Meet the world’s biggest chocolate maker
By Haig Simonian
Published: July 18 2007 19:42 | Last updated: July 18 2007 19:42
The packaging promises pleasure, the contents suggest satisfaction, but how many consumers spare a thought for the raw materials in their favourite chocolate?
Key facts
• Sales (2005/06): SFr4.3bn
• Net profit: SFr183m
• Employees: 8,500
Whether a branded bar from a multinational or a gourmet praline made by a specialist, the chances are the raw material will have come from one source: Barry Callebaut, the world’s biggest chocolate maker.
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About 8,500 Barry Callebaut employees toil worldwide, buying cocoa beans, converting them into chocolate and selling the results. Depending on the customer, the end product can be anything from cocoa powder in packets, liquid chocolate in tankers or dainty little bars sold to individual chocolatiers.
Together, sales to such clients mean the Zurich-based company should churn out more than 1.2m tonnes of chocolate and related cocoa products this year – with Barry Callebaut involved in a good one-in-four of the chocolates we eat.
The only unifying factor is that next to no one outside the business has ever heard of Barry Callebaut, in spite of a surging share price and the fact that the company has generated revenues of nearly SFr3.3bn ($2.7bn) in the first nine months of the current business year,
“We are by far the world’s biggest chocolate maker, but not so well-known”, admits Patrick De Maeseneire, chief executive. “Most of our customers are wholesalers and prefer to put their names on our product.”
Clients range from confectionery companies, such as Nestlé, Hershey and Cadbury Schweppes, to foods groups like Kraft, Kellogg and Unilever. Although such multinationals dominate sales, the company also caters to thousands of hotels, restaurants and confectionery shops.
Attempts to break away from the business-to-business model and to win more consumer recognition have not always gone to plan.
In March 2002, Barry Callebaut bought Stollwerck, a leading German chocolate company, known for its Sarotti brand.
Instead of enhancing Jacques and Alprose, Barry Callebaut’s two existing consumer brands, the initiative turned sour, with disappointing sales, exacerbated by Germany’s recession, factory closures, job losses and big restructuring provisions.
But Mr De Maeseneire, who joined the company later, defends the decision:. “You shouldn’t say it was a good or bad idea. The market changed.”
He says buying Sarotti deepened the group’s knowledge of the retail market, easing expansion into producing “own label” products for retailers.
Perhaps the biggest lesson from Stollwerck was to reaffirm Barry Callebaut’s focus upon core business.
That awareness was propitious. Many of Barry Callebaut’s biggest customers are reassessing their chocolate needs and show increasing willingness to buy more from outside, whether liquid chocolate or even finished products.
The process reflects changes. Squeezed by rising raw materials prices and ever-stronger retailers, big food groups struggle to contain costs, and turn to outsourcing.
Greater outsourcing can be a sensible response – especially if a specialist such as Barry Callebaut is cheaper and more flexible than in house manufacturing. Such decisions look even more appealing when ageing factories need modernisation or renewal – allowing manufacturers to avoid capital expenditure.
In recent months, Barry Callebaut has signed breakthrough deals with Nestlé, Hershey and Cadbury Schweppes in what Mr De Maeseneire calls an accelerating trend. Hershey, for example, only started outsourcing chocolate supplies two years ago.
In other cases, Barry Callebaut is finding that some established customers want to deepen the relationship further. Nestlé, for example, has not only outsourced more chocolate supplies, but has agreed that Barry Callebaut should take over an entire factory in Dijon, including responsibility for manufacturing the group’s distinctive Lion bar.
“The process has really started. Our customers will concentrate increasingly on marketing, selling and distribution, and less on the rest of the value chain”, Mr De Maeseneire says.
He concedes that rival suppliers, from giants such as Cargill and ADM to smaller local chocolate makers, want to break in. But he is confident Barry Callebaut’s unmatched vertical integration provides an edge.
“Being on the ground in the chocolate producing countries gives us much better quality control. The fact that we then go up the entire value chain can also help us in terms of costs and innovation. And we have unmatched geographic spread.”
Mr De Maeseneire recognises outsourcing has its limits. No big group will source more than 40-50 per cent from an outsider, he concedes. Yet, that leaves room for Barry Callebaut to grow. Just don’t expect to see its name on the packet.
Copyright The Financial Times Limited 2007
hi,
We happy to introduce ourselves one of the leading supplier in India at delhi & NCR area.
We are looking for chocolate slabs, chocopaste, chips, cocoa powder etc. We are into the market last 10 years and having much experience of tonnes of sale.
Therefore for request to send us ur products name with their price list to email us. We want iCD price at Delhi. We want to be sole distributor of ur company.
Thanking you,
Sincerely yours,
VK Kakkar)
VK Enterprises)
Posted by: vka kakkar | March 13, 2008 at 02:29 PM