ADM strengthens European position with Schokinag acquisition

By Sarah Hills

- Last updated on GMT

Related tags Chocolate Adm

Archer Daniels Midland Company (ADM) is continuing its march into the European chocolate market and moving closer to its customers on this side of the Atlantic with the acquisition of the German firm Schokinag.

The US-based company ADM said it had signed an agreement to purchase Schokinag-Schokolade-Industrie Herrmann GmbH & Co. KG, which produces chocolate and cocoa powder, subject to approval by relevant antitrust authorities.

The acquisition demonstrates ADM’s confidence that the European chocolate market will be resilient, despite strong evidence that this sector is being hit hard by the current economic turmoil.

Benoit Villers, director of chocolate for ADM International told “I’m convinced that chocolate is a crisis-proof product because it is the most affordable product to indulge ourselves and our friends.

“Today we can see that the market is maybe flat but we don’t think it will be the case over the next coming years.

“Chocolate has always grown one, two or three per cent.

“After this crisis, we don’t see why it would be different.”

Schokinag manufactures chocolate and other cocoa products in it headquarters in Mannheim, Germany, and in Manage, Belgium. It has sales offices in Ludlow, UK and in California, USA.

ADM is a global supplier of cocoa and chocolate ingredients, serving the confectionery, bakery and dairy industries, among others.

Villers said that it is already capable of delivering to European customers, as in 2006 ADM acquired the assets of the UK, business-to-business chocolate manufacturer Classic Couverture Ltd.

But the supply chain from the UK can be “quite expensive” ​and this latest acquisition would make it easier for the company to grow in the region.

Villers added that ADM would also be “much better equipped”​ to offer different types of products to customers as taste preferences may differ from country to country.

Scott Walker, managing director, ADM Cocoa International, described Europe as the world’s largest chocolate market and said: “By integrating Schokinag into our cocoa business, we will better serve this steadily growing chocolate market and realize significant efficiencies in sourcing, operations and transportation.”

Hans Hermann, owner and chief executive of Schokinag, said: “ADM Cocoa’s global strengths in sourcing and processing, combined with Schokinag’s long tradition and service to European and global chocolate markets, are a combination that is a good foundation for future growth for our employees, our valued customers and the Mannheim community.”

Market conditions

However, tohere are strong indications that consumer spending in the European chocolate market has dropped amid the recent economic downturn.

Last week ADM’s chocolate rival, Barry Callebaut, issued its results for the three months of the fiscal year 2008/09, which showed lower sales volume in Western Europe. This was in contrast to good growth in the emerging markets of Eastern Europe and Asia, and market share gains in North America.

And growth in the French chocolate confectionery market alone fell sharply in 2008, according to a report from Snapshots, which is part of the Mintel Group. However, it forecast that it will recover this year, helped by sales of premium products.

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