Chocolate is Good for You

KFT, NSRGF

The world's largest chocolate manufacturer Barry Callebaut AG (EB:BARN) scored a victory Tuesday, winning the backing of a European food agency for its claim that Cocoa flavanols can be good for blood circulation.

The Swiss company said the European Food Safety Authority, or EFSA, issued a positive opinion on a health claim dossier it submitted last year, after the Chocolate maker provided evidence that the intake of 200 milligrams of Cocoa flavanols a day, or compounds that can also be found in Dark Chocolate, contributes to normal blood flow.

There is already some evidence that suggests that small amounts of Chocolate may be beneficial. The flavanols have been shown to lower blood pressure, improve blood flow and reduce heart-disease risk at least in part by stimulating production of nitric oxide, which relaxes vessels.

Barry Callebaut, one of the world's largest buyers of Cocoa, which it turns into chocolate for customers such as Nestle SA (VX:NESN),(PK:NSRGF) and Kraft Foods Inc (NYSE:KFT), said that it still awaits approval from the EU Commission for its health claim, which would give the Chocolate maker the right to use the Cocoa flavanols claim for 5 yrs within EU countries. The company said a final decision is expected at the beginning of next year.

Barry Callebaut said it is the first company in the 27-member bloc to obtain an official validation of the positive effects of cocoa flavanols.

The company said it sees considerable market potential, including for applications in Chocolate drinks, cereal bars and biscuits.

Barry Callebaut's customers using the high-flavanol Cocoa products would be able to apply the claim on their products and packaging, it said.

Winning such a health claim is not easy and could give Barry Callebaut and its clients a definite competitive advantage.

Every food company would like to have products presenting a health benefit and if you receive a health claim it helps you differentiate from competitors.

The Swiss company carried out over 20 clinical studies looking at effects of Cocoa flavanols on people since Y 2005, using Cocoa powder and Chocolate products made through a special process it developed that preserves up to 80% of flavanols, which would be mostly destroyed in conventional Chocolate-making procedures.

The worldwide market for so-called healthy products is a fast-growing business for food giants, such as Groupe Danone SA, Nestle SA and Unilever, along with hundreds of smaller companies.

Research by Euromonitor International showed the global market for health and wellness food and drinks is forecast to rise to US$691-B by Y 2015 from US$601-B in Y 2010.

Food makers have embraced this strategy because it allows them to distinguish their products and charge more by adding healthy supplements, health claims are worth billions of Euros in annual sales.

Paul A. Ebeling, Jnr.

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.