Barry Callebaut: The Global Chocolate Powerhouse

Barry Callebaut is one of the world’s leading suppliers of chocolate and cocoa products, operating at the heart of a global industry that touches everything from confectionery and baked goods to food service and premium artisanal creations. With a fully integrated value chain, a vast international footprint, and deep partnerships with the largest food manufacturers, the company blends decades of heritage with innovation across sustainability, ingredients, and next-generation chocolate alternatives. As it navigates volatile cocoa markets, shifting consumer tastes, and major operational transformation through its Next Level program, Barry Callebaut is positioning itself for long-term resilience and growth. The question is: Does this global chocolate powerhouse deserve a place in your portfolio?

This is not a financial advice. I am not a financial advisor and I only do these post in order to do my own analysis and elaborate about my decisions, especially for my copiers and followers. If you consider investing in any of the ideas I present, you should do your own research or contact a professional financial advisor, as all investing comes with a risk of losing money. You are also more than welcome to copy me. 

For full disclosure, I should mention that I do not own any shares in Barry Callebaut at the time of writing this analysis. If you would like to copy or view my portfolio, you can find instructions on how to do so here. If you want to purchase shares or fractional shares of Barry Callebaut, you can do so through eToro. eToro is a highly user-friendly platform that allows you to get started on investing with as little as $50.

The Business

Barry Callebaut is one of the world’s largest and most influential chocolate and cocoa manufacturers, with roots stretching back more than 175 years. Formed in 1996 through the merger of Cacao Barry in France and Callebaut in Belgium, it blends a rich European heritage with global scale and a strong focus on innovation. Headquartered in Zurich, the company operates in over 30 countries and runs more than 60 production sites along with 25 CHOCOLATE ACADEMY centers that support chefs, chocolatiers, and artisanal users around the world. Its customer base is broad, ranging from multinational food manufacturers and bakeries to ice cream producers, pastry chefs, and caterers. The product offering covers everything from large-scale industrial chocolate and cocoa ingredients to high-end couverture and specialty creations used in premium applications. A defining feature of Barry Callebaut’s business is its presence across the full cocoa and chocolate value chain. It sources cocoa directly at origin, processes it into ingredients such as liquor, butter, and powder, and produces finished chocolate solutions tailored to customer needs. The company operates through three main areas: the food manufacturers segment, which supplies large global and local brands; the cocoa products segment, which handles the sourcing and processing of cocoa ingredients; and the gourmet and specialties division, which focuses on artisanal and premium users where margins are higher. This diversified model allows the company to serve both mass-market demand and premium niches, strengthening its resilience and earnings potential. Barry Callebaut’s competitive moat lies in its remarkable integration, global scale, and deep customer relationships. By controlling every stage of the value chain, the company gains reliable access to raw materials, consistent quality, cost efficiency, and valuable market insight, advantages that are very difficult for smaller competitors to replicate. Its worldwide production footprint places it close to customers, making it a trusted outsourcing partner for food manufacturers that require dependable supply and the ability to scale. Long-standing partnerships, often supported by multi-year contracts and collaborative product development, create high switching costs and make Barry Callebaut an embedded part of many customers’ operations. Innovation further strengthens the company’s positioning. Barry Callebaut invests heavily in developing new chocolate solutions that match emerging consumer trends such as sugar reduction, plant-based options, natural ingredients, and premiumization. Its CHOCOLATE ACADEMY network reinforces customer loyalty by offering training, inspiration, and ongoing support, particularly for chefs and artisans. Sustainability is another pillar of its moat. Through its “Forever Chocolate” program, the company is working to improve farmer livelihoods, secure the long-term future of cocoa, and make sustainable chocolate the industry standard. This commitment aligns Barry Callebaut with the priorities of global brands increasingly focused on traceability and ESG, while also safeguarding the company’s supply chain.

