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Full speed ahead for frozen foods in thus far recession-proof Benelux.

Full Speed Ahead for Frozen Foods In Thus Far Recession-Proof Benelux

Almost without exception, business is booming across the board. Fruit, vegetable and potato processors are active; coldstores are full; equipment manufacturers are hard at work.

Busy, busy, busy! That is the state of the Benelux frozen food industry. There are no signs of recession to be found, excepting a slight hiccup in a certain part of the fish processing sector. However, this can be blamed on raw materials shortages rather than on lack of product interest.

The coldstore business appears to be booming (see separate story on page 167), as does machinery and equipment manufacturing. On the other hand, because of fluctuating weather patterns, fruit and vegetable yields have varied tremendously.

Overall, though, processors are reasonably happy. There were four casualties on the potato processing front, but that was due to overcrowding. The new concerns ultimately failed to break into an established trading pattern already producing sufficient end product to meet demand.

Two noteworthy bright spots on the scene are Eismann's development of home delivery services and the emergence of a pastry specialist that is marketing Vietnamese-style spring rolls.

Established some seven years ago as a shrimp importer, Western Europe Company BV entered the non-seafood industry during 1989 by testing a selection of Trinh's label spring rolls. Based on an original Vietnamese recipe, the outer casing is a type of pastry which does not absorb cooking oil or fat during the baking process.

Four fillings are available at the moment, with one being 100% vegetable while the other selections are combinations of vegetables supplemented with either lean pork, chicken or shrimp. All are low in salt and have no preservatives or colorings.

The spring rolls are available to caterers in quantities as great as 160 per box or as little as 20 per pack for smaller establishments. Retail boxes contain four units. Offering great menu versatility, they can be served as snacks, hors d'oeuvres, or as part of a main meal.

With home delivery food service showing solid growth in Holland, one of the principal players in Eismann BV. The company is part of Eismann GmbH, the home delivery market leader in Germany. After a slow start it can be reported that the Dutch subsidiary has now established eight strategic depots throughout the Netherlands. A fleet of 70 distribution vehicles is employed to service accounts on a three-week cycle.

Here's how the system works: Salesmen are initially hired as members of staff. Following a satisfactory probationary period of about six months they are offered an area franchise. Typical work days last 12 hours because customers with jobs outside the home can usually only see Eismann personnel after 5 P.M.

The sales call starts with the delivery of a professionally illustrated catalog which provides a full description of the extensive range of frozen foods offered. A followup is made the next day to discuss selections. On the third day the order is delivered. Three weeks later the pattern is repeated.

The bulk of Eismann's product line is obtained from well known frozen food processors. Its standard matches those achieved by such respected retail chains as Albert Heijn, Sainsbury's, Tesco, etc. The range extends from ready meals, vegetables, fish, meat and poultry to snacks, fruit and a large number of ice creams.

An innovative company, Eismann's products are 100% private label and available exclusively through their home delivery service. Development is the password at headquarters, where management has built a business that now stretches from Germany and Holland to Belgium, Italy, Spain, Switzerland and the United Kingdom.

Does the Dutch potato market continue to flourish? On the face of it the answer is yes, although 1991 saw several undercurrent situations which are bound to have an unsettling effect on a number of existing processors.

As for the raw material situation, yields are continuing to be satisfactory at 40.5 tons per hectare (compared, for example, to 35.7 tons in the UK). But there is growing concern about the levels of fertilizer and pesticide being used and the impact it could have on the environment.

The final 1991 crop was higher in total than 1990's, however, this is probably because more hectares were planted. (See table on page 50 with figures for yields and acreage of ware and seed potatoes.)

It is said that the continual heavy usage of fertilizers and pesticides is now causing so much worry that potato growers are surveying parts of eastern Germany to buy agricultural land. Not only is it cheaper, but it's also free of such contamination problems since tillers of the soil there lacked the wherewithall to employ intensive farming methods.

The Netherlands' actual processing and exporting of potato products looks good at first glance, but closer scrutiny of the figures shows a decline in the two major markets of Britain and Germany. The latter country's imports are surprising when one considers that the Iron Curtain came down in October of 1989. With an extra 15 million people to feed, more positive statistics would have been expected. Having said that, results of the first six months of 1991 suggest an improvement of exports in general terms.

From 1985-90 Dutch potato exports grew 68%, from 416,243 tons to 699,457 tons. So it is not surprising that investors were keen on sinking fresh capital into the market. The result proved disastrous over the past year, though, as 25% of all processing companies (three completely new organizations) have either closed down or been taken over.

