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FF market repositionings intensify as Scandinavian firms gear up for '92.

FF Market Re-Positionings Intensify As Scandinavian Firms Gear Up for '92

Anticipation of changes heralded by creation of a European internal market sees the big getting bigger and some of the small getting out while purchase prices are high. Meanwhile, frozen food consumption continues to rise.

DENMARK

Since the last in-depth market report on Denmark appeared in this magazine, exactly one year ago, more changes have taken place in the national frozen food industry than perhaps in any previous 12-month period.

The Danes used to be fond of saying that "small is beautiful," referring to the many small and medium size companies that are able to operate profitably in export markets dominated by multinationals. Now, faced with the dropping of EEC trade barriers at the end of 1992, the slogan seems to have changed to "big is better."

With the increased competition that the changes in the internal market are sure to encourage, many producers feel they must be of a certain size in order to protect their brands. And as commercial television is becoming more acceptable throughout Europe -- not to mention the satellite channels which broadcast across the continent -- retailers are asking for promotion to back up new and existing products. But no small company has the financial means or marketing expertise to mount such a campaign. Hence many processors are now of the opinion that it is better to sell out while their company is profitable and a good price can be gotten. The feeling is that he who hesitates will suffer lost market share.

Ready buyers have been found in two large firms: the Danish distillery, De Danske Spritfabrikker; and the sugar beet cooperative, Sukker-fabriken Nykobing. Thinking in terms of international markets, the companies have changed their respective names to the more pronounceable (and shorter) Danisco and SN Invest.

At the time of this year's annual survey in May, Danisco had added baked goods producer Mette Munk to its growing stable of food companies. And it was looking for others.

SN Invest has bought a 25% stake in family-owned seafood and ready meal maker, Rahbekfisk. Earlier this year it bought Frigodan, Denmark's largest vegetable producer, and merged it with its own vegetable company -- Falster Frost. This leaves only one other vegetable company in the country, Svendborg Konservesfabrik, and reportedly it is looking for a buyer. Danisco is said to be interested.

Commenting on the merger of his company with Falster Frost, Frigodan head P.H. Vittrup stated, "The joining of our two companies comes not from a wish but from a need." He explained that due to the low profitability in vegetables, processors must be of a certain size to take advantage of economies of scale.

But is it valid for companies to automatically assume that they must be of a certain size in order to effectively compete after 1992? In some cases this is accurate, but for many if not most companies merging or selling out is probably not necessary.

Throughout QFFI's trip this year, during which 35 firms were surveyed, many processors commented that they had studied the United States market in the belief that the same distribution and marketing patterns will evolve in Europe after 1992. While it is true that in the U.S. only the very biggest companies are able to sell their brands on a nationwide basis, it is also true that hundreds of small and medium size processors have always operated at profitable levels. These firms exist by marketing their brand names on a regional level while producing private labels for other sectors of the country.

Changes have also taken place at the Danish Frozen Food Institute which for over 25 years has promoted the industry and provided valuable services for its members. At the Institute's annual meeting on May 18, Torben Carlsson and Henrik Emborg retired from their respective positions as director and president. Taking their places are Svend Aage Hedegaard as director and Jan Lindman of Findus as president. Both men have their work cut out for them as under the previous leadership membership in the institute and per capita consumption grew considerably.

At the Institute's offices in Copenhagen, Mr. Carlsson commented that the current rash of mergers and acquisitions has been bad for membership. Mr. Hedegaard added that "the member list practically changes from one week to the next" and that membership had decreased to 85 from 89 last year, due solely to the combining of companies.

Every year, the Institute sponsors a two-week retail promotion in March. Frostival '89 was promoted heavily this year through the use of TV ads, which have only recently been allowed in Denmark. A contest was held in which consumers were asked to submit names for the penguin who symbolizes the campaign. Over 3,000 entries were received and the lucky winner was awarded DKK 10,000 in travel vouchers.

Although exact figures have yet to be tallied, it is thought that store participation was at least as good or better than in previous years. However, several institute members complained that Frostival has become mainly a price promotion which has no lasting effect on sales. Mr. Hedegaard stated that future emphasis would be placed on educating consumers to the benefits of frozen foods.

Every year the Institute develops quite extensive statistics on domestic consumption. It is significant to note that this year, in a move to have the industry become more internationalized, the figures were published first in English, then in Danish. In previous years just the opposite was true.