Management

Peter Feld serves as the CEO of Barry Callebaut, a role he assumed in 2023. He brings more than three decades of international leadership experience across global consumer goods, professional services, and investment firms. Throughout his career, Peter Feld has built a reputation for delivering growth, driving transformation, and strengthening the competitive positioning of the companies he leads. Before joining Barry Callebaut, Peter Feld served as the CEO of Jacobs Holding AG, a global professional investment firm based in Zurich. In this role, he oversaw a diverse portfolio of international businesses and gained deep exposure to the food and beverage sector through the firm’s long-standing investments. Prior to his time at Jacobs Holding AG, Peter Feld was the CEO of GfK SE, one of the world’s largest market research and analytics companies. During his tenure, he led GfK SE through a significant transformation into an AI powered analytics and consulting business, modernizing its technology platform and repositioning the company for long-term sustainable growth. Earlier in his career, Peter Feld served as CEO of WMF Group, a premium cookware and professional coffee machine manufacturer. Under his leadership, WMF Group strengthened its global market presence, expanded its digital capabilities, and enhanced its premium positioning across both consumer and professional segments. Peter Feld also held senior executive roles at Procter and Gamble, Johnson and Johnson, and Beiersdorf, which provided him with extensive operational expertise and a strong foundation in global brand management, supply chain leadership, and commercial strategy. Peter Feld holds a Master’s degree in Mechanical Engineering from RWTH Aachen University in Germany. His leadership style is frequently described as analytical, disciplined, and focused on building organizations that can excel through innovation and operational excellence. With his background leading companies through digital transformation and strategic repositioning, Peter Feld is well suited to guide Barry Callebaut as it continues to focus on sustainable growth, value chain innovation, and the advancement of its long-term cocoa sustainability agenda.

The Numbers

The first number we will look into is the return on invested capital, also known as ROIC. We want to see a 10-year history, with all numbers exceeding 10% in each year. Barry Callebaut has historically earned only modest ROIC because its business is very capital intensive and heavily exposed to volatile raw materials. The company controls the entire cocoa and chocolate value chain, which means it owns factories, processing plants, and large inventories of cocoa. This structure requires a lot of capital, and the returns on that capital naturally tend to be lower than in asset-light consumer brands. Cocoa prices also move sharply from year to year. When cocoa prices increase, Barry Callebaut must finance larger inventories at higher costs. Even though the company can pass these costs on to customers, it usually takes time, which temporarily reduces profitability. This cost pass-through lag has happened many times in the past and is a big reason why the company rarely sustains ROIC above 10%. Another structural factor is that Barry Callebaut serves many large food manufacturers through long-term outsourcing deals. These contracts are stable but often come with lower margins. The higher-margin gourmet and specialty segment helps balance this but is smaller in scale. All of this contributes to a long-term pattern where ROIC sits in the mid- to high-single digits most years, reaching around 10% only when volumes are strong, costs are stable, and cocoa prices are relatively calm. In fiscal year 2025, ROIC reached its lowest level in more than a decade because the company was hit by an unusually severe combination of headwinds. Cocoa prices reached record levels, global chocolate consumption fell, and many customers reduced orders to manage their own costs and inventories. Barry Callebaut’s volumes declined sharply, especially in cocoa products, where volumes dropped by double digits. At the same time, the company was investing in its internal transformation program, which increased expenses without generating immediate returns. The result was a situation where profits fell while the amount of capital tied up in the business remained very large, pushing ROIC down to its weakest level in years. This decline is concerning, but it is not necessarily permanent. Much of the pressure came from extraordinary cocoa price volatility and an unusual drop in demand, both of which are cyclical rather than structural. Looking forward, ROIC is likely to recover, though probably gradually rather than suddenly. Several factors support this expectation. The company is focusing more on higher-return products and reducing low-margin volumes. Its internal transformation program aims to improve efficiency and digitalize operations, which should help margins over time. Management also expects profit to grow at a faster rate than invested capital in the coming years, which is essential for ROIC recovery.

The next numbers are the book value + dividend. In my old format this was known as the equity growth rate. It was the most important of the four growth rates I used to use in my analyses, which is why I will continue to use it moving forward. As you are used to see the numbers in percentage, I have decided to share both the numbers and the percentage growth year over year. To put it simply, equity is the part of the company that belongs to its shareholders – like the portion of a house you truly own after paying off part of the mortgage. Growing equity over time means the company is becoming more valuable for its owners. So, when we track book value plus dividends, we’re essentially looking at how much value is being built for shareholders year after year. Equity has decreased at Barry Callebaut over the past three years mainly because several large accounting movements have reduced the value of equity on paper, even though they do not necessarily reflect a deterioration in the company’s underlying operations. A major factor has been currency translation. Barry Callebaut reports its results in Swiss francs, but most of its business is conducted in other currencies such as euros and US dollars. When the Swiss franc strengthens, the value of those foreign operations becomes lower when converted back into francs. This effect reduces reported equity even though the actual business performance of those subsidiaries has not changed. Another important contributor has been the impact of the company’s hedging program. Barry Callebaut uses financial instruments to manage cocoa and currency risk. During years of extreme volatility in cocoa prices and foreign exchange markets, these hedges can show temporary losses that bypass the income statement and are recorded directly in equity. Rising cocoa prices have made it much more expensive for Barry Callebaut to hold inventory. Because the company needs large amounts of cocoa on hand to run its business, higher prices mean more money tied up in stock. This also increases the amount of financing the company needs. These factors put extra pressure on the balance sheet at a time when profits have already been under pressure. Taken together, these factors explain most of the decline in equity. It does not point to a structural problem in the business but rather reflects the accounting and balance sheet impact of a strong Swiss franc, volatile commodity markets, and temporary hedge movements.

