VCA results in long-term sustainable tax strategy for Barry Callebaut
On taking on global responsibility for tax at Barry Callebaut, the world's leading supplier of high-quality chocolate and cocoa products, Daniel Fehr needed to review the Group’s transfer pricing (TP) strategy to bring it into alignment with a business that has grown and expanded significantly over the last few years.
Going forward, the company was aiming for a long-term sustainable solution. Developing that solution meant first analysing the full global picture of where the organisation creates value. Barry Callebaut has operations in 30 countries around the globe.
PwC proposed our proprietary Value Chain Analysis (VCA) offering that compared the company against the publically available information of around 240 peer companies and key competitors to discover the true value drivers of the industry. Unlike traditional VCA services that tend to focus solely on data available within a firm, our empirical approach adds in external data to deliver a complete picture of the client’s global footprint.
© Barry Callebaut
Despite being unique - Barry Callebaut is the only publicly listed supplier of chocolate that’s solely focused on the entire value chain, from ‘bean to the chef’s table’ -, which made it challenging to find appropriate peer companies against which to compare the client, we identified and analysed an adequate number to deliver valid findings that impressed the client.
And having worked with Barry Callebaut for more than a decade, we knew the business well and understood how it was structured in each location. We were able to factor our knowledge into the analysis to create a more value-adding result. Findings were validated internally.
Results showed that indeed the company’s current TP strategy no longer entirely reflected how value is created in the value chain. Based on the VCA, we helped the firm refresh its TP policy and tax strategy to make sure it’s aligned with how the company generates profit. And that it offers the transparency required by a multinational player with regards reporting.
© Barry Callebaut
"Calling on its international network to bring the highest calibre TP specialists from across the world to work on the VCA made an extremely persuasive case for the power of the PwC network. It also offered us assurance that the results and recommendations it delivered would be a true reflection of our global business operations."
Reaching out to the best of our network proved to be a powerful persuader for the client that the solution delivered was the most optimal for the business as a whole, irrespective of borders.
As we’re part of a global network, the client was confident that we could deliver the same high standard of support, using the exact same terminologies in all countries. The project provided a prime example of how PwC can support companies across borders.
© Barry Callebaut
Covering the entire value chain, our VCA provided Barry Callebaut with empirical data which can be used to defend its position to the tax authorities in any of the jurisdictions in which it operates, when required.
Our consistent approach in all countries and regions, which is crucial when addressing transparency, helped the firm make sure it was addressing tax in the same way everywhere, consolidate the firm’s approach to tax and devise a long-term sustainable tax strategy. Easily understood by the firm’s board, the analysis brought the tax discussion to a new level within the firm and also offered comfort with regards how the company deals with sustainability from a financial and tax perspective.
The clear diagnostics delivery by the VCA showed where value chain issues were so they could be resolved effectively. As a result of the project, Barry Callebaut is now much better positioned in today’s complex and challenging environment.