Falling cocoa prices haven’t helped Barry Callebaut yet

ZURICH, SWITZERLAND — Barry Callebaut said a decline in volume sales for cocoa due to supply disruption — particularly in North America — and a competitive overcapacity market due to the rapid reduction in cocoa prices during the past six months, has led to a drop in the company’s overall revenue.

“In the first half of our fiscal year, cocoa bean prices decreased, which is encouraging for future chocolate market momentum and supported strong free cash flow generation,” said Hein Schumacher, chief executive officer of Barry Callebaut Group. “Yet the unique speed of the market decrease combined with a competitive overcapacity market, volume declines and supply disruption impacted EBIT performance and adjusted our profitability outlook for the year as we prioritize restoring volume and leading the market back to growth.”

Peter Vanneste, chief financial officer at Barry Callebaut, added that cocoa bean prices “have decreased very rapidly, falling by 53% in just 8 weeks in January and February, and closing at £2,057 ($2,783) at the end of February.”

“In the short term, given that this is a demand-driven surplus, we expect bean prices to remain in the £2,000 to £3,000 range ($2,706 to $4,059),” he said. “Over the medium term, depending on supply and demand dynamics, we believe prices could move back into the £3,000 to £5,000 ($4,059 to $6,766) range.”

For its fiscal half-year ending Feb. 28, 2026, Barry Callebaut saw net profit of 89.1 million Swiss francs ($114.5 million) compared with 30.5 million Swiss francs in the prior year period. The company attributed the increase to lower finance costs and lower income tax expenses during the six-month timeframe. Basic earnings per share also rose to 16.30 Swiss francs ($21), from 5.85 Swiss francs a year ago.

Sales volume decreased by nearly 7% to 1,010,247 tonnes from 1,085,048 tonnes in the same period a year ago, while sales revenue fell 7% to 6.8 billion Swiss francs ($8.7 billion) from 7.3 billion Swiss francs in the first six months of fiscal 2025.  

Global chocolate volumes fell by 5% to 826,926 tonnes from 871,215 tonnes a year ago, and global cocoa volumes declined 14% to 183,321 tonnes from 213,833 tonnes during the prior-year period.

Innovation ahead

Volume development in Barry Callebaut’s Food Manufacturers segment dropped 5% during this time as well, which the company said was impacted by negative market dynamics as customers adapted behaviors in the context of lower demand, as well as supply disruption in North America — the company’s largest market — where volume fell 13%, the steepest decline among all the company’s global regions.

“We had operational incidents in North America in the Saint-Hyacinthe (Quebec, Canada) factory, resulting in some volume losses and higher operating costs,” Vanneste said. “Importantly though, North America saw recent months improvements as the business is rebuilding inventories and increasing customer orders.”

Vanneste said the cocoa market is stabilizing, and with that, Barry Callebaut’s food manufacturing customers are showing signs of innovating again after pulling back when cocoa prices were at their most volatile during the past year.

Barry Callebaut anticipates investment and innovation this year from food manufacturers as the cocoa market stabilizes further.   

| Photo: ©EVGENIY – STOCK.ADOBE.COM

“At the end of February, our futures booking portfolio was much higher than at the same time last year when cocoa bean prices were spiking,” Vanneste said. “At the same time, our customers have priced through to their end consumer. As a result, consumer pricing and the rate of end-consumer volume declines have started to stabilize.

“We’re now seeing our customers gradually shift their focus back to category investment to stimulate growth. I’ll just quote a few examples. In North America, Ferrero launched their ‘Go All In’ promotion from April 1, backed by a $100 million investment. It marks their first portfolio-wide campaign and largest marketing commitment in the company’s history. Another example is Hershey, who is boosting media investment by double-digit this year with media campaigns for Reese’s and Hershey’s, the first launches of this nature in eight years.”

Focus for Growth program

Barry Callebaut is ending its BC Next Level program, which was launched in 2023 to improve customer service and efficiencies across the company. While BC Next Level did deliver savings of around $150 million, Schumacher said the savings “were more than offset by the impact of volume declines, higher operating costs, particularly from the cocoa market and supply disruption, as well as from a more competitive environment.”

“The combined effect was an organization that did become overstretched and quite internally focused, and with too many quality incidents, the business also began to lose market share,” he said. “As a result, we find ourselves in a position today with clear improvement areas that need to be addressed.”

Schumacher previewed the company’s next program, called Focus for Growth, which Barry Callebaut will detail further at a conference in June. Focus for Growth is built around three pillars:

• Commercial — identifying distinct growth opportunities and prioritizing key markets and segments;
• Operational — restoring service levels and enhancing core processes and data visibility while aligning manufacturing growth capacity with evolving customer needs;
• Organizational — moving to a smaller leadership team, and empowering regional rather than centralized decision making.

“I had a team of 20, and we’ve reduced it to 12 members,” Schumacher said. “This creates a smaller, more agile, and more importantly, a more commercially focused leadership team in the company, which will enhance the speed of decision making that we need. We’re not reinventing our strategy, as you’ve seen. What is different is the level of focus, the level of energy, and depth, supported by clear choices and strong resource prioritization.”

Barry Callebaut’s new Focus for Growth program includes aligning its manufacturing growth capacity with evolving customer needs, like chocolate inclusions, fillings and coatings for desserts.

| Photo: ©MARKOBE – STOCK.ADOBE.COM

Second-half outlook

Based on the company’s fiscal first-half results, Barry Callebaut’s volume is now forecast to decrease between 1% and 3%, with a return to positive growth in the second half. The company also is keeping an eye on the situation in the Middle East and how that might affect its business moving forward.

“The primary impact for us is on the supply chain side,” Vanneste said. “It includes shipping disruptions, increased transit times resulting from port closures or limited container availability. There’s a sharp increase in energy prices. In some markets, fuel rationing has been introduced, combined with higher freight and insurance costs, and all of that is adding complexity and costs across our supply chain.”