To go. Thank you very much, everybody, for joining us this afternoon. It is my great pleasure to welcome Peter Feld, CEO of Barry Callebaut, to the stage for this afternoon's chat. Peter, thank you very much indeed for joining us. I think perhaps before we move into questions about Barry and your work there, perhaps you could walk us through your career up to the point of becoming CEO and maybe your thoughts on the kind of culture that you fostered in the roles that you had. Yeah, it was a pleasure. Thank you very much, Tom, for having me. I think the, you know, some background, I've basically operated in executive roles in fast-moving consumer goods companies in Procter & Gamble, Johnson & Johnson, Bayer, software around Europe and North America in the global supply chain. Then actually spent 10 years in two investment companies of KKR, where I was running both WMF and then later GfK. Created value for the investors at that point in time. Always with a concept of bringing companies to the next life cycle. That's the same journey that we're on at Barry Callebaut today. Maybe as a, you know, first of a bit of the background, I've run and built factories for Procter & Gamble when they still had a food and beverage business in the early stage of my career, which is probably also the reason why I'm sitting here as Barry Callebaut CEO, because obviously I understand food manufacturing quite well from that perspective. Okay, perfect. Thank you. When you were announced as CEO with immediate effect in April 2023, the company was still feeling the effects of the WISA closure to some extent and perhaps increased scrutiny around the level of controls and oversight that was beginning to be put into the company. Can I perhaps ask you to describe the internal situation at Barry Callebaut from your viewpoint when you were first made CEO and what were sort of the important things that you felt you needed to deal with immediately? Yeah, I think first and foremost, I must say we're still a young company, right? We're only 28 years young when you think about it. While our brands that we have acquired over the years, Callebaut, Cacao Barry, you know, some of the other brands may date back longer, we as a business, a B2B chocolate company, are really only 28 years young. When I looked at Barry Callebaut still from the time when I was CEO of Jacobs Holding for that short stint from the outside, obviously, you know, we looked at a company that already was a global market leader, you know, with literally no competition out there except maybe our largest customers who operate a similar supply chain that we operate. It was obvious that we had sort of outgrown our shoes a little bit. While we have had that big size, you know, there were obvious opportunities in just improving value we are creating for our customer, service we are creating for our customer, you know, the sustainability aspects and then food safety and quality. That was apparent. It was clear that when I joined the company that we had a massive opportunity to take an already number one market player to, you know, a better position serving our customers for better and becoming advisors to our customers rather than just supplying the products that we serve to them. Okay, perfect. Thank you. Expectations were that you were likely to have to invest into the business to make it, for want of a better phrase, future fit. You then announced the BC Next Level Strategic Program in September of 2023. Perhaps you could walk us through the key elements of the investment plan and what were the main motivating factors in allocating where the investments went? I suppose what's the sort of north star of what you view where Barry could get to after these investments? Tom, when you think about more mature companies, and I mentioned we were a young business, right? Many other companies would every 10 years look over their shoulders and say, what served us well over the last 10 years, is that good enough to serve us well in the next decade? We thought of doing that for the first time in Barry Callebaut, or we did in fall 2023 when we launched the Next Level Investment Program with a clear idea that we can serve customers better. We based the strategy of Next Level on two pillars, if you want. The first one is really getting closer to our customers. The second one is simplifying digitized Barry Callebaut. That is the two pillars that we based the whole investment program on. When you think about it, you know, as a first intervention that we did is we established country cluster general managers in 25 country clusters globally, like in France or in Italy or in the Benelux, right? These are huge businesses for us, right? When you think about France, probably today a billion revenue business, and we were operating it from Belgium at that point in time. You know, food is so local. It was paramount that we actually established those local leadership roles to tell us what's needed in the market so that we can actually then develop the right innovation, the right infrastructure for them to work more effectively. That was the first pillar, right? Get closer to markets and our customers. That's highly appreciated by our customers as we are discussing today very local challenges. While they may have a global brand that we serve them from different locations, we have very local discussion. How does that matter for Turkey? And how is that different versus China versus India and other places? That is closer to markets. The second one is simplify and digitize Barry Callebaut. That is speaking mostly to the dispersed structure that we had as Barry Callebaut. When we grew up as