Looking at the statistics shows that Denmark has further solidified its position as No. 2 in per capita consumption with an increase of 7% to 34.6 kgs. Tonnage posted a 6.5% gain, growing to 177.262 tons. Prepackaged imports represented 20% of total consumption.

While there is no reason to doubt the Institute's data, there are some discrepancies between what the figures reveal and what processors stated. However, it should be noted that more respondents took part in the 1988 statistics and certain product groups have been further broken down into categories not recorded previously. The result of this is that the figures are more accurate, although some growth rates may be exaggerated.

Gains in consumption and tonnage came strictly from the catering side with retail posting a decrease of less than 1%. The Institute attributes this small retail loss to a mild autumn which enabled consumers to maintain garden supplies over a longer period. However, some processors are seeing a much stronger decrease in home market sales which they feel is due to a poor economy and higher taxes. The average Dane, who already suffers from the highest taxes in the world, has seen further increases in taxes. To economize, many are cutting back on grocery expenditures, thereby limiting the growth of some categories. The figures are not expressed in value, but if people are buying less expensive products the monetary value may be showing a much greater decrease.

The paradox in this is that the catering side showed a 12.78% gain in tonnage. If people are cutting back on retail purchases, it is hard to imagine that they are spending more money in restaurants. As a traveler, one can observe that restaurants all seem to be doing a pretty good business. However, J.C. Jespersen of Mou Dybfrost confirmed that the catering business was off. Part of this he attributed to a change in the tax laws which no longer permit business lunches to be written off. He further stated that in the town of Esbjerg, where Mou is located, most restaurants were now closed for lunch because of this change.

A closer look at some of the categories may indicate where the market is headed.

Vegetables and seafood posted healthy gains, but new sub-groups were added to these categories, making a direct comparison with previous years impossible.

Ready meals gained by 5%, but this was half of 1987's 10% increase. Meat and vegetable ready meals logged increases of 59% and 12.7%, respectively. Seafood meals enjoyed a whopping advance of 145.5%, but volume remained low at 523 tons. The growing popularity of this sector is probably due to the availability of ranges from Priess and Rahbekfisk.

It must be remembered that traditional products such as soups, dumplings and poultry dishes still account for the biggest tonnages in the category. And most processors continue to complain about a soft home market for ready meals.

Pizza, which supported the category in 1987 with a 54.5% gain, declined by 10.5% last year.

Meat halted its two year slide by recording an 18.6% increase. This came entirely from the catering side as retail tonnage slipped 4%.

Dough products rose a modest 7.1% with gains in every sector except flutes and French rolls, which declined 8.4%. Danish pastry and cakes grew by 258%, but volume is a low 544 tons.

In-store bakery development remains at a modest level in Denmark, but when this begins to take off the category should go back to enjoying the double digit gains of previous years.

Overall, processors seemed optimistic about future home market and export potential. Given the current tax structure, which severely limits the monetary incentive for company owners to expand their operations, it is truly a credit to the spirit of the Danish people that so much effort and hard work is put into the industry. A number of those interviewed were worried that future generations would not have the discipline to work as hard unless tax reform was instituted. In fact, some of the country's best talent has emigrated to the U.S., U.K. and other countries where greater material gains can be achieved with hard work. One equipment manufacturer informed QFFI that it was difficult to staff his U.S. office with Danes because when it was time for them to come home, many stayed in America and got jobs with competitors!

Microwaves Again on Move

Microwave oven sales, which had doubled every year since 1983, slowed severely in 1987 due to an excise tax on durable goods. This tax has since been lifted and volume in 1988 reached 55,000 units, up 20,000 from the previous year. Sales this year are expected to reach 100,000 when the effect of a full year without the excise tax is realized. Some 150,000 units are forecast to be sold in 1990, bringing ownership to 18% of households. Current ownership stands at 8%, up from 6% in 1987. This trend bodes well for vegetable and ready meal producers since they stand to see strong gains from increased microwave ownership.

Emborg Sees Opportunities

Although he is currently heading up sales to military bases in West Germany, Henrik Emborg has retired from the presidency of Emborg Foods and handed the reins to the capable Mogens Kaiser.

