Switzerland's Barry Callebaut group has made no secret of its desire to move into the added-value segment of the confectionery market, reducing its reliance on the volatile commodity segment through a number of acquisitions. And a burgeoning own label business is the driving force behind a newly streamlined company offering 'Centres of Excellence' at every stage of the confectionery chain.
Barry Callebaut already operates as the 'preferred partner' for a number of companies, but until now has focused solely on offering chocolate and cocoa ingredients to the industrial and artisanal sectors. But its own move into the added-value segment means that it can now extend this 'preferred partner' status to finished food producers and retailers - in turn boosting its own revenue possibilities.
The new strategy will involve some restructuring, with Barry Callebaut's 30 or so production facilities around the world integrated into a centrally managed unit supplying all of the company's business streams, with each factory becoming a 'Centre of Excellence' devoted to the product or products to which it is most suited.
This, the company claims, will result in more specific expertise, longer production runs and optimised stock and capacity management.
The first change under this new system will come at the Stollwerck subsidiary in Germany, which is planning to close its Cologne factory at the end of March 2005, transferring production to other German sites, primarily the more modern Norderstedt facility near Hamburg. Norderstedt offers a production capacity of around 30,000 tonnes compared to 7,000 tonnes in Cologne, and the move will allow Stollwerck to consolidate praline production in Germany at one dedicated factory.
Germany will act as the role model for the company's new strategy, partly because of the importance of Stollwerck there but mostly because the company sees the German retail model as the one most likely to succeed on a pan-European level.
While the German market's dependence on discount chains such as Lidl and Aldi would make it a tough place to do business for branded chocolate suppliers, for suppliers of quality own label products such as Barry Callebaut it offers a major advantage.
"We have reason to believe that the situation in Germany with a still weak domestic economy, strong growth of customer label products and increased price pressure on suppliers, will persist," said Barry Callebaut's CEO Patrick De Maeseneire.
"Furthermore, the situation in Germany might soon become manifest in other markets as well because the large retailers are expanding rapidly and consumers everywhere are showing a growing interest for quality at the lowest price."
He continued: "We are determined to tap into the strong market growth driven by the worldwide demand of the big retailers for customer labels, and we also want to benefit from the demand of the big branded consumer goods companies for moulding and packaging."