The recent appointment of Brian Sikes as chief executive of Cargills, replacing Dave MacLennan, is notable for several reasons. First, he is only the 10th CEO in the company’s 157-year history, and second, although Sikes spent a short time as COO, he made his name at Cargill running the meat business.
As Cargill continues to navigate dynamic global markets, both operational excellence and a clearly articulated vision driven by purpose and values will define the company’s success, and there is no better person than Brian to lead Cargill.MacLennan, outgoing CEO
Cargills has stated in a letter to stakeholders as part of its annual report that the company’s focus is to ensure the world is fed. Food, it says, is a basic human right.
Cargill’s strategy seems to be to feed the world with staples such as proteins, starches and sweeteners. Investments in these areas, such as the $300 million commercial plant to produce renewable bio-based 1,4-butanediol (BDO) – the first in the US – show where the company’s focus lies.
Look also at their recent acquisitions, like chicken producer Sanderson Farms, which they purchased for about $4.5bn.
A supply chain crisis triggered by the pandemic and the war in Ukraine created great uncertainty in the agricultural markets. The company was able to take advantage of this and achieved a record profit of $6.68 billion dollars in the last business year, even surpassing the all-time high of the previous year.
Reading the 2022 Annual Report, the investment of $100 million in 2 Cocoa processing plants in Africa seems rather modest compared to other categories.
It is unlikely that Sikes, with his background, will change course, but is this a sign that the industry is in trouble or that there are simply more profitable opportunities?
Cargill has certainly outperformed the trading houses from which it emerged or even the major chocolate companies. Barry Callebaut, for example, reported a profit of $449 million in its last annual report. A big trading house like Louis Dreyfus earned $1.324 billion in 2020, according to Reuters. Both big-name companies are far below Cargill’s profits.
So it seems that other businesses are more profitable than cocoa. And as the regulatory environment changes and environmental factors bring major uncertainties to production, this industry could become even less attractive to a growth-oriented, ambitious company.