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Bonduelle looks forward to 1992 Europe, but doesn't think changes will be major.

Bonduelle Looks Forward to 1992 Europe, But Doesn't Think Changes Will be Major

President of French vegetable giant gives exclusive interview. Among topics discussed: more producer specialization; greater retail distribution concentration; own label strength.

With all the bombast over the promise of post-1992 integration of European markets and what it holds for food companies doing business on the Continent, one concern that does not seem overly concerned is Groupe Bonduelle. Perhaps because it's already firmly entrenched in many EEC countries.

"We've been living in Europe without frontiers now for 20 years. The main areas of change will be banks and transport. What I hope will happen is a single currency for Europe, because it is very difficult to conduct business when one must change money every day."

That's what Bruno Bonduelle, president and general director of the Lille, France-headquartered frozen and canned vegetable producer, told Quick Frozen Foods International. Pointing with pride to a small flag of Europe in his office, he continued:

"We produce in Spain to sell in England, and in England to sell in Spain; in Flanders for Germany; in Belgium for Portugal. Life for us in 1993 should be much easier. Trade between different European states will increase.

"At the same time, I doubt that non-EEC countries have anything to fear as barriers against outsiders are not likely -- certainly not in respect to frozen vegetables. After all, their limited added value makes them difficult to export to most agricultural nations in the first place. However, Japan is a special case because it cannot grow enough vegetables at home to meet rising demand."

Specializing in canned and frozen vegetables, the Bonduelle Group has seven divisions: Central Europe, with operations in France, West Germany, Austria and Italy; Northern Europe, with units in Belgium, the Netherlands, Great Britain and Denmark; Conserveurs Associes and Bonmais, French firms devoted respectively to canned vegetables for private label and canned corn; Spain; Portugal; Asia. The Asian division's only company is in Japan.

The fortunes of the group are surging, although performance varies from country to country. Total turnover grew 24% in 1988, as sales rose from 2,530-billion to 3,150-billion francs. France accounted for approximately 41% of this turnover, with sales at 1,289-billion francs, an increase of 9%. In West Germany, which experienced problems due to restructuring and weather, turnover dropped from 703-million to 651-million francs; but in Italy it increased 12% to 91-million francs.

In its largest market, France, 150,000 tons of canned vegetables and 66,000 tons of frozen vegetables were sold under the Bonduelle name in 1988. This makes it No. 1 in sales of the latter to households, with 30% of the market. It also claims to be tops in restaurant volume, with a 21% share. Although domestic demand for frozen vegetables in general did not increase from 1987-88 due to a mild winter, Bonduelle's frozen sales still managed to grow 7% during that period. In canned vegetables it was first in sales to restaurants and second in purchases by households.

In 1988 the packer sold about 1,000 tons of frozen vegetables to Japan, but activities there consisted essentially of acquainting importers, distributors and top quality restaurants with its offerings. During the past two years the company has explored production possibilities in Thailand and China for the Japanese market. It expects to expand this initiative, at least in China.

The Japanese sector is especially attractive because it consumes an estimated 400,000 tons of frozen vegetables and potatoes a year. At the same time, it is able to domestically produce only 100,000 tons annually. All the while, the market is growing fast. "The Japanese people are eating more and more like Westerners and less and less as they used to 20 or 30 years ago," explained the Bonduelle president.

The Pacific island economic giant exports so many manufactured good to Europe that the cost of return-trip freight is relatively low as transport companies do not want their ships to sail back to Japan empty. Moreover, the Japanese are presently fascinated with France and things French, just as Americans were after World War II. They are particularly fond of French cuisine, Bonduelle noted.

The packer also has its sights set on Eastern Europe -- especially Hungary, Czechoslovakia and Poland. For details, see page 136 of the January, 1990, issue of QFFI.

Last year Bonduelle acquired a 90,000-ton capacity factory in Kortemark, Belgium, from Talpe. As a result it now controls 60% of the production of canned vegetables and, with its two Belgian brands -- Star and Marie-Thumas -- claims virtually 100% of the brand-name market in Belgium. The plant's 20,000-ton annual frozen output is sold to domestic buyers as well as customers in the Netherlands, U.K., Denmark and France.

Also in 1988 Bonduelle formed its Portugese company by combining forces with the Portugese distribution group Sonae to sell canned and frozen vegetables under the Bonduelle name and to operate a factory for freezing vegetables. Its Conserveurs Associes gained majority control of the canned vegetable company Gravier at Orleans and bought the stocks of another canned vegetable firm, Vernet, that was being liquidated. This action reduced the number of French firms canning vegetables to seven, down from 17 in 1985, and 70 in 1965.

In 1989 Bonduelle reached an agreement with the Greek company Trofina to distribute its frozen line Grand Public throughout the mainland. Previously its one distributor there was the chain Alpha-Beta, which had stores only in Italy.

"Our ambition is to be everywhere on the Continent . . . We would like to sell one brand of frozen and canned vegetables all over Europe," Bonduelle told QFFI. "So, there's a long way to go."

The president pointed out that his firm already enjoys a unique position, as many competitors who specialize in vegetables are generally only interested in their own countries. "In Spain we are No. 3 in frozens, while exclusive Spanish market companies rank first and second," explained Bonduelle. "The same is true in Italy. In France we're No. 1."

