Barry Callebaut leans to emerging markets

Barry Callebaut leans to emerging markets

Barry Callebaut expects emerging markets to increasingly contribute a greater proportion of group sales, driven by M&A and organic growth.

The company today (16 January) booked an 8.3% increase in first-quarter sales volumes, driven by double-digit gains in the Americas and Asia-Pacific.

Barry Callebaut spokesperson Raphael Wermuth said the business-to-business chocolate maker expects emerging markets to make up a greater proportion of the group's total sales going forward, as expansion in Asia Pacific and Latin America offsets sluggishness in developed markets.

Wermuth said this trend is accelerating due to the group's M&A strategy - including the recent purchase of the cocoa business of Petra Foods.

"Emerging markets make now around 20-25% of total sales. With this announced acquisition of Petra it will be boosted to more than 30-31%. This figure will also grow in terms of our organic growth, we are already growing fastly now in emerging markets. This proportion versus developed markets will increase."

While Barry Callebaut is currently focused on closing the Petra deal and integrating the business, Wermuth indicated the group has not ruled out further M&A in the near-term.

"We are always looking for potential M&A possibilities. However, for us now it is the first priority to actually, after closing this deal, integrate Petra into the Barry Callebaut family. Of course if there are attractive acquisition opportunities - in the gourmet sector for example, another area that we want to further grow - then we will certainly have a look at these."

While Barry Callebaut saw strong sales volumes gains, the group reported a slight dip in first-quarter sales value, which fell 1.4% in local currencies. However, Wermuth highlighted, this is the consequence of the group's "cost plus" model that factors in commodity prices.

"For 80% of our business, it is run on a cost plus model. That means when contracting the business with our customers we do this at current market prices. There is a time-lag inbetween when a business is contracted and when it becomes sales revenue relevant. That means, compared to last year, raw material prices were at a much lower level this year when we contracted the business."

In the near term, Wermuth revealed the Swiss firm does not anticipate any significant movement in cocoa prices.

"We expect that the cocoa prices will continue to trend within this range of GBP1400 - 1600 this year. Looking further ahead, so speaking longer term, we expect that the prices might become more volatile."

The group reiterated its mid-term sales volume guidance range of 6-8%.