This case won the First Prize in the 2018 oikos Case Writing Competition (Sustainable Finance track), organized by oikos International, Switzerland

Can Barry Callebaut Attract Sustainable Investment with its 'Forever Chocolate' Strategy?

Can Barry Callebaut Attract Sustainable Investment with its 'Forever Chocolate' Strategy?
Case Code: FINC135
Case Length: 22 Pages
Period: 2016-2018
Pub Date: 2018
Teaching Note: Available
Price: Rs.500
Organization: Barry Callebaut
Industry: Chocolate
Countries: Global
Themes: International Marketing, International Marketing Mix, Sustainable Finance
Can Barry Callebaut Attract Sustainable Investment with its 'Forever Chocolate' Strategy?
Abstract Case Intro 1 Case Intro 2 Excerpts


A Leader in Cocoa Sustainability

Callebaut claimed that cocoa sustainability was firmly embedded in its growth strategy. By integrating the cocoa industry and processing nearly one-quarter of the world's cocoa beans into chocolates products and flavoring for other retailers, Callebaut took on the responsibility of becoming a leader in sustainable cocoa. According to Seema Kedia (Kedia), Senior Manager, Marketing and Sustainability for Barry Callebaut USA, "Barry Callebaut is an acknowledged leader in sustainability with a number of both company and partnered programs." In September 2016, Callebaut joined the SXI Switzerland Sustainability 25 index basket, which put together the 25 most sustainable companies listed in Switzerland. According to Antoine de Saint-Affrique (Saint-Affrique), CEO of Barry Callebaut, "The listing of Barry Callebaut in the SXI 25 index reflects the long standing commitment of Barry Callebaut in developing a fully sustainable chocolate value chain." .....

Sustainable Farming

The Swiss chocolate giant felt that the future of the industry depended on its ability to make cocoa farming more viable and attractive to farmers. According to Juergen Steinemann (Steinemann), former CEO of Callebaut, "Demand for chocolate and cocoa continues to grow, yet production remains flat. And without more cocoa, there cannot be more chocolate. To safeguard the future of our business, we must make cocoa farming viable and attractive to farmers today and tomorrow." Callebaut, therefore, focused on farmer productivity, one of the key pillars of its sustainable cocoa farming. ..

Sustainable Cocoa Products

Callebaut introduced the HORIZONS range of sustainable cocoa and chocolate products and it charged a premium for the products used to support its Cocoa Horizons Foundation. Saint-Affrique commented: "I am excited about the development of Horizons cocoa and chocolate products, with the focus on supporting our customers on their sustainability journey. We also expect to attract new customers for these sustainable products, thereby scaling impact and driving change in cocoa sustainability globally."...

Strategic Partnership

Callebaut went in for a digital solution that could offer complete supply chain traceability in order to implement cocoa farming best practices. In June 2016, Callebaut collaborated with German software group SAP SE to use its enterprise software SAP to help enable sustainable cocoa farming. In July 2016, Callebaut announced a strategic partnership with Tony’s Chocolonely to produce chocolate from fully traceable cocoa. By tracking cocoa beans from every step of the production process, the company contributed toward the United Nations’ Sustainable Development Goals (SDG), including reducing poverty and providing farmers decent work and the ability to grow economically...

Environmental Sustainability

In its operations, Callebaut focused on five areas that had significant impact on the environment and were most relevant to its business: carbon emissions, energy consumption, water consumption, waste generation, and transport. Callebaut published relevant environmental information in its annual report, the externally validated 'Chocolate Sustainability Report' as per the GRI G3.1 Guidelines...

Cocoa Sustainability: Emerging Issues

Despite Callebaut’s sustainability inventiveness for years, it admitted that only 23% of its cocoa supplies were sourced from sustainability programs in 2015-16, though it was up 17% from the previous year. The company warned that “The global cocoa sector may suffer a 1 million metric ton shortfall by 2020 because of increasing economic and environmental pressures on cocoa farms around the world." ..

Forever Chocolate Strategy

Looking at the social and productivity challenges of cocoa farmers in West Africa, serious questions were raised on whether there would be enough cocoa in 20 years to satisfy the demand for chocolate. Against this backdrop, Callebaut decided in November 2016 to confront these key sustainability challenges head on and commit to four bold targets in the chocolate supply chain under the umbrella of 'Forever Chocolate'. The Forever Chocolate strategy aimed to target 100% sustainable chocolate from niche to norm, by 2025...

Sustainable Investment

By committing to sustainability objectives and reporting on them, Callebaut not only positioned itself as a sustainable brand, but also ensured future availability of finance, one of its key resources for investment in the sector. Since its inception, the Cocoa Horizons Foundation had served as a platform for chocolate companies and other contributors to invest in sustainable cocoa. The Foundation worked through pooling resources and funds and putting them to the most effective use to scale impact and drive positive change in cocoa growing communities. ..

Financial Pressures

Though Callebaut occupied a unique position in the global cocoa and chocolate market, the company witnessed a declining net profit margin and lacked consistency in sustainable growth over the years from 2011 to 2017. During the period, the company’s erratic growth cast a shadow on its business success and financial sustainability. Industry experts opined that Callebaut's operations were exposed to liquidity risks and foreign currency and interest rate risks. The volatility of raw material prices could affect the company’s working capital requirements, resulting in liquidity issues, they observed...

The Road Ahead

Callebaut projected a comprehensive growth plan to target emerging markets and achieve profitability by the fiscal year 2017–18. To successfully execute its growth plan, Saint-Affrique cited an improving environment involving acquisitions, a focus on gourmet products, and technological diversifications as contributing factors. Guided by its 'Smart Growth' agenda, Callebaut focused on generating sustainable long-term value for its shareholders and all other stakeholders....


Exhibit I: Barry Callebaut's Chocolate Value Chain
Exhibit II: Unique Position of Barry Callebaut in Chocolate and Cocoa Market
Exhibit III: Income Statement of Barry Callebaut from 2011 to 2017
Exhibit IV: Balance Sheet of Barry Callebaut from 2011 to 2017
Exhibit V: Key Annual Financial Ratios of Barry Callebaut from FY 2010/11 to FY 2016/17
Exhibit VI: Top 25 Companies for the Switzerland Sustainability 25 Index®
Exhibit VII: Barry Callebaut's Four-pillar Long-term Growth Strategy
Exhibit VIII: Global Grinding of Cocoa Beans (2013-2016),* in Thousand Tonnes
Exhibit IX: Barry Callebaut's Sustainable Chocolate Norm
Exhibit X: Barry Callebaut's Forever Chocolate Gaining Momentum
Exhibit XI: Liquidity-Debt Maturity Profile as of August 31, 2017 (in Millions of CHF)
Exhibit XII: Working Capital Management of Barry Callebaut vs. its Competitors (2011-2017)
Exhibit XIII: Cash Flow Statement of Barry Callebaut from 2011 to 2017(in Millions of CHF)
Exhibit XIV: Barry Callebaut's Business and Financial Risk Position in the S&P Global Risk Rating Matrix
Exhibit XV: Growth Targets of Barry Callebaut (in FY 2017/18)
Exhibit XVI: Barry Callebaut's Key Performance Indicator for Sustainable Cocoa

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