February 6, 2018 / 7:00 PM / 2 years ago

Singapore's Olam to open U.S. cocoa powder plant in Chicago area

NEW YORK, Feb 6 (Reuters) - Global commodities trader Olam International Ltd is building a cocoa powder manufacturing facility outside Chicago, according to a company spokesman and a local official.

The plant marks the latest step in the transformation of the large Singapore-based cocoa trader into a bean processing heavyweight. In 2015, Olam scooped up the cocoa assets of rival Archer Daniels Midland Co for about $1.2 billion. That did not include ADM’s U.S. chocolate plants.

Olam is building the nearly 183,000-square-foot facility which is expected to be fully operational by mid-2018, said Matt Eastman, a planning and zoning administrator for Bolingbrook, Illinois, where the plant will be located. Olam spokesman Levi Hensel confirmed the company was building a new facility, but declined to provide details, citing a quiet period ahead its quarterly financial report.

Olam sources beans in Africa, Asia and South America and processes about 700,000 tonnes of cocoa powder, liquor and butter in 12 facilities worldwide, according to its website. That represents a notable chunk of a global grind of 4.3 million tonnes in the 2016/17 crop year, according to International Cocoa Organization data.

The global cocoa market has been consolidating into the hands of fewer players including Cargill Inc, Barry Callebaut AG and Blommer Chocolate Co, most recently with the bankruptcy and unraveling of mid-sized cocoa trader and processor Transmar Group.

Olam acquired eight cocoa processing facilities from ADM with the 2015 purchase. It sells into North American and European markets from processing facilities in Canada, Germany, Spain, the Netherlands and the United Kingdom, according to its website.

Last year, Olam opened an “innovation center” in nearby Willowbrook, Illinois, where it assists customers on recipe development, but this would be its first U.S. manufacturing site, the website showed.

The Bolingbrook facility will create 50 jobs in a town where companies such as Goya Foods and Lindt & Spruengli AG’s Ghirardelli also have facilities, said Eastman on a phone interview.

Cocoa powder is used in food products like cookies, ice cream and snack bars. Processing margins have risen as cocoa prices have tumbled for two straight years on excess supply, said industry sources.

Cocoa grinding, a traditional gauge of demand for chocolate’s key ingredient, in North America fell to a five-year low in 2017, while in Europe it rose to a six-year high.

Reporting by Chris Prentice; Additional reporting by Marcy Nicholson; Editing by Richard Chang

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