In 1990 there were some 16 manufacturers of frozen potato products in Holland. During the year four companies got into dire straits, and indeed no longer produce in their own right. Select Frites has gone completely to the wall; Kuibo Frites changed hands, shutting down production of frozen potatoes entirely to concentrate on chilled potato lines. The other two outfits involved -- who, by the way, like Select Frites had only been producing for 12 to 18 months -- were Gerant and Polder Foods. The former was taken over by American potato giant Lamb-Weston, while the latter's plant was bought by McCain Foods Holland BV.

Despite the above, wholesale panic has not set in. On the contrary, demand for value added potato products is growing on a global scale -- and this pattern is likely to continue in the years ahead. But problems are confronting the Benelux producers on two fronts:

Firstly, today's modern equipment is so efficient that machines can literally churn out products 24 hours a day, seven days a week. Thus production is inclined to outstrip demand and seriously undermine pricing.

Second, new factories are being opened in other parts of Europe and beyond. For example, Quick Frozen Foods International was told that three plants are being planned or are now under construction in Germany's new federal states. Another is scheduled to begin operating in Spain early this year. Looking at the export table, on page 48, one sees that both Spain and Portugal have grown considerably as markets since 1985. These developments, coupled with greater competition from existing plants based in Germany, have upset the marketing strategy of established Benelux companies.

Reviewing the Players

There is no doubt that the big boys of the industry such as Aviko and McCain will continue to go from strength to strength, and it will be interesting to see if Lamb-Weston can join the leading companies by selling Europe on its American-style specialty products. In the USA it packs some 350,000 tons of finished product per annum. A complete range of fries is offered, with particular emphasis on light coatings of natural seasonings and spices.

Lamb-Weston had decided to tackle the McCain-dominated UK market head on. But whereas its American business is predominantly in catering and industrial segments, European activities have been aimed mainly at the retail side.

QFFI was informed that the company is backing its UK activities with an expensive, four-month TV advertising campaign which will run through March. Much of the marketing will surround two specialties: Seasoned Criss Cut Fries, based on a patented formulation and presented as either an appetizer or side dish; and Seasoned Twister Fries, which come flavored in either spicy or mild coatings.

To date Britain has been rather conservative in its taste for french fries and other potato varieties. But as the advent of flavored/coated crisps (or chips, in American parlance) certainly expanded the potato crisp snack market, it will be interesting to see if Lamb-Weston can convert the everyday eating habits of the British consumer in a similar fashion.

Van Den Broeke

Holland is not the only Benelux country to produce potato lines. Across the border in Belgium is a highly specialized plant belonging to SA Van Den Broeke NV. Privately owned and run by Guy and Luc Van Den Broeke, the Leuze-en-Hainaut company is very much in the forefront of the European frozen potato market.

Activities are quite diversified, ranging from the actual cultivation of raw material to manufacturing finished product and marketing it. Great emphasis is placed on research and development, a vital function which alone employs 20 people.

Heavy investment took place from 1985-89, when the equivalent of 25 million [pounds] was spent on developing highly sophisticated lines which are now capable of producing 120,000 tons per year. Individual machines process seven to eight tons an hour, achieving a 1991 production figure of 95,000 tons. Some 75% represents french fry output.

The company's leaders expressed confidence about the future, noting that Italy, Spain and markets in Eastern Europe are developing at a rapid rate. If projected figures are met then the factories will soon be up to full capacity of 120,000 tons per annum, which is probably the reason why even more investment is planned for 1992. A new office block will be completed this year, as well as further extensions to the existing plant.

McCain Foods Holland

As the old saying goes: It's an ill wind that blows no good. The news last year that Polder Foods had gone bankrupt was softened by the decision of McCain Foods Holland BV to buy the total plant at Lelystad in order to produce still more french fries under its label.

The transaction took place on Oct. 15, and by the 28th equipment had been completely overhauled to begin new production. Hourly capacity is eight tons of finished product -- 100% of which is fries for the time being. Two eight hour shifts operate daily, with a third to be added later.

McCain management is hopeful that it will be able to re-employ three-quarters of the original workforce. Meanwhile, all new senior staff are veteran McCain employees. They have been busy transferring technical know how from the world's largest frozen potato specialist to the Lelystad lines.

Aviko

Innovation is a word long associated with Aviko, and indeed such has kept it at the cutting edge of the international potato processing industry. Last year the Steenderen-headquartered concern introduced an edible cone-shaped container for french fries that has captured the imagination of environmentalists. Produced from potato powder, wheat flour, vegetable oil and salt, it tastes of potato.

