BARN Read-Across: Demand Still Weak

Research evidence excerpt

BARN Read-Across: Demand Still Weak

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of approximately GBP3,000/t.

More relaxed on cocoa prices vs prior cycle: BARN management stressed that the industry

is entering the 2026/27 crop year in a much healthier position than during the 2023/24 cocoa

crisis. It expects the current crop to deliver a significant surplus for a second consecutive

year, leaving the industry well stocked, with more than 10 months of cocoa cover. El Niño

could create weather risks in key producing regions such as West Africa and Ecuador, but

management does not expect a repeat of the extreme price volatility, based on; abundant

inventories, improved sourcing flexibility and stronger supply chain resilience across the

industry.

Pricing fading before volume recovers: The chocolate market remains challenging, with

Nielsen data showing category volumes down 4.4% in the latest quarter despite pricing still

running around 9% above last year. Barry Callebaut highlighted that pricing is now rolling off

faster than a normal seasonal pattern. While pricing typically eases after Easter promotions,

management noted a more pronounced decline in net pricing this year as customers increased

promotional activity, product launches and media investment to rebuild demand following

the cocoa price correction. This is a less favourable backdrop for branded manufacturers, as

pricing is likely to keep rolling off before volumes recover, implying slower organic growth and

higher commercial investment.

Feng Zhang * | Equity Associate

Read-across for Lindt: We continue to see pricing and margin reset risks for Lindt. Barry's +44 (0) 20 7029 8491 | feng.zhang@jefferies.com

decision to raise volume guidance without upgrading profit is telling. Management stressed

David Hayes * | Equity Analyst