Barry Callebaut Sinks as Cocoa Costs Drag on Chocolate Sales

Dried cocoa beans. (Ferley Ospina/Bloomberg)

(Bloomberg) -- Barry Callebaut AG’s shares plunged the most in 15 years as investors doubted whether chocolate demand would withstand sky-high cocoa prices.

The world’s largest bulk chocolate maker dropped as much as 12% on Thursday, the sharpest decline since January 2009, after reporting a slight decline in sales volume for the quarter through May. 

Cocoa prices have more than doubled this year following weak harvests in the main producing countries, leaving investors fearing whether the higher input expenses would destroy sales of chocolate. Meanwhile, Barry Callebaut’s US rival, Mondelez International Inc, said it will look to keep chocolate affordable in anticipation of lower costs next year.

Vontobel analyst Jean-Philippe Bertschy said that Barry Callebaut “continues to face significant exogenous, unprecedented market headwinds,” despite boasting a loyal customer base and encouraging growth rates. He expected cocoa prices to remain high this year.

Barry Callebaut said Thursday the prices it pays for cocoa beans have risen by 131% on average from a year ago. So far, the company has been able to pass the increases onto the majority of its customers, seeing Swiss franc revenue grow by 16.3%.

Meanwhile, the implementation of a restructuring plan that was announced last year and included savings across the business was “well under way,” Chief Financial Officer Peter Vanneste said in a statement.


--With assistance from Allegra Catelli.

(Updates share prices)

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