Finally, we will analyze the free cash flow. Free cash flow, in short, refers to the cash that a company generates after covering its operating expenses and capital expenditures. I use levered free cash flow margin because I believe that margins provide a better understanding of the numbers. Free cash flow yield refers to the amount of free cash flow per share that a company is expected to generate in relation to its market value per share. Free cash flow has been negative at Barry Callebaut in the past two years mainly because cocoa bean prices rose to record levels. When cocoa becomes more expensive, the company must spend far more money upfront to buy and hold inventory. Because it takes 12 to 18 months for cocoa beans to move through the system before being sold as chocolate, the company is forced to tie up a huge amount of cash for a long time. In fiscal year 2024, this effect was enormous: the value of inventories increased by about CHF 2.7 billion. This alone pushed free cash flow deep into negative territory. Barry Callebaut also faced extra cash outflows because of the way it manages cocoa price risk. In the previous year, the company used financial tools to delay some payments related to cocoa futures. Those postponed payments had to be settled in fiscal year 2025, which temporarily reduced cash flow. This was a timing issue rather than a sign that the business itself was weakening. Another factor has been the company’s ongoing “Next Level” investment program. These are strategic investments aimed at improving efficiency, strengthening sourcing, upgrading manufacturing, building new planning systems, and making the business more resilient. They increase cash outflows now but are designed to improve the company’s long-term performance. CapEx has also remained high because the company continues to invest in food safety, manufacturing capabilities, and efficiency upgrades. The situation began to improve in the second half of fiscal year 2025. Cocoa prices stopped rising and even fell slightly from their extreme highs, which meant Barry Callebaut no longer needed to spend as much cash to buy and hold cocoa. At the same time, the company changed the way it manages its cocoa supply and day-to-day operations. It bought more beans from countries where payments move faster, improved the timing of its purchases, reduced the amount of cocoa it buys far in advance, kept tighter control of inventory, and streamlined its logistics. Looking ahead, the company expects its cash generation to turn strongly positive again. Management is planning for around CHF 1 billion of positive free cash flow in fiscal year 2026, as long as cocoa prices stay at more normal levels. Most of this improvement will come from running the business more efficiently and managing its cocoa purchases and inventory more effectively. If cocoa prices remain stable or fall a bit, that would give a small extra boost, but the main driver is expected to be the company’s own improvements rather than big changes in the market. It is important to keep in mind that Barry Callebaut historically generated positive free cash flow before cocoa prices exploded. The negative results seen in the past two years are not signs of a broken business model. They are largely the result of unusual and temporary conditions in cocoa markets combined with upfront transformation investments. As these pressures ease, free cash flow should gradually return to more normal levels.

