Swiss chocolate maker Barry Callebaut has increased sales of chocolate products despite tough market conditions - evidence, it claims, that its product mix is the right one.
In the nine months to 31 May, Barry Callebaut reported sales revenues up 38 per cent to SF2.8 billion (€1.8bn) on the back of a 17 per cent increase in sales volumes to 685,265 tons. Net profits rose by 2.4 per cent to SF82.4 million, or by 9.8 per cent in local currencies.
Organic chocolate volume growth during the nine months was 2 per cent, despite stagnating or declining chocolate markets and depressed consumer sentiment, the company said.
The declining market for cocoa, rather than chocolate, products has already prompted the Swiss group to alter its strategy, and sales from its Cocoa, Sourcing & Risk Management unit have been steadily educed over the last year as Barry Callebaut focused on select third-party customers. Volumes from this division fell by 12 per cent in the period.
In contrast, volume sales in the Food Manufacturers business unit, which supplies chocolate and compounds to industrial customers, grew by 4 per cent, while the Gourmet & Specialities unit (which sells to chocolate makers, pastry chefs, hotels and restaurants) posted a 5 per cent gain. The Consumer Products arm recorded a massive 272 per cent increase in sales volumes, but this was due to the first-time consolidation of the German Stollwerck group.
Western Europe remains Barry Callebaut's biggest market, with sales volumes rising 28 per cent to 457,135 tons during the period, accounting for 66 per cent of the group's total sales. The increase was attributable to the Stollwerck acquisition and higher sales in the Food Manufacturers and Gourmet & Specialities business units. Growth in Consumer Products, with the bulk of its business being in the declining German market, was flat, the company said.
But eastern Europe is becoming increasingly important for many confectionery companies, not least because the strengthening of the Russian economy has created a growing middle class with a taste for premium imported products. Barry Callebaut therefore sees particular opportunities for its Food Manufacturers and Gourmet & Specialities business units there, although sales thus far are relatively small - just 4 per cent of total volumes at 25,034 tons.
The improvements in European sales were in stark contrast to the decline in sales in North and South America, where volumes dropped 2 per cent to 155,270 tons (23 per cent of total sales). This was partly due to the planned reduction of sales to third-party customers in the Cocoa, Sourcing & Risk Management business unit, but sales at the Food Manufacturers business unit were also poor during the period, remaining flat compared to the same period a year earlier. Only the Gourmet & Specialities business unit increased sales volumes.
Like most companies doing business in Asia, Barry Callebaut was affected by the SARS outbreak there, which has significantly reduced tourism levels. But its broad business spread meant that Barry Callebaut was able to take advantage of a rise in at-home consumption of chocolate products by stepping up sales to its industrial customers there. Sales volumes in the Asia/Pacific region accelerated by 12 per cent to 21,040 tons (3 per cent of total sales).
In Africa, where cocoa production in the Ivory Coast was significantly hampered by political turmoil, Barry Callebaut benefited from strong sales of consumer products, which more than offset the difficult economic and political situation in several countries in the Middle East and the effects of the Iraq war. This led to a 2 per cent increase in overall volumes in Africa and Middle East to 26,786 tons (4 per cent of total sales).
Patrick De Maeseneire, CEO of Barry Callebaut, said he expected the company to meet its target of EBIT of SF200 million in 2002/03, even though the economic situation throughout Europe had worsened since the end of the first half.
"My confidence is bolstered by several new and promising products in the pipeline, especially in our Gourmet & Specialities business unit, which will allow us to respond to changing user and consumer needs and to further differentiate ourselves from our competitors," he said.