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16 December 2012 | Adam Leach
The world’s largest chocolate manufacturer, Barry Callebaut, has bought Asia’s largest cocoa processor in order to ensure security of supply while also boosting its profile in key emerging markets.
The Swiss company, which makes a range of chocolate products and fillings for leading brands such as Nestlé, has agreed to buy the cocoa ingredients division of Petra Foods, which is currently the largest cocoa processor in Asia. The deal makes the company the biggest global player in both the chocolate manufacturing and cocoa processing sectors. The acquisition means it will be able to use a higher proportion of its own supplies and buy less from third parties, while also adding value to its services to customers.
Juergen Steinemann, chief executive officer at Barry Callebaut, said in a statement: “A stronger integrated position in sustainable cocoa sourcing and processing is important to keep growing our chocolate business over-proportionally, especially in emerging markets. The deal also allows us to become a strategic supplier of specialty cocoa powders and meet the growing integrated value chain requirements of our customers and partners.”
The acquisition also fits with the company’s strategic priority to diversify the locations it sources its cocoa from and reduce its reliance on West Africa, where it currently sources the majority of its supplies.
Provided the deal gains approval from regulators, the company expects to make significant operational efficiency savings. The statement announcing the deal forecast the savings to be in the range of CHF30 million (£20.15 million) to CHF 35 million (£23.51 million) over four years through enhancing the purchasing platform and optimising product flows and overhead costs.
Achieving these savings and integrating the operations of the two companies is estimated to cost CHF10 million (£6.72 million) to CHF15 million (£10.08 million) over two years, with an additional CHF10 million in transaction costs being spent in the first year.