Debt

Another important aspect to consider is debt. A simple way to judge whether a company’s debt level is manageable is to compare its long-term debt to its earnings and see how many years of earnings it would take to repay that debt. Using this measure, Barry Callebaut currently has 22,96 years of earnings in debt, which is far above the three-year threshold I normally use. However, this number is inflated because earnings fell sharply in fiscal 2025 due to unusually high cocoa prices. When profits drop temporarily, this ratio looks worse than it really is. Management has also made it clear that most of the increase in debt came from the sharp rise in cocoa prices, which forced the company to finance much more expensive inventory. This was not caused by uncontrolled spending or structural issues. It was simply a result of buying cocoa at extremely high prices and holding it for long periods, which is unavoidable in Barry Callebaut’s business model. The company has already started reducing its leverage. During the first half of fiscal 2025, net debt rose to 6,5 times EBITDA because cocoa prices peaked during the harvest. But by the end of the year, leverage had fallen to 4,5 times as the company freed up cash and improved the way it manages its cocoa supply. Management’s goal is to reduce leverage to below 3,5 times by the end of fiscal year 2026, and they have stated this is a top priority. It is also important to look at what Barry Callebaut’s debt is backed by. The company’s net debt is about CHF 4,3 billion, but it also holds CHF 4,7 billion worth of cocoa and chocolate in its warehouses. In other words, the value of its inventory is actually higher than the amount it owes. When you adjust the debt levels to account for this, the company’s real leverage is much lower than the headline number suggests. In fact, if you exclude the value of cocoa and finished goods that sit in inventory, the company’s leverage would be less than one times EBITDA. This shows that the debt figures can look more alarming on paper than they truly are in terms of actual financial risk. The company has also built a very predictable repayment schedule. About CHF 700 million of debt matures each year over the next five years. This staggered profile makes repayments easier to manage, especially as the company expects stronger cash generation going forward. The debt level is something to monitor, but it does not appear to be a structural weakness. Most of the increase was caused by temporary external factors such as extreme cocoa price inflation, unusually high inventory values, and timing effects from hedging. As cocoa markets stabilize and cash generation improves, the company should be able to reduce its leverage.

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Risks

Commodity prices are a risk for Barry Callebaut because the company is deeply exposed to the cost, availability, and volatility of cocoa and other agricultural raw materials. Cocoa is its most important input, and when cocoa prices rise sharply or move unpredictably, it affects almost every part of Barry Callebaut’s business. Cocoa markets have been extremely turbulent in the past two years. Prices tripled within a few months, then spiked again, reaching levels twice as high as historic norms. At the same time, daily price swings became unusually large, making it difficult for the company and its customers to plan ahead. This volatility had a direct impact on Barry Callebaut’s financials. Higher cocoa prices meant the company had to spend far more cash to buy and hold inventory, especially because cocoa takes 12 to 18 months to move from bean sourcing to chocolate sales. This pushed free cash flow into deeply negative territory and forced the company to take on more debt to finance these inflated inventory values. In fiscal year 2025 alone, cocoa price movements had a negative CHF 1,1 billion impact on cash before conditions began improving in the second half. Even though Barry Callebaut operates on a cost-plus pricing model, meaning it can pass higher cocoa prices on to customers, these adjustments do not happen immediately. Customers need time to raise consumer prices, adjust pack sizes, reformulate products, or reduce stock levels. During this period of adjustment, orders slow down and volumes drop. This happened recently, where customer reactions to higher cocoa prices contributed to a 6,8% decline in volumes. Large customers who also produce chocolate in-house even slowed down their own capacity while demand softened. These cascading effects show how a spike in commodity prices can disrupt the entire B2B environment Barry Callebaut depends on. The root causes behind recent cocoa price spikes—extreme weather, disease outbreaks, aging cocoa trees, and supply challenges in West Africa—add long-term structural risk. Climate change increases the likelihood of droughts, excessive rain, crop diseases, and large-scale production swings. Some producing countries have also restricted replanting in disease-affected areas, making it harder to restore yields. These issues mean that cocoa supply could remain tight and volatile for years, creating ongoing uncertainty for Barry Callebaut’s cost base, liquidity, and ability to secure high-quality beans.

Shifting consumer trends are a risk for Barry Callebaut because the company operates in an industry where tastes, health priorities, and buying behaviors can change quickly, and these shifts directly influence the demand for chocolate and cocoa-based products. One major trend is the growing adoption of GLP-1 medications such as Ozempic and Wegovy. These drugs reduce appetite and cravings, including for high-calorie treats like chocolate. As more people use them, overall consumption of indulgent foods may decline. This creates a long-term risk for Barry Callebaut because the company depends heavily on stable demand from confectionery manufacturers, bakeries, and food service customers. If chocolate consumption softens, even slightly, it can affect order volumes throughout the entire B2B supply chain. This development fits into a broader move toward healthier eating habits. Consumers are increasingly choosing products with less sugar, fewer calories, and simpler ingredient lists. Plant-based and “better-for-you” options are gaining traction. While Barry Callebaut has developed sugar-reduced, vegan, and specialty products, the pace and direction of these shifts are not always predictable. If the company does not innovate quickly enough or fails to offer viable alternatives that match new expectations, it risks losing market share to competitors who adapt faster. Environmental and ethical considerations also play a growing role. Many consumers now expect transparency in sourcing, responsible farming practices, and products that align with their personal values. Concerns about deforestation, carbon emissions, and farmer livelihoods influence purchasing decisions. If Barry Callebaut does not meet or exceed these standards, it could face reputational damage, reduced demand, or even regulatory challenges. These pressures require continuous investment in sustainability programs and traceability. Younger generations add another layer of complexity. They tend to be more demanding and less loyal to traditional brands. They want unique flavor experiences, customization, and products that reflect ethical or lifestyle choices. Their preferences shift quickly and are heavily influenced by social media, cultural movements, and global trends. For a large-scale supplier like Barry Callebaut, keeping pace with these rapid changes requires ongoing innovation and strong partnerships with food manufacturers.

