Belgian chocolate producer Baronie Group is ramping up its presence in the UK after rescuing a British supplier from insolvency.
The owner of the Duc d’O brand acquired the activities of Ashbury Chocolates out of administration this week as part of a long-term strategy to gain a foothold in the UK retail market - despite unprecedented pressures on confectionery firms. Baronie, which already works with Aldi and M&S, hoped a base in the UK would enable it to win more customers, director Jean-Marie van Logtestijn said.
“When you have the footprint in a country it is easier to do business with the national trade,” he added. “Our challenge always has been managing business relationships from Belgium. So the main reason for the Ashbury deal is to have a base in the UK to be able to grow the business on a constant level.”
Business restructuring partners Malcolm Cohen and David Gilbert at BDO were appointed as joint administrators over Ashbury Chocolates on 9 February, concluding a sale of the business and assets on the same day to newly formed subsidiary Baronie UK. The deal saved 236 jobs at a factory in the Midlands, and van Logtestijn said Baronie was “here for the long term”.
Founded in 1896, Baronie has 10 factories in Germany, Switzerland, the Netherlands and Belgium, with 1,650 employees, revenue of €535m (£395m) and production capacity of 150,000 tonnes. About 40% of its output is branded, 40% private label and 20% is made for retailers.
Ashbury was hit by a slowdown in the private-label chocolate sector, which eroded its working capital position. Van Logtestijn pointed to rising raw material costs of cocoa and hazelnut and currency fluctuations as two of the main difficulties for chocolate producers at present.
“If you look at the competitive environment of mass retail, they make exactly the opposite price move,” he said. ”To have a sound business you need to increase prices. Our customer base looks for price decreases. It is not a happy marriage. That creates problems in chocolate producing companies which are heavily dependent for their result on mass retail.”