Barry Callebaut Ag · SIX:BARN
Barry Callebaut — Investor Day (November 2023)
79 slides from Barry Callebaut's investor day presentation, Nov 1, 2023
Slide 1: Barry Callebaut
Barry Callebaut Setting course for sustainable profitable growth and higher cash generation 1 November 2023
Slide 2: Disclaimer
Disclaimer Certain statements in this presentation regarding the business of Barry Callebaut are of a forward-looking nature and are therefore based on management’s current assumptions about future developments. Such forward-looking statements are intended to be identified by words such as ‘believe,
Slide 3: Key messages
Key messages 1 Creating the world's best chocolate solutions 2 Leading with global scale, deep capabilities and high-quality relationships 3 Operating in attractive markets with significant runway for growth 4 Learning from recent missteps 5 Unlocking next phase of long-term growth and shareholder v
Slide 4: Providing chocolate ingredient solutions at scale
Providing chocolate ingredient solutions at scale Customers Food Artisans Global FMCGs Regional Accounts Chains / Products Service & other Cocoa products1 Liquid chocolate Solid chocolate Compound Specialty chocolate Decorations & Inclusions The World’s Best Chocolate Solutions 4 Note: Pictures show
Slide 5: Chocolate ingredients market provides significant growth potential
Chocolate ingredients market provides significant growth potential Rebounding growth outlook… …and long runway for expansion CHF 50B1 +1% Premiumization (value growth / mix) Today +3-4% volume growth Captive +1-1.5% Increased outsourcing (volume growth) ~16% value Competitors market Underlying deman
Slide 6: Partner of choice for global FMCGs due to scale and global presence
Partner of choice for global FMCGs due to scale and global presence Partner of choice to global FMCGs Unmatched footprint supporting their growth 3-4 x RMS with the Top 10 FMCGs1 Locations The World’s Best Chocolate Solutions 6 Source: Global consulting firm, Company data, Euromonitor 1) Relative ma
Slide 7: Leading across the global Gourmet market
Leading across the global Gourmet market Relative market share Market position by region 19% 2-3x #1 #1 RMS1 Global 8% 49% Gourmet Market #1 7% #2 4% 1% 3% 1% 3%3% 2% The World’s Best Chocolate Solutions 7 Source: Global consulting firm; Company data; Euromonitor Note: (1) Relative Market Share comp
Slide 8: Leading globally in cocoa – and chocolate
Leading globally in cocoa – and chocolate Relative market share Global footprint Barry Callebaut Cocoa factories 21% 1.3x 38% RMS1 Global Cocoa Grinding 16% 3% 3% 14% 5% 14 cocoa factories The World’s Best Chocolate Solutions 8 Source: Global consulting firm; Company data; Euromonitor Note: (1) Rela
Slide 9: Specialty solutions across all customer segments globally
Specialty solutions across all customer segments globally From specialty chocolate ... Free-from Religious Sustainability Nutrition Indulgence Dairy-free Kosher Traceable Added nutrients Ruby Nut-free Halal Sustainable Vegan Wholefruit Reduced / Origin 2nd Gen sugar-free Organic To inclusions and de
Slide 10: Recognizing and acting upon recent challenges
Recognizing and acting upon recent challenges While our commitment to serve customers has never wavered, we must also recognize some recent missteps: 1 • Wieze and other issues • Service levels • Internal complexity We did not respond fast enough to help our customers adapt to a 2 post-covid environ
Slide 11: Right assets to take significant future market share
Right assets to take significant future market share 1 Market leadership and global scale 4 Leading innovations Vertically integrated 2 Multi-channel, multi- segment resilience 5 cocoa – chocolate globally Recognized leader in 3 #1 partner to the leaders in chocolate 6 sustainability BC Next Level w
Slide 12: Delivering attractive, profitable growth
Delivering attractive, profitable growth Long term growth objective MSD+ to HSD1 LSD+ to MSD1 Volume growth EBIT growth Building towards a 10% EBIT margin ambition The World’s Best Chocolate Solutions 12 Note: (1) Low single-digit plus to mid single-digit volume growth and mid single-digit plus to h
