Jürgen Steinemann Barry Callebaut
Text: Eric Johnson/Images: Markus Bertschi, Barry Callebaut
During Juergen Steinemann’s six years as CEO of chocolatier Barry Callebaut, sale volume has climbed by about 40 % while the share price has increased by over 70 %. As he prepares to hand over his position to his successor in the second half of 2015 and focus more on his role as Vice Chairman of the Board, he reflects on the state of the company and its integral relationship with Africa.
“There would be no chocolate without African cocoa.”
We took an international company and built it into a global enterprise. Today, 50 % of our people are located in emerging markets or markets where our raw materials originate. We made our biggest acquisition ever, the cocoa ingredients Division of Petra Foods, in 2012, which added 1,800 employees and made us also the largest manufacturer of cocoa products worldwide. We created an unprecedented footprint in the new markets. Six years ago, we had one factory in Asia and one in Latin America. Now we have nine factories in Asia and seven in Latin America. In addition to the previously three pillars of our growth strategy – expansion, innovation and cost leadership – we’ve added a fourth pillar of “sustainable cocoa.” I am convinced this fourth pillar will become the biggest differentiator in our industry – and sustainable cocoa is what drives us. On top of this, we have initiated a group-wide people and management development program. At the end of the day, it’s your people who drive the success of your company; it’s your people who make the difference.
I believe a company can only be one or the other in the long term. B2B and B2C are too different and call for different KPIs, people have different backgrounds. If you do both, you’re competing with your own customers. Knowing we had to choose one or the other, we chose B2B.
There are more similarities than one would expect! Both deal with a global, agricultural supply chain. Both require expertise in supply chain and general risk management. The processing steps are partly similar – as a matter of fact Bühler, a Swiss company, makes a lot of the technical equipment for both industries. The business is B2B, and customers tend to be big, global players with global contracts.
“To Africans, everything is possible, and they will do what is necessary to find a solution.”
We had this discussion repeatedly, and the answer was always: As long as we manage to outperform the market big time, as we have for the past 10 years, it’s wise to not change. Our success partly comes from our focus on only one category, chocolate and cocoa. This forces us to excel because this is the only boat we are sitting in, we have nothing else to fall back on. Our competitors might have 15–20 categories of products, so they have more leeway if one category underperforms, but they are also less focused, because they have to keep up with everything from let’s say orange juice to cement. At Barry Callebaut we rather ask ourselves the question: “What adjacent businesses would fit?” For instance we bought a company, la Morella nuts, that processes the nuts that are central to many chocolate products. A patissier, for example, needs both chocolate and a nut paste to make pralines. We also have bought some companies that manufacture speciality decorations for cakes or to personalize chocolates. These products have the same route to market and the same end customers as our mainstream products – that’s what we call “adjacent”.
Barry Callebaut is the result of a merger. Callebaut, a Belgian chocolate manufacturer that belonged to late entrepreneur Klaus Jacobs, wanted to get a stronger grip on its main ingredient, cocoa, and thus decided to back integrate into cocoa. This was the reason for the merger with French cocoa processor Cacao Barry. So we integrated our supply chain back into the bush: This was our entry into Africa.
Very much so – there would be no chocolate without African cocoa. Africa, in particular West Africa, produces about 70 % of the world cocoa harvest. Five of our 16 cocoa-processing factories are located there, and they handle a good part of our cocoa needs. For climatic reasons, cocoa only grows around the equator, i.e. in the developing world, but traditionally it has been processed close to its consumers in the developed world – the largest cocoa-processing nation is the Netherlands. Over the years, starting with the merger in 1996, we’ve moved to processing our cocoa closer to its origin for commercial and strategic reasons. Consequently, about 1,000 of our more than 9,000 employees are based in Africa.
I love Africa; I love to be out in the bush. I’m in Africa four to six times a year. One of the great delights of working for Barry Callebaut was being the conduit, the link between the Western world and Africa. In the same week it happens that we have a meeting in a suit-and-tie at a polished conference table with the CEO of a consumer products company discussing consumer eating habits in 2030. A few days later we will be in khakis in the bush talking cocoa harvest with a farmer under a tree. Barry Callebaut’s intrinsic job is to connect these two worlds.
Africans are true entrepreneurs and very flexible. Recently I visited one of our companies in west Africa, where they were using three-wheeled motorcycles to collect multiple sacks of cocoa beans at a time from the farmers. Our colleagues had figured out that this could spare farmers the trouble and expense of loading one sack onto a bicycle and riding for two hours through the bush to deliver their cocoa to a cooperative. Rather than going through the corporate purchasing bureaucracy, they had bought the three-wheelers on Alibaba, the Chinese web-based retailer! To Africans everything is possible, and they will do what is necessary to find a solution. I sometimes ask myself what we, in the compliance and conformance-obsessed West, can learn from them.
Not just that of Africa, but from emerging countries in general. Within our global management development programme, about a third of our current crop of 45 trainees are from cocoa-origin countries. It’s not always easy to get them out of their home regions. Not all are eager to live in Western cultures. Many have strong attachments to family that they don’t want to leave. They, however, make our operation truly diverse, and stronger. I am also pushing that, as part of our graduate training, we should make it mandatory for one of its three segments to be spent in a cocoa origin country. If you can make it there, you can make it anywhere.
“If you can make it there, you can make it anywhere.”
Africa offers great opportunities, but you need to see them. Let me explain this through an anecdote: Two shoe salesmen were sent to Africa. One writes back after a week: “Coming home, no one wears shoes.” The other one also writes home: “Going to stay for a year, no one wears shoes!” Go there, see for yourself. Figure out the opportunities on the ground. Of course you have to read studies and apply due diligence, but nothing substitutes for hands-on, face-to-face experience.
The German national (1958) studied business administration at the European Business School in Wiesbaden, London and Paris before starting his career in the food industry in the mid-1980s. Before Steinemann became CEO of Barry Callebaut in 2009, he served as COO at animal and fish nutrition giant Nutreco for almost a decade. Prior to that, he worked for Unilever and Eridania Beghin-Say. He is also a member of the board of Lonza and the supervisory board of Metro.
… is the world’s leading manufacturer of chocolate and cocoa products, producing about 1.8 million tonnes per annum in 50+ factories around the globe. Sales in fiscal year 2014/15 were about CHF 6.2 billion for the Zurich-headquartered company, which is listed on SIX Swiss Exchange. The company is a business-to-business supplier, selling to industrial food manufacturers and to artisanal and professional users of chocolate such as chocolatiers, pastry chefs, bakers, hotels, restaurants or caterers.