Chocolate maker Barry Callebaut has confirmed that it will pass on higher cocoa prices arising as a result of the Living Income Differential implemented by Côte d’Ivoire and Ghana.
Announcing details of the company’s full year results for fiscal 2018/19, Barry Callebaut Chief Executive Antoine de Saint-Affrique (shown here) said the company “totally supports the living income differential” (LID).
He explained that, under the company’s cost-plus business model, the LID will be passed on rather than absorbed by the company.
Mr de Saint-Affrique said he expected other countries to raise prices too, and that the company would not therefore come under pressure from customers to source cocoa from other, lower cost producers.
The company’s Chief Financial Officer, Remco Steenbergen, said the LID would show in the company’s balance sheet but would not affect margins. “The cost of the LID is not insignificant,” he said, but the cocoa price is not the only one it incurs in the production of chocolate.
“The LID and the increase in the price of cocoa is part of a larger cost price that will be diluted as it passes through the cost chain,” he said.