Barry Callebaut reveals 2.7% sales volume decline against “challenging market environment”

13 Jul 2023 --- Barry Callebaut has seen a 2.7% drop in its sales volume for the first nine months of its fiscal year, in line with a “declining market” and further hurt by severe plantation floods that drove up prices, the company notes. Nonetheless, the cocoa and chocolate giant managed an uptick in sales revenue (up 3.6% to CHF6.29 billion or US$7.3 billion) and still targets flat volume growth for the full year.

The business says that volume decline has stabilized in some regions like EMEA and Americas, while in Asia-Pacific inflation continues to cause struggle.

“In the first nine months of the fiscal year, we witnessed soft volume in a continued inflationary environment which affected customer demand. Our volume was in line with the declining underlying chocolate confectionery market, excluding the residual effects of the Wieze incident,” says Peter Feld, CEO of the Barry Callebaut Group.

The company had to deal with a salmonella outbreak in its Wieze factory in Belgium but resumed full production in October.

“In a challenging market environment, we continue to work toward flat volume growth for the full year 2022/23 and remain confident to deliver solid operating profit,” Feld underscores.

Floods in key cocoa production regions have led bean costs to reach prices unseen since the 1970s.Critical commodities go skyrocketing
Barry Callebaut explains that two of the three of the “key raw materials” they use have been particularly affected by inflationary pressures.

The company has seen, on average, cocoa bean prices increase 15.5% from a year ago, with intense price fluctuations. Floods in key cocoa production regions have led bean costs to reach prices unseen since the 1970s last month.

“The global bean supply and demand forecast for 2022/23 indicate a deficit,” the business highlights.

Barry Callebaut chocolate sales declined 3.7%, more than the general chocolate market (-1.5%).

Sugar prices have not sweetened the situation, with the company seeing 63.1% increased costs for sugars in Europe and 10.9% globally “on the back of lower exports from India and a slow start of the crop in Brazil.”

Nonetheless, some good progress in the sugarcane harvest in Brazil and sluggish global import demand, particularly from China, led FAO’s Sugar Price Index to its first decline (by 3.2%) in June after four consecutive monthly increases.

On the other hand, dairy prices have softened considerably, decreasing on average by 19.5% due to a combination of supply and demand factors. “While global milk supply improved, consumer demand slowed due to the persistent high inflation,” notes Barry Callebaut.

Strategic milestonesBarry Callebaut introduced two new chocolate products in Mexico.
Barry Callebaut has announced several strategic moves to boost its growth, innovation and sustainability in the global market.

The company has renewed and expanded its long-term partnership with Unilever, one of the largest ice cream producers in the world. The agreement, which dates back to 2012, will see Barry Callebaut supply Unilever with cocoa and chocolate products and collaborate on new ice cream innovations and sustainability initiatives.

“The recently announced renewal of a global strategic partnership with a key customer underpins the sustained trend toward outsourcing. It is a showcase for the added value we can deliver to customers globally and for the deep relationships our teams are building every day,” says Feld.

Barry Callebaut has also launched two new chocolate products in Mexico, catering to the rising demand for plant-based and sugar-free options and responding to the “mindful indulgence trend.”

In addition, Barry Callebaut has invested in a new cocoa bean warehousing and dispatching facility in Pasir Gudang, Malaysia. The facility, which covers over half a million square feet, will enhance the company’s growth plans in the region.

The company has also updated its Forever Chocolate plan to make sustainable chocolate “the norm” by 2025. 

Edited by Marc Cervera