Barry Callebaut profits grow as chocolate market shrinks

By Caroline Scott-Thomas

- Last updated on GMT

Related tags Late-2000s recession Macroeconomics Europe

Chocolate maker Barry Callebaut has reported increased profits and sales volumes for the full 2008/09 fiscal year, despite shrinking global chocolate consumption.

As the effects of the global recession began to be understood last year, there was much speculation that chocolate might prove to be recession proof. The theory was that consumers would continue to treat themselves to small luxuries like chocolate even as they cut back on other non-essentials. However, according to market research organization Nielsen, there has been a two per cent decline in global chocolate consumption over the past year – the first decline in more than a decade.

Despite this, Barry Callebaut has reported an improvement in net profits for the year ended August 31, 2009 of 10.4 per cent, reaching CHF226.9m (€150m), and a 4.1 per cent increase in sales volumes, to 1,213,610 tonnes.

The company’s new chief executive officer, Jürgen Steinemann said he expects Barry Callebaut to carry on outperforming the global chocolate market, fuelled by food manufacturers continuing to outsource their chocolate production, as well as continued expansion into emerging markets.

Nonetheless, Steinemann did revise earlier predictions for the next three years slightly downwards, forecasting volume and sales growth of 6-8 per cent as opposed to previous estimates of 9-11 per cent and 11-14 per cent respectively.

Steinemann said: “I am pleased that we were able to deliver strong top-line and bottom-line growth in the face of a rarely seen global chocolate consumption decline. After reaching a low in winter 2008, growth resumed and regained momentum in the second half of the year…We expect the economic environment to remain challenging and volatile.”

In Europe, gourmet chocolate markets were struck by the recession, and the company’s vital food manufacturing business was hit with the double challenges of general industry destocking, combined with lower consumer spending overall. But Barry Callebaut said that there were pockets where consumption continued to grow, including Poland and Turkey.

Although chocolate consumption picked up in the UK, Germany and the Netherlands during the second half of the year, the overall trend was a slowdown in the market in Western Europe. Barry Callebaut’s European sales volume was down in the first half of the year, particularly affected by negative market trends in France, Belgium, Italy and Spain, but “it rebounded strongly by 8 per cent in the second half.”

The company added that “sustained double-digit sales growth in Eastern Europe, particularly in Poland, partly compensated for the slowdown in Western Europe.”

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