At company headquarters in Aalborg, Mr. Kaiser offered his views on impending market changes in 1992. Regarding the mergers and acquisitions that have taken place, he feels that opportunities will open up for smaller companies in niches where larger, more bureaucratic firms cannot operate. Regarding Emborg's fortunes, he believes that being a distributor not tied down to a production facility offers a distinct advantage. "There will always be a need for food companies that move products from countries with over-production to user countries," he stated. "And Emborg has the possibility to take advantage of market opportunities when they arise."

Product Manager John Mortensen explained that the firm is not very active in the European retail market so it will be largely unaffected by retailer demands.

Emborg is deeply involved with markets outside of Europe, particularly those in the Middle East. While this has been a difficult place to do business in recent years, sales have once again picked up since the end of the Iran-Iraq war.

Emborg's original business was in selling to American military bases in Europe, and this continues to be an area of strong activity. The firm was recently appointed the agency to sell Kraft products to U.S. posts in Germany, and is currently looking for other U.S. companies to represent.

The full Emborg line will be on display at ANUGA in October.

Svendborg Broadens Market

Being owned by the large cooperative FDB has been both a blessing and a curse for vegetable producer Svendborg Konservesfabrik. The advantage has been that it has had a large built-in home market selling to the co-op's retail stores. The opposite side of the coin is that no other Danish retailer will buy from it as this is regarded as supporting the competition. This is the reason given for the fact that Svendborg has made it clear it is looking for a buyer. However, given that this has always been the case and that competitors Falster Frost and Frigodan have recently been merged, the observer must conclude that other factors are involved.

Managing Director Jorgen Ludvigsen stated that the firm's turnover last year was up 40%, largely due to its popular range of stir fry meals and vegetable mixes. A new factory, opened last year, is now at full capacity and expansion is planned. A plant to purify waste water has been bult to comply with stringent Danish environmental laws. Export Manager Niels Sigh explained that although this has been costly, it will give the company an advantage in 1992 when all European producers must comply with the same environmental regulations--and in the long run actually saves money as waste water can now be re-cycled.

Some 75-80% of Svendborg's production is exported with Norway, Finland and Germany being main markets. Sales began in France two years ago and a market has developed for bulk products such as rice and carrots. Exports to Spain began 18 months ago and this now represents the biggest market for rice.

For the home market, a new line of soups has been introduced and export markets are being looked into as well. In the stir fry range, new products will continue to be released.

Mette Munk Buy Out

In 1976, Jens Moldrup bought baked goods producer Mette Munk from a Danish flour mill. The firm has now gone full circle with the flour mill, owned by Danisco, regaining possession on March 30. Mr. Moldrup will stay as director until Sept. 1 at which time he will move to the south of France. He will remain in contact with Mette Munk in a consultatory capacity.

Asked about his decision to sell the Odense firm, which his efforts caused to become a major pastry producer, Mr. Moldrup replied, "The future of the company is in better hands. They (Danisco) are far more capable than I of planning for the challenges of the future. Everything will no longer be based upon the shoulders of one man." With Danisco's vast resources and marketing clout, Mette Munk will be firmly positioned to meet the competition and exploit the opportunities offered by 1992.

Sales for the firm were good last year with France and the U.K. being cited as strong export markets. Business was a bit off in Norway, and Germany has been difficult with the market being very price conscious.

New products include a mint profiterolle for the U.K. Mette Munk's unbaked savory range has been extended with the addition of broccoli and smoked chicken and cauliflower, ham and cheese.

Dat Schaub

Broad-based exporters such as Dat Schaub are less concerned about 1992 than some other companies. Export manager Kirsten Hagedorn explained that while the Copenhagen-headquartered firm will take full advantage of new opportunities in Europe, they will continue to fully concentrate on other areas where the company is active.

Dat Schaub has always been active in the Middle East, where business is now picking up again since the Gulf war has ended. Mrs. Hagedorn described that area as being in a re-building phase, and demand for food products is steadily increasing.

Business in the Far East was said to be steady, and no markets have seen a decrease. Overall, sales were up slightly in 1988 and a similar gain is expected this year.

The company is doing well in the French retail market with products sold under the Dannka brand. Southern Europe is developing nicely and Dat Schaub has opened offices in Spain and Portugal. Italy is being strongly considered as a future growth area.

Following success in the catering market, fish and shrimp nuggets have now been launched in retail packs. Other new products in addition to a full range can be seen on the company's stand at ANUGA in October.