Regulatory risks are a significant concern for Barry Callebaut because the company operates across many countries, each with its own rules governing food safety, environmental standards, labor practices, trade, and supply chain transparency. As these regulations become stricter and more complex, they increase both operational difficulty and compliance costs. The most immediate example is the EU Deforestation Regulation (EUDR), which requires companies to prove that their supply chains are free from deforestation. For Barry Callebaut, this means tracing cocoa back to the exact farm level across regions where documentation is often limited and where millions of smallholders produce beans. Implementing this level of traceability is expensive and operationally challenging. Failure to comply could lead to products being blocked from EU markets, higher costs, or reputational damage. Beyond deforestation rules, the regulatory landscape is expanding in many directions at once. Food safety and labeling requirements differ across regions, and failing to meet them could result in forced product recalls or restricted market access. Labor and human rights rules in cocoa-growing countries also pose challenges. Barry Callebaut must ensure its suppliers follow strict standards to avoid legal penalties and protect its reputation, especially as issues like child labor and unsafe working conditions remain global concerns. Regulators, customers, and civil society increasingly expect full transparency, putting additional pressure on the company to monitor and audit its supply chain. Climate-related regulations add another layer of complexity. Governments are tightening rules on carbon emissions, sustainable sourcing, and environmental reporting. These rules require significant data collection, documentation, and system upgrades. Inconsistent enforcement across countries can also create confusion and operational friction. Failing to meet these expectations could lead to fines, investigations, or loss of trust among customers, investors, and business partners. At the same time, political and nutrition-related regulations are constantly evolving. Sugar taxes, restrictions on marketing high-calorie foods, new nutrition labeling rules, and advertising limits can all change customer behavior and product demand.

Reasons to invest

The Next Level investment program is a reason to invest in Barry Callebaut because it strengthens the company in ways that directly support long-term growth, higher profitability, better customer relationships, and a more resilient business model. It is the most comprehensive transformation in the company’s history, and its impact is already visible across operations, customer service, efficiency, and financial performance. The program is designed to make Barry Callebaut faster, simpler, more digital, and much closer to its customers. This matters because the chocolate and cocoa industry is becoming more complex, with higher cocoa prices, more volatile supply chains, stricter regulations, and rapidly changing customer expectations. Next Level helps Barry Callebaut navigate this new environment while also unlocking growth opportunities. One of the core strengths of the program is its focus on improving planning, logistics, and end-to-end coordination. Better visibility and more efficient workflows have already helped the company handle inventories more effectively, which supports stronger cash generation, an essential part of its deleveraging strategy. These improvements also allow Barry Callebaut to decouple its performance from cocoa price volatility, reducing risk and stabilizing results. Next Level is also delivering major operational upgrades. The introduction of the Barry Callebaut Operating System (BCOS) is transforming factory performance, standardizing processes, and significantly improving productivity. In factories where BCOS has launched, production efficiency has improved by around 20% within six months. This type of progress supports higher margins, faster scaling, and a more reliable supply for customers. Next Level also drives targeted cost savings. The program includes more than thirty initiatives, with the goal of achieving CHF 250 million in one-time cost improvements. Around 60% to 70%t of these savings are already embedded. These efficiencies help improve margins and support cash flow, especially important during periods of high cocoa prices. They also give Barry Callebaut more flexibility to invest in growth and innovation. Importantly, Next Level helps position Barry Callebaut as a true strategic partner. By being more agile, more digital, and more responsive, the company becomes a trusted advisor rather than just a supplier. This creates a “flywheel effect”: better service leads to higher customer satisfaction, which drives market share gains, which enables further investment in innovation and efficiency, reinforcing the company’s competitive position.