Slide 13: Unlocking the full potential with BC Next Level
Unlocking the full potential with BC Next Level 25/26 24/25 • Delivering on long term growth objective1 23/24 • Back to growth and deliver on BC • Execute on BC Next Level 22/23 Next Level initiatives cost savings • Get Executive Leadership Team in place The World’s Best Chocolate Solutions 13 Note:
Slide 14: The chocolate ingredients market is growing
The chocolate ingredients market is growing The World’s Best Chocolate Solutions 14
Slide 15: Years of growing chocolate demand
UNDERLYING VOLUME GROWTH 50 years of growing chocolate demand 6,000 CAGR 1970-2020 ~2.5% 5,000 Cocoa grinding (kMT) 4,000 3,000 2,000 1,000 0 1970/71 1980/81 1990/91 2000/01 2010/11 2020/21 The World’s Best Chocolate Solutions 15 Source: ICCO
Slide 16: Market is getting back to growth
Market is getting back to growth … of the global outsourced chocolate ingredients Favorable market trends are driving growth market Growing global demand for chocolate Developing Chocolate in more More chocolate +1% Premiumization markets growth product categories content (value growth / mix) +3-4%
Slide 17: Underlying market growth supported by changing consumer behaviors
UNDERLYING VOLUME GROWTH Underlying market growth supported by changing consumer behaviors Share of consumers who snack Average number of snacks per Chocolate is increasingly the has increased1 day has also increased1 snack of choice2 +8ppts +6% +5ppts 78% 86% 3.1 3.3 56% 61% Chocolate is taking an
Slide 18: Chocolate increasingly an application in products
UNDERLYING VOLUME GROWTH AND OUTSOURCING SHARE Chocolate increasingly an application in products New product launches containing cocoa products (by category, in %) 2013 2023 Mondelez launches Cadbury Caramilk Wallaby in 2023 Sweet Biscuits 44% 50% +6ppts Cakes & pastries 29% 35% +6ppts Nestlé launch
Slide 19: Growing middle class fuels chocolate market in APAC
UNDERLYING VOLUME GROWTH Growing middle class fuels chocolate market in APAC Potential chocolate consumers1 Key chocolate growth drivers in APAC Growing middle class 0.8B Low but increasing chocolate consumption per 0.9B capita 0.8B 2.5B Variety of products containing chocolate Strategic growth prio
Slide 20: New entrants growing category value
OUTSOURCING SHARE AND VALUE GROWTH New entrants growing category value New brands have demonstrated …but also face strong growth trajectory at premium prices… several pain points Retail sales value (2018-23) Organic scale-up of manufacturing 1 capabilities and capacities is capital and time-intensiv
Slide 21: Chocolate is premiumizing
OUTSOURCING SHARE AND VALUE GROWTH Chocolate is premiumizing Specialty volumes are growing rapidly, Embraced by numerous customers illustrated by momentum for select products1 in product launches Mondelez launch of 0.9 +30% +15% Grenade Oreo in 2023 0.6 +11% p.a. Vegan Gluten free Plant-based KitKat
Slide 22: Sustainability is increasingly important for the growth of customers
OUTSOURCING SHARE AND VALUE GROWTH Sustainability is increasingly important for the growth of customers … …driving increased share of …and a higher share of 6 out of 10 sustainable cocoa production globally…2 product launches with an environmental claim3 consumers actively seek out sustainable choco
Slide 23: … and commands a price premium
VALUE GROWTH … and commands a price premium LEADING FMCGs NEW ENTRANTS PRIVATE LABEL Products with sustainability claims command up to 2-3x price premium over comparable alternatives1 The World’s Best Chocolate Solutions 23 Note: 1) Comparison vs. regular/private label chocolate unit price based on
Slide 24: Recap – market is getting back to growth
Recap – market is getting back to growth Premiumization +1% Growing global consumer demand (value growth / for chocolate mix) +3-4% volume growth Increased +1-1.5% outsourcing Increasing customer reliance on (volume growth) established chocolate suppliers Underlying +2-2.5% demand growth (volume gro
Slide 25: Long-term strategic growth priorities
Long-term strategic growth priorities The World’s Best Chocolate Solutions 25
Slide 26: Long-term Strategic Growth Priorities
