated in a range between £1,500 (US$1,880) and £1,800 per ton and closed at £1,788 per ton on May 31, 2019. On average, cocoa bean prices increased by 4 percent versus the prior year. Going forward, global cocoa supply and demand are expected to remain balanced.

Sugar prices increased in Europe (+46.0 percent YTD), due to a disappointing 2018 crop. The world market prices for sugar increased by 3.9 percent during the first nine months of this fiscal year, in the light of expectations of lower crop production in 2019/20.

During the first nine months of fiscal year 2018/19, dairy prices also increased (+25.2 percent) due to deteriorated production conditions and increased demand.

“We are confident we will deliver on our current mid-term guidance. Going forward, we remain committed to achieving consistent above-market volume growth and enhanced profitability. This is why, in January, we renewed our mid-term guidance for the coming three fiscal years,” says Antoine de Saint-Affrique, Barry Callebaut Group CEO.

Barry Callebaut has laid out its “strategic milestones” achieved in the first nine months of fiscal year 2018/19 which include an expansion in March, when the Group inaugurated a state-of-the-art processing unit at its Société Africaine de Cacao (SACO) plant in Abidjan, Côte d’Ivoire.

This includes a fourth grinding line and will increase SACO’s cocoa bean processing capacity by more than 40 percent by 2022. This major extension also highlights Barry Callebaut’s commitment to the African continent, not only as a supplier of high quality cocoa beans, but also as an industrial base and as an emerging market for cocoa and chocolate consumption.

In April, Barry Callebaut signed a Memorandum of Understanding (MoU) with the Government of Serbia to construct the Group’s first chocolate factory in Southeastern Europe. The plant in Novi Sad is expected to have an initial annual production capacity of more than 50,000 tons and is expected to be operational by 2021.

The expansion is in line with Barry Callebaut’s “smart growth” strategy and will expand the company’s footprint in the region and supply customers with a wide range of chocolate, compound and filling products. The factory will serve as a regional hub from which Barry Callebaut can supply the rapidly growing chocolate markets of Southeastern Europe.

The Group is also in the process of accelerating capacity expansion in Region Americas.Barry Callebaut also notes its innovation strategy as a contributor to its growth, particularly the continuing success of Ruby chocolate – the fourth type of chocolate initially unveiled in Shanghai in 2017.

At the beginning of the year, ruby chocolate made its mark in Cologne, Germany, as it was given its first moment in the major trade show spotlight at the world’s leading sweets and snacks fair, ISM 2019.

In May, ruby chocolate was officially introduced in the US, the world’s largest chocolate and confectionery market, and Canada, as a part of the global launch plan. The innovation was also the highlight of this year’s National Confectioners Association’s (NCA) Sweets and Snacks Expo in Chicago.

Ruby chocolate has been welcomed by artisans, brands and consumers across the globe and is now available in more than 50 countries worldwide.

Furthermore, Barry Callebaut’s sugar reduced solutions, such as the new dark and milk chocolate with only one percent added sugar, continue to cater to the desires of wholesome choice consumers and as a result continued to grow by double-digits.

Sustainability and traceability

Barry Callebaut has established traceability for a third of its global cocoa volume. Traceability is a key tool for the Group to reach its Forever Chocolate commitment to make sustainable chocolate the norm by 2025. To achieve this, the company has prioritized the establishment of traceability in its Ghanaian and Ivorian supply chains. By the end of 2019, Barry Callebaut will have mapped all the farms it directly sources from in Côte d’Ivoire and Ghana, the world’s two largest cocoa producing countries. Overall, this means that 100 percent of the cocoa volume it sources in Ghana and 40 percent of the cocoa volume it sources in Côte d’Ivoire will be traceable by the end of this year.

Source: Ingredients First

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