The non-chocolate product portfolio is a reason to invest in Barry Callebaut because it strengthens the company’s long-term growth potential, improves profitability, and reduces its dependence on volatile cocoa markets. As the cocoa industry faces rising costs, supply disruptions, climate challenges, and changing consumer expectations, Barry Callebaut is proactively expanding into categories that offer higher returns, faster growth, and more strategic flexibility. One major element of this strategy is the company’s push into cacao coatings, sometimes known as compounds. These products require far fewer cocoa beans per ton and are therefore much less sensitive to cocoa price spikes. They are also less capital-intensive to produce, offer higher margins, and are growing faster than traditional chocolate due to reformulation trends and cost pressures faced by food manufacturers. Customers increasingly use coatings to lower costs, reduce cocoa content, and innovate with new textures and functionalities. Barry Callebaut reports that coatings are outperforming chocolate in many regions, including strong growth in Western Europe, the world’s largest chocolate market. This shift directly supports the company’s financial resilience and earnings stability. Beyond coatings, Barry Callebaut is accelerating innovation in non-cocoa alternatives that mimic the taste and experience of chocolate without relying on cocoa beans. These innovations are not meant to replace traditional chocolate but to complement it, allowing the company to meet new sources of demand. The long-term commercial partnership with Planet A Foods (maker of ChoViva) is a milestone in this journey. ChoViva uses locally available crops such as sunflower seeds to create chocolate-like products with far lower environmental impact and significantly greater supply security. This partnership enables Barry Callebaut to scale production and bring these alternatives to mainstream customers, unlocking entirely new product categories that are not constrained by the global cocoa supply. This diversification supports Barry Callebaut in several important ways. It reduces exposure to extreme cocoa price volatility, which has recently driven up inventory costs, debt levels, and cash requirements. It expands the company’s ability to deliver stable long-term supply to customers even when cocoa availability tightens.

Emerging markets are a reason to invest in Barry Callebaut because they represent one of the most powerful long-term growth drivers for the company, with demand potential far beyond what is possible in mature Western regions. Barry Callebaut is uniquely positioned to benefit from the rise of emerging-market consumers, especially in Asia, where 2,5 billion people are entering income levels that allow them to spend more on discretionary products like chocolate. Chocolate consumption in many of these countries is still extremely low compared to Europe or North America, which means the runway for growth is decades long. Even small increases in per-capita consumption translate into enormous volume opportunities for a large B2B supplier like Barry Callebaut. Recent performance shows how strong this momentum can be. In Asia, the company delivered double-digit growth over the last six months in fiscal year 2025, even while China, a key market, remained weak due to low consumer sentiment. This highlights the strength of Barry Callebaut’s regional strategy and the resilience of its operations. Growth in India, Indonesia, and the Middle East has been especially strong, offsetting pressure in China and developed markets. Latin America is also contributing with solid growth of around 6%, driven by innovation and increased demand for coatings and value-added solutions. China is an especially significant long-term opportunity. Chocolate consumption in China is still extremely low and remains largely untapped. Barry Callebaut views this market as a multi-decade growth engine, not a quick win. The company is laying the foundation now, through localized teams, innovation tailored to local tastes, and closer collaboration with regional customers, to capture growth as consumer sentiment improves and the category develops. Emerging markets are not only large, but they are also becoming more sophisticated. As incomes rise and Western-style food trends spread, consumers increasingly seek premium products, unique flavors, and high-quality chocolate experiences. Barry Callebaut sees Asia as both a growth engine and an innovation hub, where new applications, premium offerings, and differentiated products can be introduced. This aligns perfectly with the company’s focus on expanding the high-margin Gourmet and Specialties category in these regions.

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Valuation

Now it is time to calculate the share price. I perform three different calculations that I learned at a Phil Town seminar. If you want to make the calculations yourself for this or other stocks, you can do so through the tools page on my website, where you have access to all three calculators for free.

The first is called the Margin of Safety price, which is calculated based on earnings per share (EPS), estimated future EPS growth, and estimated future price-to-earnings ratio (P/E). The minimum acceptable rate of return is 15%. I chose to use an EPS of 33,83, which is from 2025. I have selected a projected future EPS growth rate of 15%. Finbox expects EPS to grow by 37,6% in the next five years but 15% is the highest I use. Additionally, I have selected a projected future P/E ratio of 30, which is twice the growth rate. This decision is based on Barry Callebaut's historically higher price-to-earnings (P/E) ratio. Finally, our minimum acceptable rate of return has already been established at 15%. After performing the calculations, we determined the sticker price (also known as fair value or intrinsic value) to be CHF 1.014,90. We want to have a margin of safety of 50%, so we will divide it by 2. This means that we want to buy Barry Callebaut at a price of CHF 507,45 (or lower, obviously) if we use the Margin of Safety price.

