Swiss confectioner Barry Callebaut this week closed the acquisition of Food Processing International's cocoa factory in Philadelphia, increasing its factory network and supply chain in North America.
The 100 per cent acquisition was announced in October as part of the confectioner's growth strategy and investment in cocoa processing equipment. It is focusing its attention here as it sees the early processing stage as vital in the taste and quality of the chocolate. "We are investing in cocoa operations because the taste and the quality of chocolate are already defined at this early processing stage," said CEO Patrick De Maeseneire. "We need a modern site for the production of semi-finished products such as cocoa liquor, cocoa butter and cocoa powder in the United States to keep up with the current and future expectations of our customers especially in the high-end quality segment, as well as our own internal needs." The company did not disclose the cost of the acquisition, but said that with further expansion, the total investment amount will be €37m ($51m). This expansion will include pressing, grinding and deodorising equipment to make cocoa butter, cocoa powder and cocoa liquor.
The cocoa factory in Eddystone currently has a capacity for cocoa liquor production of 25,000 metric tones per year. Barry Callebaut intends to double this capacity to 50,000 tonnes within the next two or three years to meet the growing demand for semi-finished products as well as to supply third-party customers. The company has a global presence with cocoa factories in France, Italy, Belgium, the UK, Ivory Coast, Ghana, Cameroon, Brazil, Canada and the US. The acquisition will further improve its factory footprint, providing sufficient processing facilities both close to its origin countries and to its customers in consuming countries. Barry Callebaut is present in 23 countries, getting its cocoa beans from areas stretching from Mexico, Ecuador and Brazil to Madagascar, Malaysia and Java. It operates 37 production facilities. As well as increasing its number of cocoa factories worldwide, Barry Callebaut has recently opened a chocolate factory near Moscow and will open a new factory in China at the start of 2008.
It has also recently announced plans to acquire production capacity in the highly attractive Japanese chocolate market from Morinaga, one of Japan's largest confectionery companies. This will comprise a long-term agreement and underscores Barry Callebaut's outsourcing and geographic expansion strategy. In July it signed a long-term supply agreement with Hershey, for it to provide 80,000 tonnes of chocolate per year. The deal came with production equipment and was said to propel it into the number one slot as industrial chocolate supplier in the region.
The company said that there is a trend towards manufacturers outsourcing their chocolate needs to specialised partners - and this is expected to accelerate as more integrated companies shift their focus towards sales and marketing and source from third parties.