Long-term Strategic Growth Priorities 1 Deeper 2 3 4 Scale up ‘Fair share’ outsourcing Gourmet 2.0 Specialties in APAC partnerships 2 out of 3 2x 2x 2x win-rate of new underlying Gourmet size of specialties size of APAC partnership volumes market growth business business Powered by an agile, digital
Slide 27: Deeper outsourcing partnerships
Deeper outsourcing Click to edit title partnerships
Slide 28: Long runway for partnerships
OUTSOURCING PARTNERSHIPS Long runway for partnerships Leading partner of global FMCG – with FM chocolate volume much more share to be had (Global, in M MT) FMCG 1 FMCG 2 ~7,000k MT FMCG 3 Today BC captive FMCG 4 Captive FMCG 5 Competition Competitors FMCG 6 FMCG 7 BC FMCG 8 2022 Winning 2/3rds of pa
Slide 29: Intensifying trends favor more outsourcing
OUTSOURCING PARTNERSHIPS Intensifying trends favor more outsourcing Demand Demand for for newness sustainable and products and innovation regulatory forces FMCGs Competition Competition from new from retail market brands entrants Pressure from cost and capex needs The World’s Best Chocolate Solution
Slide 30: Working with Global FMCGs creates value
OUTSOURCING PARTNERSHIPS Working with Global FMCGs creates value Partnerships with Global FMGCs How this creates value for Barry Callebaut • Co-create innovations at scale • High return business leveraging scale • Collaborating on productivity • Drives durable, recurring growth • Enabling sustainabi
Slide 31: Growing with new market entrants
OUTSOURCING PARTNERSHIPS Growing with new market entrants Differentiated capabilities make Barry Callebaut …enabling the growth journeys an attractive partner to innovative brands… Barry Callebaut’s sustainability +73x capabilities can unlock their brand over 10 years promise Barry Callebaut’s innov
Slide 32: Strategy to unlock future partnerships
OUTSOURCING PARTNERSHIPS Strategy to unlock future partnerships Innovation partnerships Sales-to-procurement Closer to Top-to-top Facilitating markets growth in strategy Transactional new markets relationships & categories More Portfolio customer-led Focused on capex innovation End-to-end avoidance
Slide 33: Recent renewals confirm the opportunity
OUTSOURCING PARTNERSHIPS Recent renewals confirm the opportunity Nov 2023 Oct 2023 Oct 2023 Jun 2023 Renewal of Renewal Multi-year multi-year of deal to Renewal of global supply partnership in facilitate global global deal deal Mexico expansion Winning 2/3rds of partnership volumes coming to the mar
Slide 34: Gourmet 2.0
Gourmet Click to edit2.0 title The World’s Best Chocolate Solutions
Slide 35: Gourmet market fundamentals are attractive
GOURMET 2.0 Gourmet market fundamentals are attractive Attractive market growth… …driven by Premiumization +1% (value growth / mix) Premiumization +3-4% volume growth Increased use of chocolate in end Underlying demand growth (volume growth) products Growth in out-of-home consumption CAGR 2024-27 Th
Slide 36: Aspiring to outgrow the market by closing market share gaps and growing premium share
GOURMET 2.0 Aspiring to outgrow the market by closing market share gaps and growing premium share Still market share gaps across Top-25 largest Gourmet …plus further opportunities to grow in markets… premium segments #1 #1 #1 Only Market position #1 #1 8% of BC Gourmet volume in #3 #3 #3+ premium >1
Slide 37: Strategy in place to unlock above-market growth
GOURMET 2.0 Strategy in place to unlock above-market growth Strategic distribution Not harmonized Sharpen country x route-to-market portfolio play Closer to Low visibility into customer markets Simplify SKU portfolio Complex portfolio of Focus on core brands brands and SKUS Portfolio Take share in p
Slide 38: Scale up specialties
Clickup Scale tospecialties edit title The World’s Best Chocolate Solutions
Slide 39: Specialty products are growing and profitable
SCALE UP SPECIALTIES Specialty products are growing and profitable Specialty products are increasingly important to FM and Gourmet customers, and are … outgrowing the Nut-free Reduced sugar overall chocolate ~900k MT Market size market …sold at premium Vegan Organic price points by 11% p.a. customer
Slide 40: Barry Callebaut has capabilities customers need to capture premium market share