Nutana

Having begun frozen food production just three years ago, health food manufacturer Nutana has grown from strength to strength. Marketing Manager Bo Nielsen explained that the 91-year-old company, which has long had a firmly established name in health food circles, is now realizing its biggest growth in frozen foods sold through supermarkets. Nutana's range of vegetable burgers and ready meals appeal to health conscious consumers who are cutting down on their use of meat.

Visiting the firm's Bjaeverskov plant where the full line is produced, including dry and canned products, it was surprising to see how little space is actually devoted to frozen. Mr. Nielsen stated that the packaging machinery has been upgraded three times in the last three years to keep up with demand. Some 1.5 million units were sold in 1988, and volume is expected to hit 2.6 million in 1989. A new plant, strictly for frozen production, will be built on Jutland this year to keep up with increasing demand.

Current export markets include all of Scandinavia, the U.K. and Switzerland. Sweden, a key area, is expected to see a 100% increase. A subsidiary has been opened in Norway with 40 employees to handle sales and marketing and operate a large warehouse. Germany has been carefully studied, and Nutana is currently looking for two or three wholesalers in that country.

On the home front, 15 products are available in Denmark and the market has increased by 30%. In the autumn, an advertising campaign will begin on TV.

The range of vegetable ready meals continues to be extended and at least three new items will be added before the end of the year. Pizza has recently been added to the line.

Brodrene Gram

Talk to any seafood producer these days and about all you're likely to hear are complaints. However, if business at freezing equipment manufacturer Brodrene Gram is any indication, seafood must be booming.

Marketing Manager H.J. Knudsen explained that the Vojens-based firm is now selling more plate freezers and screw compressors to the seafood industry than ever before. In fact, currently monthly sales are almost exceeding figures for the previous two years.

One of the reasons for this sharp upturn is that due to pollution problems, more factory ships are being built for off shore processing. Unilever, for instance, will no longer buy seafood from the Baltic or North Sea, so fish must be caught in the North Atlantic and processed at sea to maintain high standards.

Another reason for the firm's success is the quality of its marine plate freezers. Based on years of experience, all freezers are designed for easy loading and un-loading as well as space saving.

Asked about export markets, Soren Gram commented that he sees vast potential in Eastern Europe. The U.S.S.R. has embarked upon a five year plan to build new cold stores, and Poland is now looking for financing to increase its fleet of deep sea fishing boats. Other Eastern countries are looking for financing as more banks in Western Europe are becoming receptive. Mr. Gram explained that if the economic changes in Eastern Europe persist, the effect will be much greater than anything that happens in the EEC in 1992.

Demand for Gram's ice cream equipment has also been strong. Sixteen major lines were installed last year and the outlook for 1989 is excellent. The demand has mainly been for high capacity equipment and a new line of continuous freezers and a flex filler for cones and cups have recently been introduced.

June 1 marked a major shift in the way the company has traditionally done business. With the exception of Denmark and third world countries, Gram no longer has its own contracting division. The effect of this is that the company can broaden its market by selling to former competitors, i.e. other contractors.

Royal Greenland

Since the end of last year, Royal Greenland has had a major restructuring of personnel and the way the firm conducts business. First, a brief history is needed to understand these changes.

In 1985, Royal Greenland came under the auspices of Greenland Home Rule and a vast sum of money was invested to expand production and sales over the next five years. Under the guidance of former Managing Director Mogens Weihrauch, an ambitious project was embarked upon to expand production and produce value added products. New offices and a 7,500 square meter factory were built in Aalborg.

Royal Greenland was not operated like other seafood companies in that the sole purpose was not to make a profit but to provide useful employment for Greenlanders with profits as a secondary consideration. However, late last year, Home Rule ran into financial problems and it became clear that Royal Greenland would have to pull its own weight. A new management team headed by Bjarti Mohr, has been installed in Aalborg and the company's direction has been reevaluated. Plans to produce ready meals, for which there was a doubtful demand, have been scrapped and North American sales offices have been closed. As Marketing Director John Gerlach stated, "We have gone back to square one and adopted a back to basics policy."

All aspects of the business are being controlled with fishing, production and sales being coordinated so that each sector knows what the other is doing.

