Barry Callebaut is a famous Swiss company that makes chocolate for popular snacks like KitKats and Magnum ice creams. It has become apparent (clear) that the business is having a difficult time. Recently, the price of cocoa—the main ingredient in chocolate—has dropped very quickly. This caused the company’s shares (units of ownership in a business) to fall in value by more than 15 per cent.
The company frequently buys cocoa many months before they actually need it to make chocolate. However, because the price of cocoa has suddenly collapsed, they are now stuck with expensive ingredients while selling their finished chocolate for less money. This is a big challenge for the new boss, who is determined to help the company grow again and regain the trust of the community of investors.
Why is this Happening?
There are several reasons for these struggles. Conflicts in the Middle East have caused supply disruptions (problems moving goods from one place to another). Additionally, a factory in Canada had to close for a short time, which meant less chocolate was made. Even though cocoa prices are lower now, the chocolate in our local shops is still quite expensive, so many families are choosing to buy fewer sweets than before.
Despite these problems, Barry Callebaut believes things will improve. They expect to sell more chocolate later this year as prices in the shops eventually start to come down. This should be a sufficient (enough) change to help the business recover.
Fast Facts
- Barry Callebaut is the world’s largest processor of chocolate.
- Cocoa prices have fallen by more than half in recent months.
- The company provides chocolate for major brands like Nestlé.
- The company’s head office is in Zurich, Switzerland.