Another in a long line of product developments is Pommes Sixtettes, which feature hexagonal cuts. The healthy-eating chip has many advantages. It is cut a little thicker than normal, thus ensuring that less fat is absorbed which helps maintain a pronounced taste.

FRUITS & VEGETABLES

The Benelux fruit and vegetable processing industry continues to prosper in spite of some crops' volume shortfalls. With weather vagaries again upsetting calculations, the business climate may best be described by this quote from J.T.A. Hulsen, general manager of ODC Oerlemans Diepvries Centrale BV:

"For several reasons the demand for deep frozen vegetables and fruit has increased enormously, even to the extent that supply cannot keep up with it. Add increased demand from traditional markets to the demand from newly opened markets and the conclusions are obvious."

Mother nature's impact, unification of Germany and the opening of other frontiers have created new business problems. Indeed, the situation has some growers casting their eyes around for new farmland. Hence it is expected that the eastern part of Germany will become a desired area to cultivate in the not too distant future. Farms in the old DDR are, on the whole, much larger than conventional Benelux plots of 1,000 to 2,000 hectares. So Germany's new federal states offer plenty of scope for crop selection.

A wet and cool spring was followed by a long, dry summer throughout the Benelux in 1991. Rainfall began to level out again in the autumn, as Belgium reported its wettest November of the century. The final results point to another up and down year for yields. ODC reported the following is one of its recently published bulletins. . .

* Cauliflower: The autumn harvest in Benelux was good. And although southern Europe did not start harvesting until December, prices are likely to remain stable.

* Asparagus: Until the July 1992 harvest from China, Europe will have to rely on imports from South America and Spain (March/April), so there is uncertainty about prices.

* Beans: Yield was drastically reduced by 40% at the end of the harvesting period. Benelux growers have produced whole beans up to standard, so no problems are expected on that front. However, sliced beans will undoubtedly become scarce in the coming months and prices are sure to rise. Yields of french and romano beans in the Netherlands are also well down, and shortages are inevitable.

* Peas: With little holdover from last year, prices for medium and A Grades are consequently even higher. Prices for B Grades (often used in various vegetable mixes) are also increasing.

* Carrots: Early winter crops are giving no rise for concern. On the other hand, yields for parisien carrots have been disappointing.

* Sprouts: Picking started in mid-November. Due to a dry summer harvesting plans were delayed and tonnage has been seriously affected. Auction prices were so high that the processing industry had little chance of purchasing fresh product. The yield is bad and if winter starts early with freezing temperatures in December, then serious problems will result. In fact, it is estimated there could be a 50% to 60% shortfall against northern harvests, leading to much higher prices.

* Corn: Hungarian and Yugoslavian yields are good. Also, although the lower valued dollar makes prices from the USA, Canada and Israel more acceptable, it should be remembered that this is a growth market. So despite the current positive supply situation, it is possible that raw materials may have to be bought from more expensive sources.

* Paprika: No major setbacks are expected. While the political upheaval in Yugoslavia is obviously of major importance, supplies are obtainable from Hungary, Turkey, Bulgaria and Greece. This season mainly red peppers are being produced, with quantities of the green variety from the above countries being limited -- thus supplies will come from Spain. Prices are still high.

* Leeks: As harvesting started late, price levels through the end of November were too high for the industry to begin processing. However, it is expected that sufficient supplies will eventually reach markets, although prices are likely to be 20% higher than last year's.

* Fruit: Quite a gloomy outlook is reported here. Prices for raspberries will remain high, with Yugoslavia being the only major supplier until January or February when the first imports from Chile are expected. Prices for cherries and blackberries also remain dear and are likely to become more expensive as demand outstrips supply. Prices for wild blueberries from Canada are also increasing, although they are partially offset by a more favorable dollar exchange rate.

Finally, a poor orange harvest in California, coupled with the fact that from January 1 Japan will import orange concentrates, means that prices are expected to jump.

As previously indicated, the availability of raw materials fluctuates from product to product. It is surprising, therefore, that processors in Holland and Belgium continue to enjoy increased production demands.

Reviews of some of the leading frozen fruit and vegetable concerns in the Benelux follow.

Pinguin

Pinguin NV has reported expansion for many years, and 1991 saw further leaps forward as a new processing line was installed to boost annual vegetable capacity by a further 5,000 tons.

A fifth packaging system came into use at the end of October. The West Vlaanderen, Belgium-headquartered company is gradually becoming fully automated in this department. This not only streamlines the system, but offsets the severe labor shortage which exists in this region.

