Cargill Inc. will significantly bolster its chocolate operations — and further consolidate the global chocolate industry — with a $440 million acquisition of six factories operated by rival food processor Archer Daniels Midland Co.
While the deal isn't likely to raise the price of a Snickers bar anytime soon, it will give Cargill, one of the world's largest privately held firms, more clout as a supplier to candy makers and other chocolate buyers.
About 700 ADM employees will join Cargill, which currently employs 2,600 in its worldwide cocoa and chocolate operations, extending from western Europe to West Africa to Indonesia. Cargill has been in the cocoa business since 1979, and also has interests in everything from meat processing to grain trading to road salt.
The deal particularly boosts Cargill in North America, where it adds three chocolate plants to existing ones it has in eastern Pennsylvania and Ontario. In Europe, where Cargill already has seven chocolate plants, it gets three more.
"I think it's a big deal for Cargill's chocolate operations," said Jack Scoville, a vice president and trader of cocoa and other commodities at Price Futures Group in Chicago. "It's a great move for them."
Chocolate demand has been growing at a nice clip worldwide, particularly in Asia, one of the reasons cocoa prices have risen about 25 percent over the past year.
Cargill and ADM play in two parts of the global cocoa business. They process cocoa beans, grinding them and turning them into cocoa butter and cocoa solids, which are eventually combined with other ingredients to make chocolate. Cargill and ADM also churn out so-called industrial chocolate, sold to companies that will turn the stuff into retail products.
Switzerland-based Barry Callebaut is the world's largest cocoa grinder and processor, followed by Cargill and ADM. Together, the three are estimated to process about 50 to 60 percent of the world's cocoa crop.