Export Manager Jorgen Norup explained that every effort will be made to keep shrimp prices at a reasonable level; the company will not speculate by holding stocks in storage. "Our goal now is to earn the confidence of our customers," he stated.

The new plant, which is operating at about 50% capacity, will concentrate on shrimp processing and the smoking of salmon and halibut.

Overall, the outlook at Royal Greenland is optimistic. The firm will not be out of the red this year, but it is now in sight of breaking even. As Mr. Gerlach stated, "1989 is a year of re-evaluation and stabilization. We will then proceed forward in 1990."

Hatting

Baked goods producer Hatting Bageri continues to build on the success of its Danish pastry. Launched at ANUGA in 1987, the product achieved a breakthrough in that it requires no proving before baking, making it an ideal bake-off item for in-store bakeries and caterers.

Last year, an agent was appointed in the U.K. to cover in-store bakeries and so far the U.K. has been the biggest export market. To date, 30 accounts have been opened.

Norway and Sweden are developing well according to Marketing Director Ib Jensen. In Germany, business is a bit slower and Hatting has had to create demand by arranging in-store demonstrations.

All growth last year came from export markets as frozen bread consumption in Denmark was off somewhat. Also, in-store bakeries in the home market have yet to become a factor.

Garlic bread was introduced in March and initial sales are encouraging. Whole wheat and plain varieties of pita bread are currently in test market.

Hatting is on a constant program of quality improvement. In summing up the firm's philosophy, Mr. Jensen stated, "We make our products as good as we can at the time, and possibly better tomorrow." Hatting's full range will be on display at ANUGA.

Sabroe in the Black

Last year it was reported that after a year and a half of poor business, Sabroe Refrigeration was on an upswing and expected to be turning a profit again by 1989. Things have gone even better than had been hoped for and a profit of DKK 34 million was realized in 1988.

Flemming Boldvig revealed that business has remained strong for the Aarhus-based firm and the company's range of screw compressors has been expanded. Sabroe continues to make reciprocating compressors as well in the belief that in many cases, they can offer optimum efficiency by using a combination of screw and reciprocating compressors. It was reported that sales of compressors in Europe have been strong as processors gear up for 1992.

One of Sabroe's most popular innovations has been a pre-fabricated machine room. Built entirely within a standard shipping container, the machine room contains compressors, evaporators, condensers and monitoring equipment. In short, everything needed to plug into a cold store or processing plant.

A recent installation was made at a cold store in Greenland where, due to time limitations, a machine room could not be built on site. The entire room was built in a 30 foot container and installed in time for the new plant to be up and running as scheduled. Ten to 15 similar pieces of equipment are on the order books for delivery this year.

Last year a new belt freezer was developed, using a perfectly smooth belt to leave products unblemished. Two are now operating successfully in Denmark, one at a Dat Schaub plant and the other at Skagen Fish Industries.

On May 8, Sabroe bought a 75% interest in the Henry Soby company, Denmark's third largest refrigeration firm. Based just north of Aarhus and heavily involved in contracting, Soby produces pressure vessels and condensers. Having a special strength in the ice cream and dairy sectors, the company will complement Sabroe's expertise in the brewery and slaughterhouse sectors.

Iceberg Seafood

Iceberg, the largest independent seafood company operating in Greenland, continues to experience strong growth in spite of quotas imposed on its Greenland shrimp catches. At the firm's Copenhagen offices, Manager Flemming Kryger revealed that two new trawlers have recently been added, bringing the total number to eight. Six of these will continue to operate in Greenland waters while the other two will fish for shrimp in Canada in a joint effort with Ottawa-based Farocan, Inc.

Some 6,000 tons of shrimp were caught in Greenland last year, and 9,000 tons are expected this year. The Canadian trawlers should add another 2-3 thousand tons to the total.

Fifty-five percent of the firm's output goes to the Japanese market, with the remainder being distributed throughout Europe. Sweden, Norway, the U.K., France, Spain and Italy are the main markets. Iceberg will try to sell some product in the U.S. this year through its connection with Farocan.

An additional two or three trawlers are expected to join the fleet by 1990, although it is as yet unclear where these ships will be placed. Argentina and the Falklands are being studied as a potential fishing area, and Mr. Kryger will go to South America in October to discuss possibilities.

