Yesterday, Barry Callebaut released its sales figures for the first nine months of the current fiscal year. By all measures, it was a successful period. Sales volume amounted to 872993 metric tonnes of chocolate, a growth rate of 10 percent which the company claims is three times the growth rate of the global chocolate market as a whole. In its press release, the company also reported an 18.6 percent growth in sales revenue. Its chief growth areas were Europe and the Americas with Asia and the rest of the world lagging behind.
So who are these folks that are expanding at a time of record high cocoa prices and a global economic down turn?
The company came into being in 1996 with the merger of the Belgian chocolate maker Callebaut and the French firm Cacao Barry. They established their headquarters in Switzerland and have been on an acquisition path every since. Since 2000 they have bought Germany’s Stollwerck, Holland’s Graverboom, the U.S. firm Brachs’s Confections, a 60% stake in Malaysia’a KLK Cocoa and 49% stake in Biolands, an exporter of organic cocoa from Tanzania. They have also opened offices and constructed manufacturing facilities in Japan, Mexico, Russia, California and China.
The most interesting development is Barry Callebaut’s outsourcing deals with Hershey’s, NestlÃ© and Cadbury. Here are some specifics of the Hershey’s deal: Barry Callebaut agreed to build and operate Hershey’s new plant in Mexico (that’s one the plants mentioned above). It will also lease partÂ of another Hershey’s plant and operate the chocolate making equipment there. It is estimate that this deal alone will increase Barry Callebaut’s production capacity in the Americas by 130,000 tonnes of which 80,000 tonnes are guaranteed sales to Hershey’s. I could not find any information how this outsourcing affects Hershey’s workers that used to operate the equipment before.
On a global scale, such outsourcing deals are not new. Car makers have long had suppliers operate right inside their factories (Toyota is a prime example). But it is new in the chocolate industry. And it is an important change for Hershey’s. A century ago, Hershey’s was the largest maker and supplier of chocolate in the U.S. They even supplied the chocolate to Mars for its Milky Way Bar. Today, the are buying chocolate made by Barry Callebaut in Hershey’s own factories.
It is also a sign if the ever increasing concentration in the chocolate sector. Fewer and fewer companies still roast and grind their own beans. Instead, they purchase chocolate liquor from the likes of A.D.M , Cargill and, of course, Barry Callebaut.
Yes, there are lots of small chocolate makers and even more chocolate shops. But most of them rely on the few giant of the industry who truck the chocolate liquor to their small plants where it is molded and packaged. So when you buy that special bar with the cute name at your local gourmet shop and plunk down big bucks, chances are that the chocolate for that bar came in bulk from a supplier like Barry Callebaut which claims to offer the largest selection of single origin chocolates. Don’t buy into the “homemade specialty” hype on the labels or the stores. If you care about your chocolate, ask where it comes from. If the “makers” won’t tell you, don’t buy it.