The company said yesterday that it has entered a 10-year supply agreement with Morinaga, one of Japan's largest confectionery companies, a deal which will double Barry Callebaut's sales volumes in Japan. Chocolate manufacturers are keen to take advantage of the growing demand for premium products, and are targeting consumers with greater spending power and an awareness of the health benefits of chocolate. "The transaction with Morinaga will allow Barry Callebaut to gain a strong foothold in the Japanese market, which is driven by growing consumer demand for super-premium and health-enhancing chocolate," the company said. Barry Callebaut said it will lease production facilities from the company and will operate the cocoa and liquid chocolate department at the Amagasaki factory near Osaka. The company said it will also upgrade the production lines to produce higher quality chocolates to meet the consumer demand. "Its passion for nutritious and superior tasting confectioneries fits well with Barry Callebaut's focus on innovation and premium chocolate," said the company's chief executive officer Patrick De Maeseneire. "The transaction with Morinaga is a milestone in our strategy to strengthen our footprint in the fast-growing Asian markets." De Maeseneire said the company's planned expansions in Japan, China and India will help it access over 2.5bn potential consumers. "Japanese consumers particularly appreciate the health benefits of the cocoa bean and prefer premium chocolate with a high cocoa content, areas which are a great strength of ours," he added. The companies expect the transaction to be complete by the end of 2007 and Barry Callebaut aim to start deliveries to Morinaga within 12 months of this. "We regard this business alliance so significant for our future business expansion," said Morniaga's chairman, Gota Morinaga. "The alliance will enable us to obtain up-to-date information on the world chocolate market and more opportunities for product development. It will also help us to realise further manufacturing cost reductions and change our business model for more efficient operation." The supply agreement is for 9,000 metric tonnes of liquid chocolate a year and, following the upgrade, the total factory production capacity will be 20,000 tonnes. Morinaga is one of Japan's largest confectionery companies, producing confectionery, food stuffs, frozen desserts and health products. Annual sales for 2006 - 2007 were JPY167.2bn (€1.3m).