Barry Callebaut eludes global chocolate declines in Q1

By Oliver Nieburg contact

- Last updated on GMT

Market leading chocolate supplier predicts global chocolate demand will recover in next two quarters. Photo: Barry Callebaut
Market leading chocolate supplier predicts global chocolate demand will recover in next two quarters. Photo: Barry Callebaut

Related tags: Sales volumes, Chocolate

Barry Callebaut has posted flat sales volumes and increased revenues in Q1 in the face of global chocolate confectionery volume declines.

The company’s sales volumes were flat (-0.4%) to 492,931 metric tons (MT), while its sales revenue climbed 4.2% to CHF 1.89bn ($1.88bn) for the three months up to November 30, 2016.

Hot summer and Brexit

Barry Callebaut said in its results published today​ that it has outgrown the global chocolate market, which declined in volume by 2.3% over the period.

“We believe that different factors influenced the demand, including a hot summer in Europe that affected chocolate consumption, as well as the Brexit discussions that had an effect on demand in the UK (a big chocolate market),”​ Christiaan Prins, head of external affairs at Barry Callebaut told ConfectioneryNews.

According to Nielsen data, chocolate confectionery sales volumes for the overall market declined 3.1% in Europe and 2% in the Americas from September to November.

But Barry Callebaut grew sales volumes 1.4% to 113,112 MT in its Region Americas over the period, and by 2.2% in its Region EMEA (Europe, Middle East, Africa) to 225,087 MT.

Chocolate recovering in the Americas

Prins said that Nielsen data indicated the weak Americas chocolate market was slowly recovering.

Asia Pacific delivers

Asia map pins - tapanuth
©iStock/tapanuth

Barry Callebaut grew Q1 sales volumes by 8.8% to 22,544 MT in Asia Pacific, ahead of the overall chocolate confectionery market (+3.7% Nielsen data). It said most major markets in the region contributed to growth. The company’s sales revenues for Asia Pacific rose 10.2% in local currencies to CHF 92.9m ($93m). 

“We saw good growth with smaller and medium-size customers and somewhat lower growth with global accounts,”​ he added.

Barry Callebaut last year began to intentionally phase out less profitable contracts to third parties in its Global Cocoa division, which supplies cocoa ingredients such as butter, powder and liquor.

It said today these contracts were now almost completely discontinued, leading to a 8.6% volume decline for its Global Cocoa Unit.

However, the company said its chocolate business grew 2.3% in Q1. The firm also registered 14.3% volume growth in its Gourmet & Specialties Products division, which supplies premium products such as nuts and inclusions to chefs and artisans.

Market demand to recover, predicts Barry Callebaut

Antoine de Saint-Affrique, CEO of the Barry Callebaut Group, said group volume growth was expected to accelerate in the second half of the year, despite the challenging market environment.

The company reaffirmed its forecast of 4-6% 2017/18 volume growth and EBIT above volume growth.

Prins added: “We would expect the market demand to recover in the next few quarters, cocoa bean prices are significantly lower compared to prior year and this should support growth in this category. 

“Other categories that are also relevant to us, such as ice cream, beverages and biscuits, are still growing.”

Cocoa prices and production surplus

Barry Callebaut said cocoa bean ​prices had decreased by 14% in the first three months of the fiscal year.

“The combined ratio is heading in the right direction, though volatility remains high,” ​it said in its release today.

The combined cocoa ratio - the price of cocoa butter and cocoa powder at European factories relative to the futures price for cocoa beans – impacts profitability for cocoa processors.

The International Cocoa Organization (ICCO) recently told us​ that it expects a cocoa production surplus for the current cocoa year. It will release its projections next month, but says market analysts are predicting a surplus of between 150,000 MT and 250,000 MT.

Related topics: Ingredients, Chocolate

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