But the Swiss pod-to-pallet producer of chocolate and cocoa products, in its full year results for 2010/11, claims to have again outpaced rivals with a jump in sales volumes of 7.2% and the group is confident it can meet its goal of a 6-8% sales volume target over the mid-term.
Sales revenue overall for the firm was up 13.3% at CHF4.5bn.
Eastern trumps Western European markets
Emerging markets delivered for the Zurich-based company at double-digit growth rates - the chocolate confectionery market in Asia-Pacific grew by 5.9% in total.
But results were not as rosy in Western Europe for Barry Callebaut. It revealed that the chocolate confectionery market there, after a promising start, was ‘slightly negative’ in terms of volume growth at -0.3%.
However, Eastern Europe grew rapidly - at 7%, with the food manufacturer product side of the Swiss group’s divisions informing this buoyant performance in that region, notes Barry Callebaut.
The sale of its European consumer confectionery business Stollwerck, finalized in September 2011, is flagged up again as an opportunity for the Swiss group to focus on business-to-business and improve margins in Western Europe in the coming year.
Latin America outshone the US market for the Zurich supplier. While the US grew by 2.7%, Brazil did so at a substantially greater rate - 12.8%.
Higher average cocoa bean and powder prices positively influenced sales revenue for the global sourcing and cocoa division of Barry Callebaut, which came in at CHF 1,1bn, up 26.5% in local currencies. The supplier notes strong demand for cocoa powder - mostly stimulated by high demand from the bakery, beverages and ice cream industries.
And the company commented that it saw a favorable combined cocoa ratio over 2010/2011.
Following the sharp hike in cocoa prices due to the conflict in the Ivory Coast and high volatility in the commodity earlier on in the year, the crisis came to an end in early May, and cocoa prices drifted downwards. The Swiss group noted than a larger-than-expected cocoa crop and a reduction in financial investors' long positions also guided prices lower.
Supply deficit forecast
But, Barry Callebaut said that despite the recent bumper crop of 2010/11, it sees significant challenges ahead in securing sufficient supplies of high quality, responsibly grown cocoa to meet future chocolate demand.
A spokesperson for the Swiss group told FoodNavigator.com: “We see a burgeoning demand for cocoa products but are increasingly concerned that projected yields will not be able to meet that demand with, potentially, a supply deficit in the pipeline.
In this regard, and on the basis that our customers are increasingly driving home the need for responsible sourcing, we are accelerating our sustainable cocoa initiatives - QPP and Biolands - to scale up certified cocoa volumes."
The Ivory Coast is the initial focus of such efforts, added the spokesperson.