a company, we had literally three chocolate companies globally and one global cacao business and a non-cacao sourcing unit. We had very different ways of doing the same work, order to cash process, probably 20 different ways, right? There is an obvious opportunity as we grow up and mature to simplify and digitize Barry Callebaut. That is the journey that we are on with Next Level. We are now today probably, you know, more than halfway through that. We see actually we're ahead of the plan in stepping up the game here. We see that also nicely in the organization as we bring the organization along in this journey. Okay, perfect. Thank you. If we look at BC Next Level cost savings and one-time OpEx together and then CapEx and capital benefits together, firstly on the OpEx and the one-time costs. On cost savings, you said at the end of last year you were 15% the way through the total and targeted 70-80% by the end of this year. Where have those incremental cost savings been targeted? Are you beginning to see any tangible benefits? Yes. Let me remind you first that this is really an investment program in the next decade of profitable growth, right? In turn, because we're doing work smarter, we actually also see synergies coming. That is how we see that, right? This is not a cost savings program. This is investing in a better infrastructure that allows us to serve our customers better and operate more effectively and efficiently in Barry Callebaut internally. That is the journey that we're on. You know, when you think about the EUR 500 million net that we're investing both in CapEx and OpEx, it goes all into the different areas I was mentioning earlier. We want to create better customer experience, you know, creating a better Net Promoter Score with our customers. How they actually see our services performing for them. We do that mainly in four areas. The first one is that we're creating better value for our customers, price and innovation. The second one is service. That's the on-time and full delivery. It's also the speed to market that we can create when the customer asks us, for example, for a new innovation to come. The third one is best sustainability. The fourth and not least one is quality and food safety. All of the 36 investments go against that. Because we are harmonizing the work, we're standardizing and digitizing it, we see benefits coming through. That's the EUR 250 million where we see 75% falling into the bottom line. We're well underway on that journey, as I mentioned earlier. We see, you know, works council agreements all completed in Europe, which is obviously always the biggest question. How fast can you do that? I must say that I'm pretty proud of our organization and our employees and the company that we've gone through that massive disruption that we did for the very first time in Barry Callebaut's history, very smoothly. We had maybe a, you know, get together in a factory for two hours. When you think about Audi and the strikes that they had, for example, in Brussels for, you know, when they had discussions about the factory for the Q8, there was a massive, or Q7, there was a massive discussion that they had. We didn't have any of that. I think that it shows actually that not just our employees, but importantly also our works council colleagues and the unions understood that this is an investment program, that we're doing the right things going forward. Well underway on that journey and, you know, confident that we're delivering the 70-80% by the end of this fiscal year to come into the bottom line. Okay, perfect. Thank you. On CapEx and the capital investment, what are the upgrades that have been completed? When do we see the benefits? Yeah. A lot of it is trickling through, as we just discussed. For the first half year, I mean, you mentioned 15% for end of last year, 40% for the first half year, the 70-80% by the end of this year. The main investments that we have there, or the main synergies that we're seeing there, you know, we're running a more effective manufacturing footprint. We had certain factories that we, over the years, had onboarded from customers where we were subscale. We had small units that simply did not scale, that were not fit for the future. We have taken four factories out of the network already. Obviously, these benefits fall into the bottom line right away. The other thing that we have is, you know, the digitization work that we are going on. When you think about it, you know, we are all so used to buying from Amazon. I always say that we need to create an Amazon-like customer service experience from Barry Callebaut for our customers. When you order something, you ought to know where's your product? Has it left Barry Callebaut? When is it arriving? Do we have the quality documents automatically submitted to the customers? It's just a seamless end-to-end process environment that we're creating. That's what we are investing against. Most importantly, we're also undertaking major changes on how we run our manufacturing operations. For the very first time, we're actually literally, you know, asking all our 8,000 factory operators globally to participate in the improvements that we can do for Barry Callebaut's manufacturing infrastructure, which we've never done before. You can imagine when you unlock that ingenuity of 8,000 employees that are working for us every day on a production line, that's a massive opportunity for us to grab. That's what we're doing. Okay. If I may, one of the criticisms that often gets put back to us is that are the systems in the business below where they need to be at all? Given that the OpEx spend on IT is a relatively