Prime Highlights
- Barry Callebaut is diversifying into non-cocoa products, such as precision-fermented substitutes, to offset sky-rocketing cocoa prices.
- The group forecasts a mid-single-digit decrease in sales volume owing to price instability and shifting consumer demand.
Key Facts
- Cocoa prices have risen 95% in half a year with poor Ghanaian and Ivory Coast yields.
- Sales volume in the first half declined 4.7%, while net profit fell almost 60%.
- Non-cocoa ingredients, e.g., those derived from sunflower seeds, have been introduced in the UK and Benelux.
Key Background
Barry Callebaut, the Zurich-based global chocolate and cocoa manufacturer, is adapting its business model in response to unprecedented cocoa price volatility. The firm is expanding its product line beyond classic cocoa-based products. As part of this business strategy, it launched precision-fermented, sunflower seed-derived alternatives in UK and Benelux markets. These products seek to replicate chocolate’s taste and texture experiences without relying as heavily on cocoa.
The scheme is a reflex to major disruptions in the cocoa supply chain. Prices of cocoa beans have almost doubled over the past few months following poor yields in Ghana and the Ivory Coast, the world’s major cocoa producers. Prices surged from ₤5,332 to a high of ₤9,425 per tonne before falling to ₤7,342 by February 28, 2025.
Due to the price hike and lagging customer buying decisions, the overall sales volume of Barry Callebaut decreased by 4.7% during the first half of the fiscal year, while their Global Chocolate segment saw a 4.5% decrease. Volume also decreased by 5.6% in their Global Cocoa segment. In spite of these decreases, sales revenue increased 63% to 7.29 billion Swiss francs due to their cost-plus pricing strategy. Yet, net profit fell by almost 60%, to 31 million Swiss francs.
CEO Peter Feld and CFO Peter Vanneste highlighted the issue of short-term supply chain disruption but expressed long-term optimism for the resilience of the chocolate category. They explained that consumers, particularly food companies, are introducing interim recipe tweaks and looking at alternative ingredients in order to cut costs.
Furthermore, the business is turning to more stable cocoa-producing countries such as Ecuador for diversification of supply. In North America, business is being reorganized to align closer with market proximity and cost effectiveness, particularly after interruptions at their Mexican plant.
By this new emphasis on innovation, diversification away from cocoa, and global sourcing realignments, Barry Callebaut seeks to continue to be competitive in an increasingly unstable market climate.
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