SCALE UP SPECIALTIES Barry Callebaut has capabilities customers need to capture premium market share Portfolio Scale Know-how Track record • Unmatched core • Scale to allow for • Deep technical • Co-creation partner specialty chocolate dedicated capacity understanding of of choice for portfolio coco
Slide 41: Investments underway to capitalize on opportunity
SCALE UP SPECIALTIES Investments underway to capitalize on opportunity New plant in Brantford, Canada Over 50kMT of production Focused on specialty products to open in 2024 capacity The World’s Best Chocolate Solutions 41
Slide 42: Strategy in place to double the size of specialty
SCALE UP SPECIALTIES Strategy in place to double the size of specialty More direct to customer Leveraging Complex portfolio of partnerships brands and SKUs Closer to Transparency as sales markets channel into distribution Lack of focus on scalable categories Portfolio Dedicated Portfolio focused on
Slide 43: 'Fair share' in APAC
Click 'Fair to edit share' title in APAC The World’s Best Chocolate Solutions
Slide 44: APAC has a very promising outlook
'FAIR SHARE' IN APAC APAC has a very promising outlook Potential chocolate consumers1 APAC growth drivers Fast-growing GDP per capita 0.8B 2.5B Low base of chocolate consumption 0.9B 0.8B Significant market share opportunity APAC with 2.5B people Growing with global FMCGs able to afford chocolate Th
Slide 45: Ambition to double the APAC business
'FAIR SHARE' IN APAC Ambition to double the APAC business #1 across fragmented APAC market – … with opportunity to but no. 2+ in most geographies… grow across profit pools Gourmet profit pools in APAC (2023) #1 Value Mass Premium Market position and Mainstream #1 Mass Premium and Mainstream Premi #2
Slide 46: Making investments to be partner of choice in APAC region to Global FMCGs
'FAIR SHARE' IN APAC Making investments to be partner of choice in APAC region to Global FMCGs Strong footprint in APAC… …and continue to invest in local presence Doubling Cocoa & Chocolate factories capacity Opening 3rd factory in India in Neemrana, India in 2024 The World’s Best Chocolate Solution
Slide 47: Deploying the right GLOCAL strategy
'FAIR SHARE' IN APAC Deploying the right GLOCAL strategy Strengthen compound portfolio Serve the needs Closer to of highly Not providing local markets motivated Capture share product portfolio FMCGs across Gourmet pyramid Focus spread across Portfolio Optimize price too many countries positioning De
Slide 48: Sustainability
Sustainability Click to edit title The World’s Best Chocolate Solutions
Slide 49: Stepping up to lead in sustainability for customers
SUSTAINABILITY Stepping up to lead in sustainability for customers Journey to sustainability leadership Deploying capabilities with Global FMCGs Customized impact program Cocoa Life program #1 out of 579 Launch of companies for Forever management of Ferrero Sustainability Chocolate ESG risks1 Launch
Slide 50: Decade-long effort delivering positive impact at scale
SUSTAINABILITY Decade-long effort delivering positive impact at scale Integrating the Influence over key Expertise in adapting Barry Callebaut Feet on the ground program into stakeholders to sourcing for low- for a systemic child government capabilities mobilize support labor solution carbon farming
Slide 51: Aspiring to be more sustainable every day
SUSTAINABILITY Aspiring to be more sustainable every day Continue to advance Deliver on Power the future end-to-end traceability sustainability targets of sustainability Aim to further increase certified or verified Continue setting Inspire modern cocoa cocoa and ingredients ambitious, measurable, f
Slide 52: Sustainability leads to growth
SUSTAINABILITY Sustainability leads to growth COMBINING DELIVERING TRACEABILITY WITH SUSTAINABLE SUSTAINABILITY GROWTH IMPACT Increasing demand from customers to reconcile POTENTIAL Increasing demand from customers for cocoa product flows with FOR BC innovative approaches sustainability initiatives
Slide 53: Unlocking the next level of growth – BC Next Level
Unlocking the next level of growth – BC Next Level 53
Slide 54: Why BC Next Level?