small percentage of the OpEx spend and the CapEx on digital, I do not think you disclose that separately. What is the confidence that you can give to investors that the IT infrastructure and the management information systems that you are operating with now are fit for purpose and/or when will they be? First and foremost, we do not have an IT department anymore. We have a digital team. I can tell you when I recruited our Chief Digital Officer, Amy Arafa, who joined us from IKEA, he was a chief data officer there. The question I ask is, do you understand architecture? I have learned that in my last role at GfK, where we took a legacy market intelligence company to a prescription business model, right? That was based on, you know, different modules that we would sell to the customers where we democratized data and I knew about the importance of how to build a tech stack in the right way. We had never done that in Barry Callebaut because we had these different units that were independently doing things. Now we have a team that is, you know, clearly capable to do that. We have a, you know, pro in data and analytics, you know, that will help us just get more intelligence from all the work and knowledge that we have from the fields where we, you know, farm the products all the way to our customers. That is a major opportunity for us going forward. We have embedded two things in our program going forward. The first thing is that we have certain allowances, if you want, in OpEx and CapEx for the digital journey that we are on. We have also advised that we are not dropping all of the synergies into the bottom line. We have reserved and allocated, if you want, 25% of the synergies to be reserved for digital and licenses going into the future because we think that we need a certain infrastructure that will make us best in class. That is what we are doing. You know, could we go faster if we would have unlimited funds? Yes. We do not have unlimited funds, so we go as fast as we can afford. It is super exciting to see what the team is unlocking already today and the game changes that we already deliver today in the environment. Okay, thank you. I'd like to now perhaps move on to talk about growth in the context of the current cost environment and perhaps longer term. Firstly, in the context of BC Next Level and in the current cocoa price environment, do you believe that the cost plus model as it is is one that's validated by the current environment? Or do you think that there's going to be changes to elements of the model, in particular the types of costs that you didn't envisage having to manage, which you are in this environment that you didn't have to before? The first thing, and we shared that in the first half year results, we have on a, you know, price inflation, if you want, of EUR 3.1 billion, we have priced through EUR 3 billion, right? That is pretty unseen in the world, right? I mean, for a company to take that price increase through to customers. I would say that the cost plus model is protecting us very well against those volatile, disruptive price changes that we have seen. There is something to be said about pricing in a more transparent way, which we, you know, aim doing with the work that we have underway and price more to, you know, the strategy. Which customers do you invest in? Which customers do not you invest? Are you actually having the right logistics conditions with those customers? You know, are you rewarded for the right things, right? That is, let's say, opportunities going forward. I think that from a cost plus model, you know, this is giving us quite a robust backbone. We do see that there's obviously some opportunities to optimize it because we, for the very first time, and you may all know that for 20 years, the bean price was pretty much flat at GBP 2,500. Now we have the volatility sitting anywhere between GBP 5,000-GBP 10,000 over the recent period, now stabilizing a bit more at GBP 6,000. It is a totally new environment. Obviously, we're looking far better and deeper into the discussions with our customers when they, for example, ask us to source from certain origins like Ivory Coast, where we have direct sourcing quite vastly established. That actually requires for us to have a very long supply chain, which we then need to hedge. We need to pay margin calls if the prices of the cocoa increases. And there's a whole magnitude of complexity embedded in that where we now have discussions, very good discussions with our customers to shorten the cash cycle and to take a bit the air out of the balloon of this artificially inflated price point. Okay. Yeah, I guess the degree of financing costs and hedging costs have clearly been something that was not expected previously. On the balance sheet, how comfortable are you with the balance sheet and the dividend? Perhaps importantly, how comfortable are your lenders with your balance sheet? Yeah, let me just say, because you said may not have been anticipated. In fact, this environment was the thesis for us to invest in Next Level. We knew that the environment to make chocolate and deliver the supply chain to our customers would become far more complicated. That is why we are investing the $500 million. When you think about the bean price increases, I think the team has done an outstanding job to secure, in a first step, liquidity. You have seen us, you know, with very positive results on our Swiss bonds that we have raised, as well as on the recent EUR 1.75 billion bond that obviously was vastly oversigned. Now, again, I think that liquidity perspective shows the strengths of us being the market leader and actually