World’s Largest Chocolate Supplier Faces Challenges Amid Rising Prices

When people think of chocolate, brands like Hershey, Nestlé, or Mars come to mind. But much of the chocolate in these brands comes from a lesser known Swiss company called Barry Callebaut AG. Based in Zurich, the company processes over 20% of the world’s cocoa and supplies chocolate ingredients like cocoa butter, powders, and ganache to both big corporations and small dessert makers.

After years of steady growth, Barry Callebaut is going through a tough time. Its shares have nearly halved over the past two years, due to rising cocoa prices, higher borrowing costs, and leadership changes. Around a quarter of its stock is now held by investors betting the price will fall, making it Switzerland’s most heavily shorted stock. Despite this, CEO Peter Feld believes the company is facing temporary challenges rather than a crisis. He says modernizing the company’s processes is necessary to remain competitive.

Why Prices Soared
The chocolate maker struggled with multiple issues:

Last year’s cocoa shortage, caused by poor harvests in Ivory Coast and Ghana, sent futures near $13,000 per ton, four times the long-term average.
In 2022, a major Belgian plant had to shut down, costing the company about CHF 80 million and slowing production.
COVID-19 reduced global chocolate consumption.
Barry Callebaut’s pricing model, which passes raw material costs directly to customers, was challenged when cocoa prices rose faster than retailers could adjust. As a result, the company raised prices by 63%, leading some clients to cut orders or move production in house.

The company also saw major leadership changes. Peter Boone, the previous CEO, stepped down after disappointing results. Feld, previously an executive at Jacobs Holding, took over and launched the “BC Next Level” plan, aiming to save CHF 250 million through job cuts, factory closures, and trimming product lines. To strengthen the team, Feld brought in executives with experience in private equity and consumer goods, though some employees worry about losing institutional knowledge.

Challenges in the Market
Barry Callebaut’s position in the supply chain sitting between cocoa farmers and chocolate brands makes it more vulnerable than competitors. While some rivals like Lindt have strong consumer pull and could absorb price increases, Barry Callebaut relies mainly on corporate clients. Competitors like Cargill and Olam have taken advantage of this by offering better prices or alternative products.

Despite these setbacks, Feld remains confident. He is introducing chocolate with less cocoa but the same taste, improving supply chain agility, and keeping the cost plus model while adapting it for today’s volatile market. The company’s stock has recovered in recent months, showing that investors are slowly regaining confidence. Feld emphasizes that the company is still young in terms of transformation and capable of long term growth.

Barry Callebaut produces over two million tons of chocolate annually. Any disruption in its operations can affect chocolate prices and supply worldwide. How the company navigates this challenging period will have a significant impact on the global chocolate industry for years to come.