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Bullish on the frozen food industry, Tiefkuhlinstitut head sees big growth.

Bullish on the Frozen Food Industry, Tiefkuhlinstitut Head Sees Big Growth

Economic and political union of Germany should pave way for doubling of market to two million tons in short time. The east already has home freezers in large numbers.

Manfred Sassen, managing director of the Deutsche Tiefkuhlinstitut in Cologne, thinks that the English translation of "Freezer Institute" is a wrong term. His organization is rather an association of all sectors of frozen food production, combined with cold storage companies and manufacturers of technical equipment, transport and packaging. He holds the membership of leading wholesale and retail companies of major importance.

"Foreign companies are also members, as long as they do business in Germany and have a branch in the country," Sassen told Quick Frozen Foods International." A number of such concerns use the facilities of their membership for talks and exchange of ideas with their German competitors and customers."

Besides that the statistics on the German market seem to be of great interest among all members of the Institute, particularly to those who have no access to these figures through their own market research.

Herr Sassen, age 46, is married and has two children. His 11 year old son already shares father's hobby of mountaineering.

After graduating with a university degree in business economy, Sassen held several positions including managing director of the German Food Traders' Association. In 1977 he was named managing director of the German Frozen Food Institute as successor of Dr. Gerhard Hein, who rose to general director and co-president of the German Food-Producers Association.

A Cross Section of the Industry

The increase in the Institute's ranks during the last years fills Sassen with pride. More than 25 new members have been registered, bringing the total count to 120. This includes most of the leading frozen food producers and large food retailers. So far only two companies from East Germany -- a producer and a cold storage firm -- have joined. The rise in membership was partly due to the lowering of fees for a few large frozen food producers such as Unilever's Langnese-Iglo and Dr. Oetker. This has encouraged many smaller companies to apply for membership because with lower contribution rates the dominant influence of the market leaders has been reduced.

"The main aim of the Deutsche Tiefkuhlinstitut is to serve as a communication platform for companies and individuals concerned with all aspects of frozen food," explained Sassen. That includes the exchange of economic, scientific, technical and legal experiences with the organization's scientific advisory board, whose members are leading German scientists in their field.

Another function of the Institut is keeping close contact with the press and other media, and to distribute informative material. Above all, Herr Sassen represents the frozen food industry in governmental and international bodies and reports to President Dirk Ahlers (Frosta Tiefkuhlkost GmbH & Co., Bremerhaven) and board members Heinz Fa[beta] bender (Rewe Zentrale AG, Cologne) and Dr. Karlhanns Polonius (Markt-und Kuhlhallen AG, Munchen).

Looking East

Herr Sassen expressed much optimism about the accession of the East German market: "Every second household in East Germany has a freezer unit, which is an excellent basis for a fast increase in the consumption of industrial frozen food," he told QFFI.

The wide discrepancy between the large number of home freezers and the relatively low number of adequate freezer cabinets in retail shops can be easily explained: "This is a direct result of the economic functions in a so-called `real socialist society'. Inhabitants of East Germany were constantly on the move to find something to buy. Whenever scarce food came on the market, people tried to accumulate stock for the future. Thus for many households the home freezer became the `larder for times of shortage'."

"In West Germany, on the other hand, the freezer compartment or the freezer cabinet serve mainly as a storage place for industrial products. Only in rural districts are the home-freezing and storing of fruit, vegetables, game, meat or fish still practiced.

How does the managing director see the future of the 39 cold stores in the old DDR? "Cool houses had a double function in East Germany", he explained. "Many served not only as storage rooms, but also as distributors of frozen food, mainly to caterers. Thus they acquired a complete knowledge of the frozen food market in East Germany."

But Sassen thinks many of them work absolutely uneconomically: "Their number will be halved within a short time because of lack of modern technical equipment and modern management. But there remains a question to be solved: What to do with the stock on hand? Their quality is partly not too bad, but at the moment it seems impossible to sell them on the market. The East German customers refuse to buy the unattractively packed products and prefer the West German brands."

Meanwhile most West German producers, trading companies and brokers have contacted East German partners. Letters of intent were exchanged and contracts signed. But most joint ventures, sales or takeovers will come into effect only after the absolute titles on property are cleared, the balance sheets are approved and the true value of the companies is agreed upon. Without unequivocal administration of the law in East and West Germany, foreign and national investors will continue to hold back.

But the muddled legal situation does not stop many West German food retailers from doing business in East Germany. Since it is impossible to take over existing shops or rent empty premises, some retailers set up businesses in tents, shipping containers or railway wagons. Where possible store rooms are rented from former LBP (farmers cooperatives) establishments.

Challenges Vary

But the conditions for manufacturers of frozen foods are quite different from the problems of the retail trade. Herr Sassen explained: "While some West German companies have arranged joint ventures with East German producers of vegetables or potatoes (e.g. Nordstern Bremerhaven with Elbtal Lommatsch), it seems obvious that the production of specialties like baked goods or ready portion dishes will remain in West Germany. Why should they build up additional production lines in the East?"

Quoting members of his Institute, the director added, "That means investing in new machinery and buildings and training people in techniques and skills they do not know about. If the temperaure during transportation can be kept at the right level we can produce in our modern West German factories and ship the products to every given place in East Germany."

Problems can be seen with inadequate transport vehicles and display cabinets in retail shops. Leading western manufacturers of equipment and cooling systems have started instruction courses for technicians. Linde has already established a complete network all over East Germany.

Up to now French fries, fish sticks and ice cream are dominating the display cabinets. "Of course it will take a while until the per capital consumption in East Germany will equal that of the West", said Herr Sassen, "therefore the overall turnover in a bigger Germany will grow during the coming years whereas the consumption per head will decline. But as the structure of the retail trade builds up and the income of the East Germans equals that of their fellow countrymen in the West, in a few years the people in the former communist state will enjoy our standard of living. Since the West German frozen food market consumed some one million tons in 1989, we are now heading for the two million mark in a united country."

PHOTO : Manfred Sassen is optimistic on the prospects of major frozen food growth rates in a united Germany.

PHOTO : Onion Quiche in cook-in package diotrays is available from Wagner Tiefkuhlprodukte GmbH of Braunshausen, Germany. Made from an original French recipe, the 150g, dual ovenable product is made of light dough with a filling of eggs, sour cream, fresh cream, smoked meat and cheese.

HANS HECK QFFI Special Correspondent
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Title Annotation:News from West Germany; Deutsche Tiefkuhlinstitut, Manfred Sassen
Author:Heck, Hans
Publication:Quick Frozen Foods International
Date:Oct 1, 1990
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