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07/03/2019 – News / Food Processing / Cocoa / Olam / Indonesia / Acquisition / Asia

Olam acquires Indonesia’s largest cocoa processor for $90m in a bid to capitalise on strong Asian demand


Olam International Ltd has purchased Indonesia’s largest cocoa processor, BT Cocoa, as it strives to capitalise on Asia’s positive demand trajectory for cocoa products, and become the largest consumer of cocoa powder worldwide.


The global food and agri-business announced it has acquired an 85-per-cent share of YTS Holdings Pte Limited – the sole owner of PT. Bumitangerang Mesindotama (‘BT Cocoa’) – for a consideration of US$90 million. The remaining 15 per cent of the firm’s shares are to be held by the founding members of BT Cocoa, Piter Jasman and family.


The new purchase will effectively add 120,000 metric tonnes of cocoa bean processing capacity and 30,000 metric tonnes of cocoa mass pressing capacity to Olam’s operations, enabling the firm to better serve increasing demand in Asia for cocoa products, especially cocoa powder.


“Significant synergies”


The new deal brings together a world leader (Olam Cocoa) in traceable cocoa sourcing and processing, with one of Asia’s leading cocoa processors (BT Cocoa). Alongside strengthening Olam’s brand portfolio, the new deal will lead to “significant synergies”, said the company in a statement, while “a competitive cost advantage will add further value”, it noted.


“We are excited to have the opportunity to rapidly expand our footprint in Asia and to develop this business with the founder and family of BT Cocoa,” said Gerard A. Manley, CEO of Olam Cocoa. “Our longstanding relationship will enable us to deliver world class cocoa ingredients and services to our expanded customer base and look to strengthen these relationships in the future in one of the fastest growing regions in the world.”


Olam Cocoa has been working closely with BT Cocoa for nearly three years through a Business Collaborative Agreement and has already made considerable financial and operational improvements, including helping BT Cocoa achieve a 30-per-cent reduction in energy consumption.


The new acquisition supports the worldwide positive growth trend of chocolate and cocoa ingredient consumption and the expectation that the need for cocoa processing will continue to grow, supported by additional investment in cocoa producing and consuming countries.


Addressing future trends in cocoa ingredients


In 2018, global chocolate consumption was above six million metric tonnes and is expected to increase further in the next five years. Indonesia is currently the world’s sixth largest cocoa-producing country and Asia is set to become the second largest consumer of cocoa ingredients in the world – led by China, India, Japan and the Philippines.


In particular, Asian demand for cocoa powder is increasing, with a five-year CAGR projection of eight per cent, according to Olam’s own studies. Growth in snack food categories like sweet biscuits and cookies, which accounted for 40 per cent of new product development in Asia in 2018, is driving that trend, noted Innova Market Research


BT Cocoa’s prominence as an existing supplier to leading chocolate and confectionery manufacturers in the region presents new market opportunities for Olam Cocoa’s ingredients portfolio, such as value cocoa powders brand Huysman, which was launched in Asia in 2018, and to complement premium cocoa brand deZaan. With its world-leading team of R&D and Product Development and Innovation experts, Olam Cocoa is well positioned to capitalise on these emerging trends to support the needs of regional consumers.


Another key trend is consumer awareness of sustainability issues and desire for greater transparency about how ingredients are sourced. As one of the world’s leading suppliers of sustainable cocoa, Olam Cocoa said in a statement that it is accelerating progress towards the goal of 100-per-cent traceable cocoa volumes from its direct origination supply chain by 2020.

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