Why BC Next Level? 1 What got Barry Callebaut to today is not enough to reach full potential 2 Highly attractive market and structural advantages to outgrow market 3 Pockets of excellence with opportunity to scale globally Creating the platform to unlock sustainable profitable growth at higher margi
Slide 55: Unlocking the full potential with BC Next Level
Unlocking the full potential with BC Next Level BC Next Level Closer to customers Simplify & & markets digitize BC The World’s Best Chocolate Solutions 55
Slide 56: Unlocking the full potential with BC Next Level
BC NEXT LEVEL Unlocking the full potential with BC Next Level Closer to customers & markets Simplify & digitize BC Strengthen growth focus through country Eliminate complexity that does not add value clusters to customers Elevate Gourmet and Specialties from “start- Reset manufacturing network for b
Slide 57: Empowering country clusters to accelerate growth
CLOSER TO CUSTOMERS & MARKETS Empowering country clusters to accelerate growth Food is local, retail is local Country Cluster Execute tailored go-to-market strategy Ensure cross- and up-sell FM Specialities Gourmet Bring step change in speed to market Shift talent from region to country cluster Acro
Slide 58: Leveraging global best practices to drive high return growth in country clusters
Leveraging global best practices to drive high return growth in country clusters across product portfolio Country Cluster Commercial Excellence leading marketing, pricing, sales principles FM Specialities Gourmet and channel (incl. D2C) Regions make portfolio play to flow Global Commercial Excellenc
Slide 59: Scaling globally with the Customer Supply & Development Organization
CLOSER TO CUSTOMERS & MARKETS SIMPLIFY AND DIGITIZE BC Scaling globally with the Customer Supply & Development Organization 1 Optimize capital asset allocations globally Adopt best practice globally – in Food Safety, Engineering and 2 Manufacturing systems 3 Step-change in OTIF and significantly imp
Slide 60: Step-changing capital effectiveness – BC network for the future
CLOSER TO CUSTOMERS & MARKETS SIMPLIFY AND DIGITIZE BC Step-changing capital effectiveness – BC network for the future • Leveraging technology for effective capacity and capital allocation • Delivering scalability at cost and boost speed to market • Highest quality & safety standards • Plant leaders
Slide 61: Operational improvements will be significant
BC NEXT LEVEL Operational improvements will be significant End-to-end supply chain Improved DD OTIF OTIF % More scalability improvement DD cost per ton Better cost to serve Better delivery decrease DD run-rate capex Lower capital needs Clearer accountabilities reduction Continuous MSD cost out Fewer
Slide 62: Accelerating customer-led innovation with end-to-end capabilities
CLOSER TO CUSTOMERS & MARKETS SIMPLIFY AND DIGITIZE BC Accelerating customer-led innovation with end-to-end capabilities Using innovation as tool to 1 drive relevance & stickiness with customers Scaling customer-led Market & Consumer Science & Sensory 2 innovation fast globally Insights Moving close
Slide 63: Focusing on most customer-relevant portfolio
CLOSER TO CUSTOMERS & MARKETS SIMPLIFY AND DIGITIZE BC Focusing on most customer-relevant portfolio Today’s Short-term Mid-term Brands, SKUs, and supplier pain point actions actions 1 base with enhanced product lifecycle management Reduce Vast & complex Stabilize SKU portfolio complexity and complex
Slide 64: GBS - Scale & digitize best practice globally
CLOSER TO CUSTOMERS & MARKETS SIMPLIFY AND DIGITIZE BC GBS - Scale & digitize best practice globally Evolve GBS to multi-functional, E2E global capability Capture scale and efficiency benefits To-be Multi-functional setup Accelerate delivery with automated and F1 F2 F3 … digitized workflows Order to
Slide 65: Creating agile, tech-enabled organization and culture
CLOSER TO CUSTOMERS & MARKETS SIMPLIFY AND DIGITIZE BC Creating agile, tech-enabled organization and culture Digital lead generation, 1 pull marketing & sales Next Gen insights Digital processes Globally harmonized and 2 automated processes Supplier interaction 3 automation Supplier connect Deploy a