being very capable to safely drive through this transition of higher bean price environment. In turn, now we have obviously secured the liquidity. We're now, of course, focusing on deleveraging the company and how do we do that? We've had earlier meetings where I talked about, you know, that we have sort of become a bank, which we don't want to be. We want to actually sell great chocolate solutions to our customers rather than being a bank. We have made great progress since November to work with our banks, but also internally shorten the cash cycle, but also talk with banks about what have they done with the energy industry, for example, when the crisis hit with the Ukraine situation. They were actually, you know, asked to support. We have great discussions going forward, you know, in how we actually set up different mechanisms for us to reduce leverage while having the right liquidity to actually perform our business with our customers. It plays exactly into the investment hypothesis that we put forward with Next Level. Just to be very clear on the dividend, that's to be not lower than the previous year. Yeah, we said that exactly. Yeah. Yeah. Okay. Has the balance sheet, I guess when leverage first started going up, there was a view that your balance sheet would be a source of competitive advantage and that you'd be able to take market share using your balance sheet. Is that something that you think has happened? I think it's happening as we speak. I think that, you know, many players in the industry will be not capable to continue to operate in this. And when you think about, you know, companies, you're talking about small, mid-sized companies that on the side, right, they may do certain things and they also happen to have a cacao and chocolate business. That, in my mind, is not sustainable. It's not sustainable from the cash outlay perspective and the cash requirements. It's not sustainable from the expectation. For example, in EUDR, the deforestation requirements that are coming up. I mean, to run that engine that actually has satellite tracking algorithms identifying where you have deforested areas and then actually send troops on the ground to figure out what's going on, it's impossible in the future for a mid-sized company to do that. Huge opportunity for us to have more market share actually in this environment. Okay. So here's the volume question. Maybe we can move on to the demand trends and volumes. Where are you currently seeing the biggest pressure on volumes? What is your expectation for how quickly these may be able to come back? Which parts of the business would you expect to see the earliest recovery? Is it large versus small customers? Is it in expansion of SKUs versus volume per SKU? Do you think you need to see the cocoa price down for that to happen, or is it perhaps enough that it gets to, or it could just be flat for a sort of 12-month period or more? I don't think we have to see cocoa price change, right? I mean, I would start from there. We knew that the price would go higher. We knew that the world has had a free ride on the West African farmer for too long, right? And we've been lobbying for, you know, having more money to go to the farmer for a decade now. In my mind, you know, that is not necessary. I think what we have done is, you know, we have repurposed our cocoa business significantly to be the supplier for chocolate, right? Historically, with the historic setup in Barry Callebaut, cocoa would operate as an independent unit on the market. If you let that happen, they would just buy more beans, buy more beans, buy more beans. The balance sheet exponentially goes up. That doesn't make any sense. With the bean price that we're in, you know, cocoa becomes a supplier to chocolate. It has always been a supplier to chocolate, but that becomes the real purpose of the unit. For us, you know, we've said from the very beginning since we had the capital markets day in November 2023 that we're all about chocolatey solutions. We want to sell chocolate. We want to sell compound solutions, which are the chocolate without the cocoa butter with fats and oils. We want to sell non-cacao products, which we can also talk about. We obviously sell cocoa powder, which is also a chocolatey experience because it goes into muesli, into chocolate bars, into ice cream, for example. This is the new world. We're reducing the cash cycle by doing that. We're focusing on delivering those solutions. From my perspective, I don't think we have to see a major change in the bean price. I think that the customers will adjust to that. I think that's pretty clear. We have the luxury to operate in a very high involvement category at a very low cash outlay. This is very different than the steel, you know, import taxes now that go up to 50% possibly. That changes the price of a pickup truck in North America significantly. That's not the case for us, right? We believe that, you know, we will, you know, see that through and that that will be actually playing to the benefit of Barry Callebaut quickly. Okay. Is there anything you'd add in terms of small versus large customers or the gourmet versus the? Right. We see, you know, various different wins and, you know, also contractions in certain areas, right? Customers that may not be able to operate in this environment contract, right? Customers that have shock reactions as we were discussing earlier when in November the bean price actually increases by 100%. It's obvious that the procurement department first goes in the brakes and you see a short-term six- to eight-week coverage reduction. In the mid-run, right, we see benefits already and new