Barry Callebaut Faces Temporary Challenges Despite Dominating Chocolate Market
Barry Callebaut, the world's largest bulk chocolate maker, faces temporary challenges, according to its CEO Peter Feld. Despite being Switzerland's most heavily shorted stock, with about a quarter of its free float currently shorted, the company remains a significant player in the global chocolate industry.
Founded in 1996 through the merger of Cacao Barry and Callebaut, Barry Callebaut supplies cocoa butter, powders, and ganache to a wide range of clients, from multinational corporations to boutique dessert makers. It processes at least 20% of global cocoa and sells over two million tons of chocolate annually, nearly double its closest competitor's market share.
The company's strategy of sourcing cocoa beans from top growers and selling them under long-term 'cost-plus' agreements has been successful for two decades. However, recent crises have exposed vulnerabilities, leading to disappointing results and a cut to its full-year volume growth outlook in 2023. This, along with soaring cocoa prices and higher financing costs, has caused its shares to nearly halve over the past two years.
Barry Callebaut's performance significantly impacts the global chocolate industry. Despite recent setbacks, including the exit of its then-chief executive Peter Boone, the company continues to be a dominant force. Its top shareholder, the Jacobs family, previously explored taking the company private, indicating confidence in its long-term prospects. While the company faces temporary turbulence, its fundamentals remain strong, and it continues to supply the world with chocolate.
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