Quality control, an integral part of Pinguin's regimen, has been improved even further by the introduction of a new coding system. Should the occasion arise, it enables quick trace-back capability so that even the field of harvest can be identified.

One further point of interest: because Belgium is a very small country in area, it is traditional for homemakers to buy fresh vegetables. However, over the past few years store operators have put their weight behind the marketing of frozen vegetables. This has led to a marked increase in retail sales of same. Pinguin, as the domestic market leader, has therefore been in a good position to take advantage of this trend and to maintain its supremacy.

Frostimpex

Frostimpex NV has for many years been serving the frozen food industry on two fronts. Firstly, a complete range of vegetables is available both to industrial users or private label marketers. Secondly, it offers a comprehensive, year 'round range of frozen fruit that can be purchased in either IQF, block-frozen or concentrated form.

Last year saw the addition of another string to the bow as the Ooigem, Belgium-based company began actual processing of fruit. With capacity of 18,000 tons per annum, it has already gained access to many European markets. A compact 20,000 cubic meter on-site coldstore has been built to stock a range of fruit and vegetable products. The former are destined primarily for retail and bakery applications. For the record, Frostimpex claims to lead the market in supplying frozen fruits to the baking industry.

Private label is another growth area for frozen fruit and vegetable sales. Quality control stands well to the fore with regular, farm to factory inspection of raw materials sources guaranteeing the enforcement of high standards.

Helsu Holland

Helsu Holland BV is a comparatively new organization set up to supply the processing industry with a comprehensive array of frozen fruits, vegetables, mushrooms and herbs. After some two years of trading, it has already established links throughout the international scene. Coupled with the company's experience of handling food in all sectors -- from farm and factory to distributor, retailer and caterer -- it is in a position to meet all demands.

ODC Oerlemans

ODC Oerlemans Diepvries Centrale BV finds further development necessary even though a major plant expansion took place in 1988. Early 1992 plans include the completion of a new coldstore and office block which is being built in the Dutch border town of Venlo. This will provide immediate access to large German markets and highways leading to all parts of central and eastern Europe.

Over the years the Venray, Holland-headquartered outfit has patiently built up a strategic network of sales offices and depots which now serve the whole European Community. The success of this planning can be seen in the strong growth the company has achieved throughout the retail and catering industries. In volume terms ODC is probably now the biggest supplier in Holland of potatoes, fruits and vegetables to these sectors. As for new products, six will be launched early this year. They will range from mixes to individual lines.

Helmink

Helmink BV of Varsseveld, Holland is a member of the Helmink Group. The companies produce an extensive line of frozen potatoes, vegetables and fruit in addition to bakery lines and whipped cream. All are marketed in "see through" packaging to industrial, catering and retail buyers in Europe, the Middle East, Far East and North America.

One of the company's strong marketing advantages lies in its mixed load trading flexibility. This allows customers to deal with a single company rather than a number of specialists. Convenience is realized through the issuance of just one contract, one order, one invoice, one delivery and, last but not least, one payment!

Yields and Acreage of Ware and Seed Potatoes in Holland
Crop Total Production Acreage Yield/ha
Year (x1,000 tons) (x1,000 ha) (in tons)
1986 4752 107.1 44.5
1987 4955 107.7 46.0
1988 4413 104.0 42.5
1989 4376 104.9 41.5
1990 4658 112.5 41.5
1991(*) 4735 116.5 40.5


(*) interim figures

PHOTO : Trinh's Vietnamese Loempias are packed for both retail markets and catering establishments. Four different fillings are offered: vegetable, pork, chicken, shrimp.

PHOTO : Golden Longs is one of the many lines produced by McCain Foods Holland BV. The company now has three production plants throughout Holland boasting total annual capacity of 200,000 tons.

PHOTO : Aviko's Pommes Sixtettes absorb less fat during cooking because of the chips' hexagonal cuts.

PHOTO : Epinards en Branches in 1,000 gram packs is new under Pinguin's Le Pere Andre label.

PHOTO : This 20,000 cubic foot coldstore in Ooigem, Belgium, was built by Frostimpex to support its recent entry into the fruit processing business.

PHOTO : Queens Garden "see through" window style packaging has proved to be popular with the Helmink Group's international customers.
COPYRIGHT 1992 E.W. Williams Publications, Inc.
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Title Annotation:Exclusive Market Survey; includes related articles
Author:Brown, Morrison
Publication:Quick Frozen Foods International
Article Type:Industry Overview
Date:Jan 1, 1992
Words:3567
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