Chocolate giants Hershey and Barry Callebaut, have teamed up for a landmark partnership which will see the Swiss cocoa producer providing the raw material for Hershey's chocolate products and expanding facilities in South America.
The alliance will further consolidate the fiercely competitive global chocolate market and boost growth at both businesses. It is expected to be completed by the end of May.
Under the terms of the agreement, Hershey and Barry Callebaut will not just be entering into a supply deal but actively teaming up on research and development into health and wellness trends, ingredients-based research, market innovation and promoting a sustainable supply chain.
In terms of production, Barry Callebaut has signed up to provide Hershey with at least 80,000 tonnes of chocolate and chocolate products each year. In addition, the Swiss company will lease some of Hershey's facilities in the US and transfer chocolate-making machinery into Hershey-owned plants.
The increased US activity is set to boost Barry Callebaut's production capacity by 130,000 tonnes per annum. Total investment into the project will cost the cocoa processor CHF 65 million (€39.5m).
In a statement released yesterday, Barry Callebaut chief executive Patrick De Maeseneire said: "The transaction will transform our business in the Americas by doubling our production capacities of chocolate in the region. On a group level, it will increase our volumes by 10 per cent over three years.
"We will be able to significantly strengthen our factory network, bringing us closer to our customers and making us more competitive in North America."
Hershey, which has been advancing into more trend-driven niches such as premium, dark and ethically-sourced chocolate, is set to benefit from Barry Callebaut's reputation as a responsible producer as well as its experience in the manufacture of luxury chocolate items.
Hershey chief executive Richard H Lenny said: "This partnership provides Hershey with immediate access to broad expertise in premium chocolate and builds on our strong research and development capabilities. We will work together on research involving unique cocoa flavours and formats to enable superior new product innovation.
"Barry Callebaut and Hershey will also work together on corporate social responsibility efforts, with an emphasis on bringing about sustainable, positive change benefiting cocoa farmers and their families."
The two companies are backing industry moves for a certification system in West Africa to monitor how cocoa is grown and ensure labour standards are met.