Outsourcing pushes up Barry Callebaut sales

By Laura Crowley

- Last updated on GMT

Related tags: Revenue, Barry callebaut, Asia

Barry Callebaut reported increased sales volume for the first
quarter of this fiscal year as a result of a mounting trend for
food manufacturers to outsource their chocolate needs.

On 30 November 2007, sales volumes had risen to 331,916 tonnes compared to 300,120 tonnes at the same point the previous year. This represents an increase of 10.6 per cent, which is more than three times the growth rate of the global chocolate market. According to Euromonitor International, the global chocolate confectionery market grew by 3.5 per cent between 2006 and 2007, and is valued at around CHF 90bn (€54bn). Sales revenue ​ Callebaut also experienced sales revenue growth, rising 21.9 per cent to CHF 1,419.4m (€886.2m), compared to CHF 1,164.7m (€727.2m) at the same point in 2006. This was related to the company's strategy of passing on higher raw material prices to customers and favourable exchange rate effects. The Food Manufacturers business unit contributed significantly to this increase due to outsourcing, with a 32.5 per cent increase to CHF 923.9m (€576.7m). However, the Gourmet & Specialties unit saw solid growth of 13.2 per cent to CHF 201.6m (€125.9m), which the company claimed was a result of a continuing rise is the demand for premium quality chocolate. "During this period, we have focused on geographic expansion into high-growth markets such asEastern EuropeandAsia,"​ said CEO Patrick De Maeseneire. "We opened two new factories inRussiaandChinaand acquired production capacity inJapanfrom Morinaga. InNorth America, we acquired a cocoa factory nearPhiladelphiaand finalised the sale of the Brach's candy business. The construction of our new factory inMexicois well underway." ​ Callebaut achieved sales revenue growth worldwide, while increases in sales volume were specific to Europe and the Americas, with a decrease reported in Asia. Europe​Europe achieved sales volume growth of 11.5 per cent to 240,793 tonnes, driven by increased demand from industrial and artisanal customers. Sales revenue rose 24.4 per cent to CHF 1,099.7m (€686.5m), lifted by strong demands for premium chocolate products and passing on high raw material costs. Barry Callebaut has aimed to meet the demands by opening a new factory in Chekhov near Moscow last September. Deliveries to Nestle, which began in the second half of 2007, have added to increased outsourcing volumes. Americas​Sales volumes in the Americas increased 12.9 per cent to 72,623 tonnes, as increasing numbers of North American confectionery companies outsourced chocolate production. Meanwhile, sales revenue rose 16.4 per cent to CHF 236.6m (€147.8m) Last July, the company started to supply Hershey as part of a long-term outsourcing agreement. It also acquired a cocoa factory near Philadelphia. Asia​Callebaut's volume of sales in Asia and the rest of the world actually decreased 6.6 per cent, to total 18,500 tonnes. The company said growth was affected by the sale of the Chocosen subsidiary in Senegal last year and constrained by production capacity limitations in Asia. Sales revenue in the region grew 7.5 per cent to CHF 83.1 million, which compensated for poor performance at the Consumer Products Africa division. A new factory near Shanghai was inaugurated in January 2008 with the intention of again increasing its sales volumes.

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