Jorgensen Engineering

As the world frozen food industry goes through an expansionary phase, processing equipment manufacturer Jorgensen Engineering is reaping benefits in a big way. Sales Manager Bent Jensen stated that 1988 was the Odense firm's best year ever, and 1989 should be better. In order to keep up with the increased demand, staff has been added in the electrical engineering department and design and development facilities have been expanded.

Eastern Europe has seen an increase in activity and complete processing factories for potato products have been installed in Czechoslovakia. In May, a complete line for mixing and packing pusta, a Czechoslovakian salad, was installed. The line is able to accurately meter four different ingredients so that precise quantities of each vegetable can be obtained.

Jorgensen has achieved considerable expertise in equipment for handling a variety of ingredients used in mixes including all types of vegetables as well as rice and pasta. Lines have also been installed at Svendborg.

Managing Director Hanne Jorgensen reported that the firm's Australian subsidiary, Tripax, has been very busy in the Asian market. Two blanchers were sold to China, and markets in Southeast Asia have seen increased activity.

The Irish subsidiary, Little Island Engineering, has been busier than ever. Originally begun to make components for the parent company, the firm now produces the full Jorgensen range. Ireland is currently placing a strong emphasis on the food industry and Jorgensen is playing an important role in supplying companies with efficient, high quality equipment.

NAF

Formed in 1918, Nordisk Andelsforbund, or NAF, is a buying organization owned by consumer cooperatives in the five Scandinavian countries. Last year, NAF bought 304,878 tons of various foods for its members. Frozen products are playing an increasing role, having increased in volume by over 41% since 1986 while total volume increased by just over 10%.

In fact, a new buying group, headed by Soren Haugaard Jensen, has been formed to handle frozen foods, indicating the priority given to this sector. Mr. Jensen stated that he is confident of the future of the new department, citing a tendency away from canned and dry products. Speaking of microwave ovens and their relationship to frozen foods, the buying manager revealed that surprisingly, Finland has the highest ownership in Europe next to the U.K.

Working through a headquarters in Copenhagen, NAF has buying offices throughout the world. The co-op is active in the U.S., South America, Spain, Italy, Germany and Hong Kong. A buying office was recently opened in Beijing, primarily for canned goods, but China is now proving to be a good source for a variety of frozen foods as well.

Cabinplant

A visit to Cabinplant is never uninteresting because the progressive equipment manufacturer is always creating something new. Anette Nielsen stated that the firm's latest development is a sorting and grading system called Scanline 500. Conveyorized products pass before a linescan camera which transmits one line of a product at a time to a computer. The computer processes the information contained in that line while the next is being scanned, resulting in high speed accuracy.

The system has widespread applications in the seafood and vegetable industries. Fish can be checked for quality, composition, volume and weight, while vegetables can be checked and sorted according to a variety of parameters. Following a successful field test, the new system was introduced at the World Fishing Exhibition in June.

Nineteen-eighty-eight marked Cabinplant's best year and the pace has not slowed this year. Offices have been extended at the Haarby-based plant and five new staff members have been added.

Recent installations include a salmon processing line and a complete herring plant in Norway, and a fish canning line in Germany.

Despite the growth in seafood equipment, the pace has not slackened in vegetable processing. Nine more of the firm's popular blancher/coolers have either been installed or ordered since last year, brining the total number now in use to 42. Blancher/cooler orders this year have been received from Europe, the U.S., China and Peru.

Schur International

With a history dating back to 1846, Horsens-based Schur International is one of Scandinavia's oldest packaging companies. Meeting at the organization's Flensburg, Germany, facility Peter Brudgam explained that out of a total turnover of DKK 1.5 billion, some DKK 200 million is derived from packaging material for the frozen food industry.

Four divisions are involved in food packaging: flexible films paper and paperboard, machinery and technology, and trade and service. The company's main objective is to provide complete packaging systems and solutions for its clients.

Recently developed, SchurTerm is a multilayer barrier film to be used on automated thermoform, fill and seal machines with evacuation and gas-flushing equipment. The film operates well in temperatures ranging from -40 [degrees] C to 121 [degrees] C, making it ideal for frozen products.

"Convenience food packaging is on our list of priorities," stated Mr. Brudgam. Referring to the current slow growth in microwaveable foods in Denmark, brought on largely by the tax situation, he called on processors to regain faith in the convenience food market. "If not, the Danish food industry and especially frozen will lose the market of the '90s."

