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Cargill: industrial chocolate expands

15-Oct-2002

Wilbur Chocolate, a unit of agribusiness giant Cargill said on Monday that it has purchased rival Peter's Chocolate from Nestle USA, making it the top US supplier of chocolate to confectionery makers and bakers.

"This is the most noteworthy acquisition in our 118 year history," said Wilbur president William Shaughnessy.

 

"We are enthusiastic about bringing together two of the finest and oldest chocolate companies in the United States," he said in a statement, without disclosing financial details.

 

The sale of Peter's Chocolate business comes barely a month after food giant Nestle's widely reported interest in buying Hershey Foods. Hershey's controlling trust abruptly scrapped plans to sell the US chocolate maker amid political pressure.

 

But Nestle's decision to sell Peter's reflects its strategy to move out of the industrial-use chocolate market in favour of the more profitable finished, branded products segment.

 

"This (transaction) has nothing to do with Hershey," Nestle spokeswoman Tricia Bowles said.

 

"This confectionery section has been undergoing strategic evaluation of our entire portfolio of products.

 

"And the conclusion reached was that the focus in confectionery should be strictly devoted toward manufacturing and marketing of the retail brand rather than industrial chocolate ingredients," she added.

 

"One is business to business and the other is business to consumer," Bowles said, declining to disclose the sale price or Peter's market share in the industrial-use chocolate market.

 

An industry source said Nestle was exiting the market to focus on the $13-billion a year retail chocolate business.

 

"It's (industrial-use chocolate) not a customer retail brand, like Nestle's Crunch bar. They decided to focus on candy you and I like to eat. This (Peter's) was a distraction and they decided to get out," the source told Reuters.

 

Industry sources said Peter's was the leader in the industrial-use chocolate market, followed by Wilbur.

 

Cargill spokeswoman Sara Thurin Rollin said the Peter's acquisition will extend the marketing reach of Lititz, Pennsylvania-based Wilbur in North America.

 

She said Wilbur would begin to manufacture Peter's products at its own production lines within six months. After that period, Peter's production facilities would revert to Nestle.

 

"We just bought the Peter's Chocolate brand name as we already have the manufacturing facilities," she added.It was the second acquisition for Wilbur in four months.

 

In June, the company bought Omnisweet of Burlington, Ontario, a manufacturer of low-melt ice cream flakes, food coatings and other value-added food products.

 

The purchase also comes at a time when the price of cocoa, the raw material for chocolate, has hit 17-year highs amid concerns about cocoa output and quality in West Africa - concerns underscored by a month-long military rebellion in top cocoa producer Ivory Coast.

 

Clashes there have left hundreds dead, displaced tens of thousands and sharpened divisions between the Muslim north and the Christian and animist south of the country. Fears of turmoil spreading to other nearby impoverished producers like Ghana has sent cocoa buyers and users scrambling.

 

Cargill , the nation's largest privately-held company, like its Midwest competitor Archer Daniels Midland, is among the biggest traders of physical cocoa supplies.