partnerships arising with customers in retail as well as in branded, as well as in gourmet. In gourmet, we see mainly, and that was the second big pillar in our strategy, we see more opportunities to optimize the go-to-market model for that. Okay, thank you. When you look at the longer-term growth potential of the business, where are you most excited about taking Barry to? Perhaps you could walk us through this maybe geographically and sort of by business unit and customer if you like. Yeah, let me talk about the four growth pillars that we've mapped out already in November 2023, which we're continuously driving forward as we speak. The first thing is that our largest customers, when you think about the top 20 customers, they still operate for historic reasons, 85-90% of the supply chain themselves. That's a huge opportunity for us as they have to focus their investments on the B2C side rather than on the vertically integrated supply chain. That's a great opportunity for us to do better service for them and on the backside gain more market share from them. The second thing though is that in gourmet, as you were saying earlier, we have a massive opportunity. We're already number one in many of the countries, actually most of the countries around the world, but we have a great opportunity to not just sell to distributors who then sell to the end customers, but to go directly to the end customer with a digital business model. We have our pilot out in Germany already. It has great functionality like subscription models, which will be very beneficial because probably the baker around the corner will use the same amount of pain au chocolat every day. Why would that change? When I have the end customer connection, I can promote. I can actually say something to Valentine's Day and to Easter and to Christmas. Huge opportunity to go in gourmet to the end customer. The third pillar that we have mapped out was the doubling of the specialties business in Barry Callebaut. That just speaks to some of the acquisitions that we have done over the past 10 years and that we did not scale internationally yet. We have a great company in Italy. We have another great company in the US. They still operate in Italy and the US, and we have not scaled it throughout the world. With our global R&D team that we now have, we can start doing that. You know, for us, that is a huge opportunity to take the specialties to a different level and not just sell partnership agreements into the FM accounts and win more market share there, but also come immediately and upsell basically with the specialties that we can actually sell to them as well. The fourth growth pillar that we discussed already in November 2023 and that we continue to plow forward on is Asia. In Asia, I mean, as you all know, we are European-based in origin business and we're just lagging in expansion in Asia. That's just for where we had a footprint and as we grew as an organization. Since two years, we have, you know, an Asian leader heading up our business. Vamsi Mohan Thati has been a leader for Coca-Cola for decades. He has been running China for them, India for them, and other places. That's giving us a totally different discussion on how do we explore the market opportunities with customers and how do we actually get traction on amplifying that. As we shared a few times, there's two and a half billion new consumers entering the industry in Asia, a huge opportunity for Barry Callebaut. Last thing I want to say to that, that also speaks for the compound opportunity. We are already today the largest compound company in the world, but it's only 35% of our portfolio. So we clearly see an opportunity here and, you know, we manifested that in building our new R&D center in Singapore, supported by the way by the Singaporean government, where we, you know, prepare for expansion into Asia at scale in a different way. I guess in addition to that, do you see then therefore there is the same level of innovation on the client side or the same willingness to accept innovation that you're producing from your R&D? Or is it that the cocoa price has led to a sort of paralysis at all? No, to the opposite. I mean, people are getting actually more excited about working with us and collaborating with us and tapping into the opportunities that we have. See, we had R&D in all three chocolate companies. When we invented something great for customers in Brazil, the Chinese customer, the European customer would never see that, right? Now we can scale that globally. On one side, we have dedicated teams for our customers, but on the other side, we can really unlock that growth opportunity for our customers where we let the innovation travel globally. Okay, thank you. The higher the cocoa price, the louder the discussion of alternatives. Can you perhaps offer us a perspective on the cocoa price outlook? How much do you see a higher cocoa price pushing the development of cocoa alternatives? If these increase in popularity, would you have the same market share of those as you would do in your current business? Yeah, let me start then again at the back. I mean, we have obviously started with our expansion of non-cacao solutions. We have a startup that we're collaborating with in Germany that, you know, actually do precision fermentation of sunflower seeds. On a waffle, this is an awesome product, right? It's the best tasting product globally. We are actually, you know, having, you know, exclusive agreement to actually take the company further. This is really exciting for us to do. We see far more traction and discussion with customers on doing that. Now, honestly, Tom, is this going