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Cocoa market awaits impact of ADM Cocoa sale

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Cocoa market awaits impact of ADM Cocoa sale

July 02
09:15 2013

The Archer Daniels Midland Company is in discussions to sell its cocoa processing operations. We find out how potential industry consolidation could affect the cocoa supply.

The world’s third largest cocoa grinder ADM announced last month that it was in talks to sell its cocoa ingredients division – a business unit that saw profits nosedive 24% on last year.

Market well-covered, says ICCO

Laurent Pipitone, director of the economics and statistics division at the International Cocoa Organization (ICCO), said: “The concern is that cocoa processing is consolidated in just a few players.”

Barry Callebaut today finalized an $860m deal to acquire Singapore-based Petra Foods’ ingredients division, helping it overtake Cargill as the world’s largest cocoa grinder.

Asked how the potential sale of ADM Cocoa was affecting the cocoa market, Pipitone said: “So far the market is well covered. There is no problem with the capacity. There is enough for all demand.”

He said that even if a buyer came in for ADM Cocoa and cut cocoa processing operations, a small reduction would not impact the supply and demand balance as there has been a lot of investment in cocoa processing in recent years and demand for chocolate has stalled.

ADM has an annually grinding capacity of around 60,000 metric tons (MT) and accounts for 15% of global cocoa processing – third behind Barry Callebaut and Cargill.

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