Barry Callebaut hails volume growth “significantly above global chocolate confectionery market”

16 Jul 2018 --- Barry Callebaut has released its nine-month key sales figures for the fiscal year 2017/18 which has shown good group momentum and volume growth that is significantly above the global chocolate confectionery market, according to the company. In the first nine months of fiscal year 2017/18 (ended May 31, 2018), the manufacturer of high-quality chocolate and cocoa products grew its sales volume by 6.9 percent to 1,512,853 tons.

“After the very strong performance in the first half of this fiscal year, we continued to see strong momentum in the third quarter, fueled by all key growth drivers, regions and product groups. Our volume growth was again significantly above the global chocolate confectionery market,” says Antoine de Saint-Affrique, CEO of the Barry Callebaut Group.

Barry Callebaut achieved very good volume growth across all regions and product groups in a global chocolate confectionery market that grew 2.5 percent. The volume increase was supported by all key growth drivers, Gourmet & Specialties (+7.8 percent), Outsourcing (+6.2 percent) and Emerging Markets (+8.8 percent). The volume growth in Q3 (+4.8 percent) was strong on top of a good base from the prior year. 

Sales revenue in the period under review amounted to CHF 5.2 billion (US$5.17bn), a decline of 2.4 percent in local currencies (–0.2 percent in CHF) due to lower raw material prices, which the group passes on to its customers for a large part of its business.

Speaking about the group’s outlook, de Saint-Affrique says that he is confident Barry Callebaut will deliver on its four-year guidance. 

“Looking at market trends and market dynamics, we continue to see many growth opportunities and are confident that this, together with the diligent execution of our ‘smart growth’ strategy, will allow us to deliver on our four-year guidance.”

Milestones achieved 
Expansion: Barry Callebaut opened its first Chocolate Academy center on the African continent – its 21st worldwide – on May 8, 2018, in Johannesburg, South Africa. Barry Callebaut announced the extension of its cocoa processing capacities in Côte d’Ivoire and Cameroon. The investments in South Africa, Côte d’Ivoire and Cameroon reaffirm the Group’s commitment to the African continent.

Innovation: Since its global launch in Shanghai in September 2017, Ruby, the fourth type of chocolate, has been warmly welcomed by Barry Callebaut’s customers and is making waves in consumer markets across the world. 

The iconic KitKat brand launched Sublime Ruby in its Chocolateries in Japan and South Korea earlier this year and was followed by a fast roll-out of the KitKat Ruby four-finger product in several European markets and Australia. After the introduction of the finest Belgian Ruby RB1 chocolate under the Callebaut brand in March 2018, Barry Callebaut launched the Swiss Edel couverture for artisans, Ruby Rubina, under the Carma brand in May. 

Ruby chocolate received the inaugural NCA Award for Supplier Innovation at the US Sweets & Snacks Expo, created to honor breakthrough innovations that advance the confectionery industry, as well as the Marketing Award 2018 of Gault&Millau. 

Barry Callebaut also announced the extension of its dairy-free chocolate product portfolio in the US, tapping into the growing customer demand for dairy-free chocolate solutions. Barry Callebaut‘s sugar-reduced solutions continue to grow by double-digits.

Sustainability: In June, Barry Callebaut signed three letters of intent with Côte d’Ivoire and Ghana to work collaboratively towards the design and validation of a sustainable cocoa farming model. This cooperation will also include agroforestry, income diversification for cocoa farmers and the planting of shade trees. Furthermore, from June 5 to June 7 Barry Callebaut organized the fourth Chocovision conference, bringing together over 200 senior business leaders and key stakeholders in the cocoa and chocolate industry to discuss strategic topics of common interest.

Regional breakdown 
EMEA – Sales volume of Barry Callebaut in Region EMEA (Europe, Middle East, Africa) increased by 8.1 percent to 695,214 tons, supported by strong growth in Western Europe and double-digit growth in Eastern Europe in both Food Manufacturers and Gourmet & Specialities. Sales revenue was slightly down by 0.6 percent in local currencies (+6.5 percent in CHF) to CHF 2,317.8 million, mainly due to lower raw material prices.

Americas – In Region Americas, Barry Callebaut’s sales volume growth was up 5.3 percent to 400,334 tons. Growth was fueled by a double-digit performance in South America and increased momentum in Gourmet & Specialties in North America. America’s chocolate confectionery market grew by 1.1 percent. Sales revenue slightly declined by 0.6 percent in local currencies (-2.7 percent in CHF) and came in at CHF 1,236.2 million. This was a consequence of lower raw material prices.

Asia Pacific – Barry Callebaut increased its sales volume in Region Asia Pacific by 14.8 percent to 79,542 tons, on top of a high base from the prior year. Food manufacturers fueled growth through a mix of new activities and additional volume from long-term outsourcing agreements as well as strong double-digit growth in Gourmet & Specialties. Chocolate confectionery markets in Asia Pacific recorded a volume growth of 3.7 percent for the period under review. Sales revenue grew +4.5 percent in local currencies (+3.3 percent in CHF) to CHF 276.0 million, likewise impacted by lower raw material prices.

Global Cocoa – Global Cocoa achieved a healthy +4.9 percent growth to 337,763 tons in the period under review. As anticipated, volume growth slowed down in Q3. Sales revenue was down 7.9 percent in local currencies (-8.5 percent in CHF) to CHF 1,353.8 million. This is broadly in line with sales volume and reflects the lower cocoa products prices.

Barry Callebaut applies a cost-plus business model, i.e., the company passes on raw material prices directly to its customers for the majority of its business. On average cocoa bean prices decreased by 12.2 percent versus prior year. However, during the first nine months of fiscal year 2017/18, they increased by 19.9 percent, from GBP 1,516 per ton on September 1, 2017, to GBP 1,817 per ton on May 31, 2018. 

The reason for the price increase in recent months was a lower than expected global cocoa surplus due to slightly lower cocoa production in West Africa, in combination with higher demand and significant fund activity. 

A rebound of dairy prices at the beginning of 2018, due to weaker production figures, followed a considerable downward price correction for all dairy products in the last quarter of 2017.

Over the last nine months, the world sugar market lost more than 20.0 percent due to good crops in Asia and Europe, resulting in a sugar surplus. In Europe, a record crop led to a sharp reduction of domestic prices.