December 15, 2022

Barry Callebaut: tasty chocolate for a proud price

Barry Callebaut: tasty chocolate for a proud price

As many followers of our Obermatt Insights already know, Obermatt’s CEO, Dr. Hermann J. Stern loves chocolate and already is an investor at Choba Choba, a Swiss chocolate enterprise focusing on farmer empowerment and organic produce. But, as they say, you can never have enough chocolate, so our Coffee Break Chat investors discussed Barry Callebaut - a Swiss-Belgian chocolate producer.

Even though Hermann would choose Choba Choba in a heartbeat, he believes chocolate production has a bright future and for Swiss people, Barry Callebaut is the logical investment choice. While it is rather expensive (low value ranks), it has a lot of growth as can be seen in the Obermatt Growth rank. In addition, they are switching to organic production and are reasonably socially responsible (of course, Choba Choba is far better in this respect 🙂).

Let’s look in detail whether Barry Callebaut is a worthy investment by looking at its pros and cons.

PRO: The following three points speak for a buy:

  1. Chocolate production has a bright future and Barry Callebaut has a green Obermatt Growth rank of 85 meaning that the company has a lot of growth already, and, taking in consideration their most recent investments into new production facilities, a lot of growth potential. Their Capital Growth (our newest rank, fairly self-explanatory) is at 73.
  2. The company has sustainability and social practices in place, but unlike Choba Choba and other smaller socially responsible producers, they are a large corporation which means that they have a much higher impact.
  3. Barry Callebaut prides itself in organic produce, good pay for farmers working on their African farms and traditional production methods with a high level of technological improvements and engineering.

CONTRA: The following three points argue against it:

  1. Barry is on the expensive side with an Obermatt Value Rank at 13 (more expensive than 87% of similar companies). Bear in mind that the company is ranked against other companies in a similar industry and economical environment.
  2. A lawsuit for child labor and slavery in Africa against Barry Callebaut and several other large food producers has been filed, but they have already been cleared of charges. We restrain ourselves from giving an opinion on the ruling, but do think that the company can’t micromanage the farms excessively. Child labor, after all, is a difficult topic. The eldest son of Obermatt CEO Dr. Hermann J. Stern started an apprenticeship when he was 14, working a full eight hours a day. Is this child labour? In certain countries it is, in Switzerland it is a fine contribution to our society and enjoys broad support.
  3. One can argue that there are more responsible businesses around the world that you can more easily correlate to and wish to invest for personal reasons.

With all the controversies and high price on one side and possible bright future of chocolate and the company itself on the other side, we decide to buy Barry Callebaut for our Swiss Value Wikifolio. We invite you to take a look and track the performance of the stocks we already chose for it. You can invest in the Obermatt Wikifolio if you like our methods of picking and judging stocks.

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