Barry Callebaut Grapples with Soaring Cocoa Costs

Barry Callebaut, the leading chocolate supplier globally, reported a significant profit decline due to escalating cocoa prices, with net earnings dropping by two-thirds to 76.8 million Swiss francs ($84.9 million) in the first half of its fiscal year ending February. Despite this, the company experienced a revenue increase of 19 percent in local currency and 11 percent in Swiss francs, attributing this to the soaring cost of cocoa, while volume sales saw a marginal rise of 0.7 percent, reaching 1.1 million tonnes.

The chocolate industry has been under pressure with New York cocoa futures reaching a record high of nearly $10,500 per ton, marking a 140 percent increase since the year’s beginning, following a 60 percent hike the previous year due to supply concerns.

Barry Callebaut’s statement highlighted the broader impact of high inflation on food manufacturers, noting a softening consumer demand. However, the firm managed a 1.0 percent increase in chocolate sales volumes, outperforming the global confectionery market, which shrank by 2.0 percent as consumers turned to more affordable private label products.

The company experienced a slight decline of 0.7 percent in cocoa sales volume, reflecting the market’s reaction to the price surge. CEO Peter Feld described the financial outcomes as solid amidst the challenging market conditions, but expressed caution over the recent dramatic price increases and their potential effects on customers and supply partners.

Barry Callebaut’s financial performance underscores the broader challenges facing the chocolate industry amid fluctuating global cocoa prices, highlighting the need for strategic responses to navigate the volatile market conditions.