The second calculation is known as the Ten Cap price. The rate of return that a company owner (or stockholder) receives on the purchase price of the company essentially represents its return on investment. The minimum annual return should be at least 10%, which I calculate as follows: Barry Callebaut had a negative operating cash flow in fiscal year 2024 and fiscal year 2025 due to the elevated cocoa prices. Hence, I'm doing the calculations based on the fiscal 2023 numbers. The operating cash flow last year was 331, and capital expenditures were 212. I attempted to analyze their annual report to calculate the percentage of capital expenditures allocated to maintenance. I couldn't find it, but as a rule of thumb, you can expect that 70% of the capital expenditures will be allocated to maintenance purposes. This means that we will use 148 in our calculations. The tax provision was 92. We have 5,474 outstanding shares. Hence, the calculation will be as follows: (331 – 148 + 92) / 5,474 x 10 = CHF 583,49 in Ten Cap price.

The final calculation is called the Payback Time price. It is a calculation based on the free cash flow per share. Barry Callebaut had a negative free cash flow in fiscal year 2024 and fiscal year 2025, so I'm making the calculation based on the fiscal year 2023 numbers. With Barry Callebaut's Free Cash Flow Per Share at CHF 21,67 and a growth rate of 15%, if you want to recoup your investment in 8 years, the Payback Time price is CHF 342,08.

Conclusion

I find Barry Callebaut to be an intriguing company because it operates in a resilient industry that has grown consistently for decades, and I believe the company has capable management. Its moat is built on strong integration across the value chain, global scale, and deep, long-standing customer relationships. Given the nature of its business, ROIC will likely remain modest, and although it reached its lowest level in more than a decade in fiscal year 2025, it is expected to improve. Free cash flow has been negative over the past two years but is projected to turn positive in fiscal year 2026. Commodity prices remain a key risk because extreme volatility in cocoa costs affects cash flow, debt levels, profitability, and customer ordering patterns at a time when climate pressures and structural issues in producing regions make supply increasingly unpredictable. Shifting consumer trends also pose risks, as rapid changes in health preferences, diets, and ethical expectations can reduce chocolate consumption and force customers to reformulate, leaving Barry Callebaut vulnerable if it does not innovate quickly enough. Regulatory pressures add further complexity, with stricter rules on deforestation, supply-chain transparency, food safety, labor standards, and climate reporting raising costs and increasing the risk of disruptions or loss of market access. Despite these challenges, the Next Level investment program is a compelling reason to invest because it makes the company more efficient, more customer-focused, and better equipped to handle a volatile environment, supporting higher margins, stronger cash flow, and long-term growth. The company’s non-chocolate product portfolio also offers attractive opportunities, as coatings and cocoa-free alternatives provide higher margins, faster growth, and reduced exposure to cocoa price swings. Emerging markets add another long-term growth driver, with rising incomes and low current chocolate consumption in regions such as Asia, India, Indonesia, the Middle East, and Latin America creating significant room for expansion. While I believe Barry Callebaut is a strong company with meaningful long-term potential, I personally see better opportunities elsewhere in the market and will not be investing at this time.

My personal goal with investing is financial freedom. It also means that to obtain that, I do different things to build my wealth. If you have some extra hours to spare each month, you can turn a few hours a week into a substantial amount of money in a few years. If you are interested to know how I do it, you can read this post.

I hope you enjoyed my analysis! While I can’t post about every company I analyze, you can stay updated on my trades by following me on Twitter. I share real-time updates whenever I buy or sell, so if you’re making your own investment decisions, be sure to follow along!

Some of the greatest investors in the world believe in karma, and to receive, you will have to give (Warren Buffett and Mohnish Pabrai are great examples). If you appreciated my analysis and want to get some good karma, I would kindly ask you to donate a bit to the Botswanan cheetah. Botswana is home for 30 % of the earth's remaining cheetahs, and as there are less than 100.000 cheetahs left in the world, they need your help. If you have enjoyed the analysis and want some good karma, I hope that you will donate a little to the Botswanan cheetah here. Even a little will make a huge difference to save these wonderful animals. Thank you.