Barry Callebaut chief innovation officer Hans Vriens

Barry Callebaut chief innovation officer Hans Vriens

As the world's largest business-to-business cocoa and chocolate manufacturer, Barry Callebaut is at the forefront of innovation in the sector. In this month's just-food interview, R&D chief Hans Vriens spoke to Dean Best on the future of the chocolate market.

Meeting the chief innovation officer at Barry Callebaut, the world's largest chocolate manufacturer, evokes visions of Willy Wonka, the eccentric chocolatier in Roald Dahl's Charlie and the Chocolate Factory.

Hans Vriens, the 46-year-old Dutchman that heads up Barry Callebaut's research and development, has an impish smile and a passion for chocolate but, after 30 minutes with him at ISM, the international confectionery trade show, it is clear that beneath the warm personality, there is a man on top of all the major trends in the industry and the challenges affecting the sector.

"I'm a bad guy to ask as I'm always at this booth. I try to get out," Vriens replies when just-food asks him what new products have caught his eye at ISM. However, he quickly adds: "It would be really embarrassing if I was to walk around here and find an innovation that I didn't know. Many people around here are our customers and they have heard the story from me three years ago and that's what they're introducing now. If I find something here that I've never seen before, I have an issue."

Vriens joined Barry Callebaut, the B2B chocolate and cocoa products manufacturer that supplies companies like Nestle, Kraft Foods and Hershey, in 2005. He had spent four years running his own company that invested in developing new consumer brands and his career involves stints at FMCG giants like Red Bull, Procter & Gamble and Mars Inc.

The position of chief innovation officer was a new role for Barry Callebaut, which, under the leadership of then CEO Patrick de Maeseneire was implementing a strategy based on three "pillars" - geographic expansion, what it called "cost leadership" and innovation. Under de Maeseniere, who left in 2009, Barry Callebaut grew to what chairman Andreas Jacobs once called the "uncontested world market leader for premium cocoa and chocolate products".

Sales and profits have continued to increase under current chief executive Juergen Steinemann (if, looking at the results for Barry Callebaut's last financial year, which ran until the end of August, the contribution of its consumer business in Europe, which it sold in June).

Despite weak consumer confidence, particularly in the West, volatile raw material prices and volumes below its mid-term targets in the first quarter of its new financial year, Barry Callebaut believes that it will this year again achieve its forecast of an average 6-8% annual increase in volumes and EBIT between 2009/10 and 2012/13.

For Vriens, the cost of raw materials is a critical factor in developing new products. "Cocoa costs will double in the next five to seven years. There is simply not enough for demand," he says. "People are doing lots of work in terms of making products cheaper. You find here [at ISM] a whole range of new fillings; moving into powders that replace current powders, moving into recipe optimisation, flexible recipes, changing milk powder into whey powder."

Although consumer confidence may be in the doldrums in many markets, Vriens claims demand for premium chocolate will grow "significantly", which will also dictate the type of products Barry Callebaut is asked to develop.

"It won't grow at 2-3%, which is the usual growth in chocolate, it will grow 15-20%," he says. "That's where the growth really is. It's not so much that people will ask more money for a 100g tablet. That's not really the game. The game is in everybody trying to make smaller portions that are much more complicated to make. Instead of having one chocolate, you'll have a praline with two couvertures and one filling, two inclusions and a decoration. You can imagine a portion like this will cost as much as a 100g tablet. Yes, it is a premium item but the consumer doesn't see it that way. They want to have indulgence, which they enjoy more and they are happy to pay. Of the top 100 customers, roughly half of them are working on these type of products. I get to see all these pipelines, it's fairly easy to predict."

Of course, indulgence is only one trend furrowing brows in research and development departments at confectioners around the world. Another key issue is health. There is the pull factor of consumers wanting healthier products and the chocolate sector is not immune to that. However, there is also the push factor of regulatory pressure.

Vriens points to the fat taxes either being introduced or considered in a number of countries. He labels such moves as "populist" and then "nonsense", questioning how a fat tax can be levied on a product that, by law, must contain a certain amount of fat to be called chocolate. The key to tackling obesity, he insists, lies with individuals. "You can't make food responsible for people getting fat. It's net calorie intake that makes you fat. If you don't get off your butt and move a little, eat whatever you like but you will get fat. The balance needs to be there," he says.

However, he concedes that confectioners must react to the regulatory climate. "There is increased regulatory pressure. What we need to do - and we can simply put our heads in our sand and ignore it and say 'eating chocolate is not related to getting obese' and it isn't, factually it isn't - but we would be stupid not to do something about it," he says. "Here, you'll find stevia chocolate in four different concepts, fat-reduced chocolate and you'll find rebalanced chocolate (there we ask a customer: 'Give us your chocolate and your application and we'll give you your chocolate back with 30% less calories and you won't even notice.') We do this work for more than 200 customers in Europe at the moment. There's a real trend."

In the opening weeks of 2012 alone, Barry Callebaut has signed supply deals with Unilever to supply chocolate and cocoa for its ice cream and with Mexican bakery giant Grupo Bimbo. As the Swiss chocolate maker continues to expand its client base, Vriens workload will increase. But his exuberance for chocolate is unlikely to sour.