Environmental issues are becoming increasingly important for packaging companies. Mr. Brudgam was quick to point out that Schur uses no materials that create waste problems. Even the plastic materials employed are well suited for disposal by burning.

One of Schur's main areas of expertise is in paperboard packaging which has seen renewed interest in light of environmental concerns. The firm continues to develop paperboard which is designed to be used mainly with Kliklok equipment. However, Schur will modify machinery to meet a customer's specific needs.

Vendsyssel

Although operating in what will almost certainly prove to be the most difficult year the salmon industry has ever experienced, smoked fish producer Vendsyssel is enjoying strong sales. Company President Peter Bamberger explained that the market has gone from a raw material shortage of two years ago to a serious oversupply situation. Mr. Bamberger reported that Norwegian farmed salmon is selling for half the rate of two years ago, and that many farmers are facing bankruptcy due to the low prices. Producers of wild salmon are now forced to compete on price.

While this price collapse has created a buyers' market for smoke houses, Vendsyssel is finding that it must increase sales to achieve the same turnover due to a lowering of retail prices. However, the Copenhagen firm has expanded its marketing area in recent years so there is always new business to be had.

Last year, a factory was opened in Malaga to take advantage of the growing Spanish market. The operation is working very well with the plant producing 70 tons of smoked salmon and trout per month.

The company's smoked salmon has now been available in Japan for over a year through a joint venture with Taiyo Fisheries. Reportedly, the product is becoming more popular there and sales have increased each month.

Daloon

Building on record sales in 1987, spring roll maker Daloon enjoyed a further increase of 8% last year. However, Marketing Manager Per Bo Christensen was quick to point out that growth was not as high as expected and new business has become tougher to come by due to increased competition.

More new products were introduced in the last 12 months than ever, most of them aimed at the Europe-wide trend toward lighter, healthier eating. Further efforts have been made in the French market with the firm's "light kitchen" range. However, Daloon has found that the term "light" means different things in different countries. In France, for instance, products labeled as such must contain less than a certain number of calories.

In Germany, where the green trend is probably stronger than anywhere, new meatless whole wheat rolls have been introduced. A savory souffle has also been launched.

The Scandinavian market remains strong with new products being introduced in Sweden and Norway. Both catering and retail sectors have been opened in Finland this year.

The U.K. turned in a strong showing in 1988 as well as other markets, but the Nyborg-based firm will place its main emphasis on France and the Northern countries this year.

Southern Europe still holds a challenge. Spain is being studied, but Daloon realizes a very big effort must be mounted to capture this market.

Danfoss

Headquartered in Nordborg, Danfoss is one of the largest manufacturers of refrigeration controls in the world. With a turnover of DKK 6.5 billion and 13,000 employees worldwide, it is Denmark's biggest independently-owned enterprise.

According to Mads Prebensen, Danfoss has built on its strength in mechanical controls by combining them with electronics in a new technology they refer to as "mechatronics." One result of this is the firm's EKS 67 + KVG control for supermarket cabinets. The system is able to maintain constant product temperatures while adding moisture to the air, thus limiting dehydration. In a field test in Wales, the new control was found to produce a 15% energy savings over standard refrigeration controls while maintaining higher product quality. The system has proven popular in Europe with 20-30 thousand installations having been made to date.

The most recent products from Danfoss are their Adap-Kool systems. The first control in this line, the AK 10 is essentially a highly advanced thermostatic expansion valve, used for the control of evaporators. Reportedly, AK 10 is self adjusting to constantly changing operating conditions to ensure maximum utilization of evaporators.

Plans are to extend the range with the introduction of AK 20 in October, followed by an AK 30 system. AK 20 will be a multi valve regulator, being able to handle up to four valves. AK 30 will be capable of regulating compressor and condenser functions in larger installations. When fully developed, the system will be able to handle up to eight screw or reciprocating compressors or any combination of both.

Danaeg

Dealing with one of the food industry's oldest commodities, egg product maker Danaeg has forged ahead and enjoyed steady growth through a constant program of innovation. At company headquarters in Roskilde, Sales Manager Ole Lemke Hansen revealed that the 96-year-old co-op is owned by 180 farms. Weekly production of fresh eggs ranges from 750-800 tons from four packing stations. However, the biggest growth is seen with frozen egg products.