Rivals that conduct business in more than one country -- such as Nestle with its Findus subsidiaries, and Uniliver's Iglo brand -- sell many products besides vegetables. "For them vegetables are of little interest, because they have low added value," said the Bonduelle president. "Such companies have to sell vegetables because of their bulk. They can't expect to make much money on them."

Distribution in Europe is becoming increasingly concentrated, pointed out Bonduelle. The French Promodes is building several huge Continent hypermarkets in Portugal. In Spain 75% of the hypermarkets belong to the French chains Auchan, Carrefour, and Continent. Auchan has just bought a very important hypermarket chain in northern Italy; and Mammouth and Casino, two other French chains, recently made respective alliances with the Belgian firm G. B. Inno and with a British chain. The West German distributor Aldi is already powerful in Belgium and plans to build 50 stores in France within the next two years.

Bonduelle thinks that by the turn of the century distribution in the EEC will be in the hands of no more than 15 hypermarket and supermarket chains. To meet this situation producers must themselves integrate and concentrate.

Patterns in distribution are forcing companies to compete aggressively with one another at the same time they expand and specialize. In some instances, contracts between a distributor and a single producer prevent the former from handling the products of additional companies, particularly those in another country. Bonduelle said that his group has not encountered such a problem. He does, however, see distributor (private label) products as a threat for producers.

Private label now accounts for almost half of the tonnage of canned and frozen vegetables sold in Europe. Name brand producers have to supply distributors with products for sale under distributor labels or be automatically excluded from a substantial portion of the market. Bonduelle has no intention of letting this happen to it. With almost 26% of is turnover from private label in 1988, it claims to be the leading European producer of private label vegetables.

Most firms also want to maintain their identity by marketing under their own names. The growing prominence of private lable is making that desire more difficult to achieve. Private label can never absorb 100% of the frozen and canned vegetable market, Bonduelle advised, the reason being that distributors will always want to stock a brand name in order to present customers with products that they can compare with their own. A high-priced name brand allows distributors to sell their own labels at a lower rate and make money. The catch for producers is that there is no room for two brands of frozens, because department shelf space is so expensive. There will be one name brand, plus private label, especially for vegetables, which have little added value.

Bonduelle employs 120 people who concern themselves only with farmers -- 5,600 of them on 60,000 hectares of land. These parcels extend almost 1,500 kilometers, north-south, from the Netherlands to Spain. "So it is very easy to play with all the climates," explained the president, "choosing the best location for a particular crop in a particular season."

In France the company sells approximately 250 different items, which include almost all the vegetables and mixtures regularly consumed. They are presented in 12 different types of packages, ranging from 115 grams to five kilograms in size. The offering embraces many types of frozen prepared items that Bonduelle was the first or among the first to present. The group introduced six varieties of frozen vegetable purees in 1985. It unveiled frozen precooked salads in 1987 with its "Croq' Salades" line that could be thawed under running water and then served.

Also that year it began to sell "Poeles `Minute,'" brightly-colored mixtures of pre-cooked vegetables that needed only to be warmed, without thawing, in a frying pan or steamer for about seven minutes. The next year it participated in a widespread trend by offering spinach, cauliflower, and "provencal" gratins to be cooked in the oven. A recent addition to ready-to-use vegetables is vegetables cooked in cream but low in calories. Like most low-calorie dishes, they are sold in packets that can be heated in a microwave or double boiler.

The tendency is toward elaborated products. The average price that Bonduelle France charged for frozen food rose 10% in 1988, because the sale of prepared vegetable dishes increased.

The trend is also in the direction of products that can be sold across Europe. Vegetables cooked in cream and distributed in the form of packages of tablets are an example of the firm's work in this area. Spinach cooked in cream represents only a small part of the French consumption of spinach, but sales of this dish are increasing at a rate of 20% per year. Although the Spanish and Italians do not cook creamed vegetables, creamed spinach, leaks, and endive are popular in West Germany, the Netherlands, and Belgium. Therefore, Bonduelle set itself the task of producing these three vegetables cooked in cream in frozen tablets for France, Belgium and the Netherlands. The task took six months and involved laboratory testing of 50 to 70 recipes for each vegetable; but the final products, each of which contained 12 ingredients, reportedly stood up well in consumer tests in each country.

Bonduelle believes that the canned vegetable market will stay at approximately its present level and that the frozen market will "grow and grow" in the future, though at a slower rate than in the past, when "increases of 6% to 8% were common." The reason for the growth will be dual. People are eating more vegetables to perserve their health, but housewives are less and less willing to devote time in buying and preparing fresh vegetables.

PHOTO : Bonduelle's new headquarters, designed to resemble a Flemish farm, is situated in fields

PHOTO : near Lille.

MARY DAVIS QFFI France Correspondent
COPYRIGHT 1990 E.W. Williams Publications, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Bruno Bonduelle
Author:Davis, Mary
Publication:Quick Frozen Foods International
Article Type:Interview
Date:Apr 1, 1990
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Next Article:French fries are still king but, the princes are gaining.

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