to be beyond 10% of the volume or not? We will see. We do believe that we need to be offering all the chocolatey solutions to our customers. That includes non-cacao. You know, from a portfolio perspective, right, with the increased prices, we see great opportunity to operate, you know, more in compounds, right? We are also offering hybrids between chocolate and compound to our customers. We actually see more requests on innovation. We are also offering more on innovation to our customers. Right. Okay, thank you. As we come towards the end of our discussion, I wanted to ask you on the progress on your Forever Chocolate targets, especially on farmers' incomes, human rights, child labor, and on traceability. What progress has been made? Do you see the costs related to the improvements increasing and being at all a headwind to a higher margin that you need to overcome? What is the degree of reputational risk that you would see sitting within the company for investors, if at all, to bear in mind? Yeah, I do not think there is that at all, right? In fact, I mean, we are probably recognized as the one company that is really trying to do the right things. And I think, you know, I have a lot of discussion with our sustainability leader about us building sustainability versus buying sustainability. You know that there are a lot of people buying certificates to sort of outmaneuver what they are creating. We do not do that, right? We work with the farmers, you know, to really do the right things. We have, you know, the largest infrastructure for seedling production globally, both for cacao trees, but also for shadow trees. There is a lot and a ton of progress that we have made on our Forever Chocolate journey. But, you know, customers are also asking us more and more the question, what should we be doing in the right way? That's something that's close to my heart and to my journey that I'm in. When you come to Barry Callebaut, you find out that we're operating four different FMCG companies, very different programs. We know they're not hitting the sweet spot yet of what matters really for the farmer and for their productivity and livelihood. We have a lot of discussions on the CEO level on, is there a way to, you know, improve that, to standardize that? We call that our North Star program, which is one of the two pillars that we have in farming. With the current origins, that's what we're driving, right? We have a program where we know exactly, for example, we know and have segmented the farms. We know who's investing in productivity in the farms. We know who's sending children to school. We know what the impact is of that. We can steer very effectively where we invest and where we do not invest. We share that with customers. That is the journey that we do with what we call our North Star program in current origins and the smallholder farming. We do that together with our customers. This is not competitive. This is pre-competitive. The second thing, the second leg that we do is future farming. That is obviously, you know, a trend or a journey that we have embarked on in summer last year or May last year, just a year ago, where we launched a future farming initiative. We do believe that you can farm cocoa far more effectively versus what is happening today. That is the other journey that we are on. Okay, thank you very much indeed. As we come towards the end of our discussion, I wonder if you could perhaps give us your vision for where you would see Barry as a business in perhaps sort of two to three, maybe to five years' time. What embedded changes would you have seen or should we expect will be in the business? That is what makes changes at all. Yeah, how would you articulate that? Yeah, let me start with you all, with our investors. We're building a far better scalability in the company. That's probably the most important thing for you to understand. We have been this dispersed business. Now we're standardizing and digitizing that we're just scale. Anything we're doing far better versus in the past. Every dollar that we're investing in the future in the company will give us a higher return going forward. That's the investor side of things. For the customers, we will deliver better service. That's the journey that we're on where we take the entire company to a mindset of becoming better than our best customers can do it today themselves. That's the one thing. That's what we are not just talking about, but we're actually putting that into the money of the top 200. We have since October last year, we've embedded the Net Promoter Score into the long-term incentives of the top 200 of our company, which is pretty unseen in this industry. We do that because we want to reassure customers, but also make sure that our leaders of the company invest in the fit for future for our business. That's what we're driving there, right? Far better scalability, you know, we're clear that with creating a better Net Promoter Score, we'll be allowed to take far bigger market share from our large customers. We have the Asia opportunity that we're investing in. We're just starting up our India facility, our next India facility in Baramati. We've just agreed another facility in Indonesia with the board that we're putting in place to just, you know, go to fair share in Asia. We see growth coming from that, but at a far better service to our customers. Okay, fantastic. Thank you very much indeed for your time. It's been a fairly broad and varied discussion. Thank you very much indeed for your answers. Thank you very much for everybody for attending this afternoon. Have a good evening. Thank you very much. Thanks, Tom.