World leader in cocoa-based products, the Klaus Jacobs group is about to open its first factory near Moscow. The company is targeting a high-class clientele.
The Barry Callebaut firm is on the verge of opening its first production site on Russian territory.
This world leader in cocoa-based products started construction of an ultra-modern factory in Chekhov, 60 km out of Moscow, last April. It should come on line this year. It represents a CHF 25 million investment and will employ some 70 people.
With an annual turnover of above CHF 4 billion in its last quarter, Barry Callebaut sits firmly in the upper echelons, mastering all the transformation processes of chocolate. The company, set up by Klaus Jacobs (see sidebar) is in the cocoa bean trade. It sells basic cocoa products for further manufacture to other multinationals and artisans alike. The group also offers services in product development, marketing and training. Barry Callebaut is well established in 25 countries, with a total of 8,000 staff, and runs some 30 odd factories worldwide.
Annual world growth in chocolate products is estimated at one or two percent. “Barry Callebaut aims to grow at twice that rate,” confides Gaby Tschofen, spokesperson for the company. Western markets are already well plied. To reach our target, we must break into emerging markets to benefit from their boom.” Indeed, according to a press release by Patrick de Maeseneire, CEO of Barry Callebaut: “In all of Europe, Russia represents the biggest potential market”. The international markets analyst, Euromonitor, predicts that in 2009, Russia’s chocolate consumption will outstrip the U.K.’s.
SALES MULTIPLIED BY FOUR IN FIVE YEARS Barry Callebaut is at present Russia’s number one industrial chocolate provider. Supplies come from its Polish plant. Sales of basic cocoa commodities to large firms, as well as to independents and pastry shops, nearly quadrupled between 2000 and 2005.
“In so far as Barry Callebaut’s major clients – such as Nestlé, Danone and Canterbury biscuits – are already established there, it made sense for the group to open a factory,” said James Amoroso, financial analyst at Helvea. “The firm is simply following its customers.” So the Russian market should therefore be instantly rewarding to Barry Callebaut as the client-base is already established.
“At a strategic level, Barry Callebaut always puts prudence first,” said Amoroso. “Only once a product has an in does the group open a new production unit.” The fact remains, however, that Russia is still considered a risky market. “Of course it is,” Amoroso admits, “notably because of corruption and difficult legal framework, but it’s still a very promising market. Trade in grocery products shows double-digit growth. Per capita income is steadily increasing, and Russians appreciate sophisticated products, such as quality chocolates.”
A CONTROLLED RISK “To launch production in Russia, it is essential to cooperate with local partners in the same sector,” explained Thomas Saulnier from Swiss Private Bank LODH. “It’s also crucial to be on good terms with the local administration.” According to Gaby Tschofen, Barry Callebaut has those bases covered in Russia. “A Russian partner is building our factory in Chekhov,” he said. “We’re already quite familiar with the market thanks to our sales office already set up with Russian staff. If we’re going to set up there, it’s because we believe we have the risk factor under control.” In emerging markets elsewhere, Barry Callebaut has also invested CHF 20 million in a factory going up around Shanghai, which will employ around 100 people. “I think our sales will go up faster in Russia,” said Amoroso. “People there are already used to eating chocolate, whereas the Chinese are not.” Barry Callebaut is a company worth investing in, according to Amoroso. He estimates a 20% growth margin on its stocks. The analyst considers the company efficiently managed. “In comparison with its two main rivals, Cargill and ADM, two American groups, Barry Callebaut has the best worldwide production network. It also has a strong competitive edge because, as opposed to its rivals, all of its activities revolve around chocolate.”
Klaus Jacobs, Captain of Industry Founder and main shareholder of Barry Callebaut, Klaus Jacobs has left his mark on the Swiss economy these last 20 years. He comes from a line of German entrepreneurs from Bremen who made their fortune in coffee. He took over the family business in 1970, at just 34 years of age.
Three years later he decided to transfer its headquarters to Zurich. In 1982, the company merged with Interfood, the group that owns Toblerone, Suchard and Milka. The new firm was christened Jacobs Suchard and soon bought the Belgian brand Côte d’Or.
The businessman sold the group to American tobacco giant, Philip Morris in 1990 – a move that earned him nearly US $2 billion. Six years later, he created a new heavyweight in chocolate, Barry Callebaut. The Belgian chocolate producer, Callebaut, was already his. He had but to acquire the French firm Cacao Barry and merge the two.
At the same time, Jacobs also refashioned the part-time work sector. In 1992, he used his profits from the sale of Jacobs Suchard to buy the Swiss firm Adia, which he merged with the French employment firm Ecco in 1996.
The new company was called Adecco and became the world’s leading employment company. The sensible fusion then fell prey to power struggles between the old guard in Adia and Ecco. The conflict turned to Jacob’s advantage, however. At 70 years old, he took back the helm and in 2005 fused the post of Director General with that of Administrative Council President. He then gave control of operations to Dieter Schieff.
Klaus Jacobs comes across as a strong-headed leader of men. He is said to be genial in private but intractable in business. Father of six children, from two different marriages, he now dedicates a part of his fortune to philanthropy.
He is also fond of scouts and, as such, a munificent patron of the World Scout Foundation.