Slide 66: Financial journey
Financial journey 66
Slide 67: Investing in next level of sustainable profitable growth
Investing in next level of sustainable profitable growth Updated strategy together with previously announced investment program BC Next Level will unlock Barry 1 Callebaut’s full growth potential and lead to step-change in profitability, drive cash generation, and deliver long- term value for all st
Slide 68: What to expect during the transition period
What to expect during the transition period Deliver long term growth During transition period, swift execution against BC 1 objective while driving Next Level with long-term shareholder value creation ongoing productivity prioritized Growing volume and EBIT modestly on an underlying 2 basis (ex-BC N
Slide 69: FY23/24 guidance
FY23/24 guidance • Underlying growth, net of actions taken as part of BC Next Level - SKU rationalization and distribution optimization represent low single-digit headwind Flat Volume growth - Modest underlying growth in Chocolate Regions with flat volumes in Global Cocoa • All guidance excludes imp
Slide 70: Post-transition, delivering attractive, profitable long-term growth objective
Post-transition, delivering attractive, profitable long- term growth objective MSD+ to HSD Volume growth, % EBIT growth, % LSD+ to MSD 3.0-4.0% 3.0-4.0% Underlying Market Volume Underlying Market Delivered Operating EBIT market growth share growth market share value to leverage growth gains growth g
Slide 71: Building to a 10% EBIT margin ambition
Building to a 10% EBIT margin ambition Ambition driven by Next Level savings flow-through and return to long-term growth objective in FY25/26 and beyond % EBIT (CHF M) • BC Next Level will allow Barry Callebaut to make 10% significant progress towards a 10% EBIT margin ambition Impact ofBC Impact of
Slide 72: BC Next Level will deliver 250M CHF in cost savings
BC Next Level will deliver 250M CHF in cost savings Cost savings impact 2022/23 – 2025/26, CHF M Annual cost savings of 15% (excluding raw Reducing cost to serve by streamlining factories and materials) from: improving performance 1. Reducing cost to serve by streamlining factories Eliminating compl
Slide 73: Investing CHF 500M
Investing CHF 500M Opex of CHF 290M (260M one-time cost): 1. New operating model Net Capital Investment 210M 2. IT costs 3. Program costs -280 CHF 210M Capital Investment net of BC Next Level 490 500 Capital Benefits: 1. Manufacturing optimization & upgrades 2. Digitize BC 3. Traceability implementa
Slide 74: Majority of investments in manufacturing optimization, new operating model and Digital BC
Majority of investments in manufacturing optimization, new operating model and Digital BC Opex expense of CHF 290M Opex split, FY22/23-25/26 1 (CHF 260M one-time costs) Program costs IT costs Net capital investments of CHF 500M, of CHF 2 which manufacturing optimization accounts for vast majority of
Slide 75: Operational step-up drives capital benefits
Operational step-up drives capital benefits Step-up in operational KPIs… …supporting capital benefit realization Improved planning Lower cost to serve 280M benefits expected from better capital Lower capital needs efficiency Driving continuous improvement The World’s Best Chocolate Solutions 75 Note
Slide 76: Wrap up
Wrap up 76
Slide 77: Unlocking the full potential with BC Next Level
Unlocking the full potential with BC Next Level 25/26 24/25 • Delivering long term growth objective1 23/24 • Back to growth and deliver on BC • Execute on BC Next Level 22/23 Next Level initiatives cost savings • Get Executive Leadership Team in place The World’s Best Chocolate Solutions 77 Note: (1
Slide 78: Concluding remarks
Concluding remarks 1 We have the right assets and global scale 2 Now with the funding and capabilities to build a more scalable, tech-enabled platform 3 Clear tailwinds for growth and driving stickiness & relevance with customers Clear path for sustainable profitable growth and shareholder value cre
Slide 79: World's Best Chocolate Solutions
World’s Click Best to edit title Chocolate Solutions The World’s Best Chocolate Solutions