Recession bites into Barry Callebaut chocolate sales

By Sarah Hills

- Last updated on GMT

Related tags Barry callebaut Switzerland Marketing Swiss franc

There is further evidence that the market for chocolate is not as recession proof as traditionally thought as Barry Callebaut sales in Europe saw a marked drop over Q1.

Sales volume for the Swiss company was down 4.1 per cent to 230,824 tonnes in Europe during the three months up to November 30, 2008, compared to the previous year and sales revenue decreased by 6.3 per cent to 1,030.6m Swiss francs (CHF).

However, Barry Callebaut stated that good growth in the emerging markets of Eastern Europe and Asia, and market share gains in North America, helped offset lower sales in Western Europe, where consumer spending dropped amid the economic downturn.

And there are hopes for private label volume growth as Barry Callebaut said its customer label sales had seen an increase in business as “consumers become more price-sensitive”​ and switch products.

A spokeswoman for Barry Callebaut told “In November the market experienced a drop in demand for consumer goods across the board as a consequence of growing uncertainties about the economic downturn.

“In addition, the financial crisis forced food manufacturers, artisans and retailers to reduce stocks in order to improve their balance sheets at the end of the year.

“As a result of this inventory management the ordering patterns of customers became more short term.”

This trend was reversed in December when orders picked up, although fall-to-spring is “the peak season”​ for chocolate consumption.

The spokeswoman said that generally the chocolate market is expected to remain flat in value terms in 2009 and to be slightly down in volume terms but “Barry Callebaut expects to do better than the market.”

She added that premium chocolate is expected to remain popular but currently “the volume growth is in customer label products”.

Regional performance

Meanwhile, sales volumes in Asia & Rest of the World were up 36.2 per cent to 25,192 tonnes and sales revenue grew by 24.8 per cent to CHF103.7m.

However, growth was held back for several weeks by lower exports from China related to the melamine milk powder scandal.

The spokeswoman said: “None of the Barry Callebaut products were affected… thanks to our very strict food safety standards and controls.

“But many customers did not want to receive chocolate made in China for a number of weeks which limited our exports.”

Sales volumes in the Americas increased 13.6 per cent to 82,497 tonnes and, as a result of “higher volumes, a better product mix and some price increases”​, sales revenue increased by 24.6 per cent to CHF294.8m.

The group’s total sales volumes for the first quarter rose two per cent to 338,513 tonnes. Sales revenue increased by 7.2 per cent in local currencies. However, “due to unfavourable exchange rate developments”​, sales revenue in the reporting currency (CHF) rose 0.7 per cent to CHF1,429.1m.

Patrick De Maeseneire, Barry Callebaut CEO, said: “While we expect customers and consumers, especially in the mature markets of Western Europe, to remain cautious, we believe that our strategy built upon geographic expansion, innovation and cost leadership positions us well to weather the tough economic environment.”

Related topics Markets Chocolate Outsourcing

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