The firm gained its reputation in 1971 by producing the now famous Danish long egg. Created by a special process, the yolks and whites are separated and then cooked in a double cylinder. The result is a long hard boiled egg with the yolk running all the way through. The advantage is an egg in which all the product is usable, and no time is wasted in cooking and shelling.

While the long egg is still Danaeg's biggest seller, the range now covers a full array of frozen products. Whites, yolks and whole eggs are packed in pourable containers. Also fried eggs, omelettes, pancakes and waffles are reportedly doing well.

All EEC countries are exported to, and Mr. Hansen has noted a strong trend toward quality instead of price being the main selling point. Citing a study done on the German market, price was found to be most important to 45% of consumers in 1984. This percentage has now fallen to 19%.

Danaeg is ready to face the challenges of 1992. Asked to comment on the impending changes, Mr. Hansen stated, "As long as you have good high quality products, you will be able to find markets."

The company's full range will be on display at ANUGA.

Kirk Foods Moves Up

The last few years have been a struggle for ready meal manufacturer Kirk Foods, but the company is now seeing the light at the end of the tunnel. Begun at the end of 1985, the objective has always been to make the highest quality range of recipe dishes available. Kirk quickly realized that marketing its products under private labels would be far easier than launching a brand. Hence it has become expert in the private label field.

Chris Harris stated that while the industry had doubts about success a few years ago, he is now 100% sure the company will survive. Sales are up as the processor has gone from having 75% excess capacity one year ago to only 35% this year. In fact, plans are under way to build a bigger plant in the north of Jutland before 1992. The expectation is to show a profit in two years and possibly break even by 1990.

Sixty-five to 70 products are currently produced, and Kirk's policy is to tailor make each one for a particular market. Exports are made to Sweden, Norway, France, Greece, Switzerland, Belgium, Ireland and Japan with the U.K. representing the biggest market.

The coming 1992 consolidation of EEC markets is seen as offering a tremendous advantage to Kirk Foods. Mr. Harris believes that private labels will see considerable growth and that opportunities will arise for co-packing. The company is flexible in that it can offer meat-, fish- or poultry-based meals.

Nowaco

Although the trend in Denmark may be to think in bigger terms than in the past, there are many companies that still see advantages in being small. One such firm is Nowaco. Sale Manager Niels Hjulmand commented that the Aalborg-based trading company can be more flexible in finding untraditional solutions and meeting customer requirements than larger firms. Of course it all depends on how you define small. Last year's turnover was DKK 200 million.

In 1988, a subsidiary company was started in Germany, primarily to serve European markets. Sales are reportedly strong in this area as well as in the Middle and Far East.

Nowaco is able to supply all markets with a full range of meats, poultry and vegetables. Seafood accounts for about 50% of total turnover.

Priess & Co.

Priess & Co. is one of Denmark's oldest and largest seafood producers. As a supplier of a full range of fish as well as smoked products and ready meals, Managing Director Anders Priess can always be relied upon for accurate information on the state of the industry.

Priess owns a salmon farming operation in Norway and, like everyone else, is experiencing difficulties in the market. Commenting on the situation, he stated, "I expect to see a couple of years during which profits on salmon are not so good."

However, Priess is in better shape than some other companies. In addition to supplying the European market with fresh salmon, he has a built in market supplying his own smoke house.

While salmon is in oversupply, haddock will be short this year. Quotas have been cut by 20% for 1989.

Since the dollar began strengthening, the U.S. market has seen steady improvement. With a sales office in Gloucester, Mass., Mr. Priess hopes that volume will soon reach the levels of three to four years ago.

The greatest gains have been made in the Danish market where the entire Priess line is sold. Denmark is expected to develop into the company's second or third biggest market in the future.

Esbjerg Seafood

Business in coldwater shrimp is great these days, if you can keep yourself supplied with raw materials. This is the problem facing Jorgvan Nielsen, sales manager of Esbjerg Seafood. Faced with an unsteady supply of shrimp, the firm has had trouble reaching its highest sales volume of 2,000 tons. Coldwater shrimp is sourced from all Northern countries, and some product from the Bering Sea is bought through Russian trawlers.

Packing mainly under private labels, the Esbjerg-based processor produces some products under its own brands. Export markets include France, Italy and Germany, while the biggest market is the U.K.

Warmwater shrimp has made a strong incursion into Europe in recent years. Esbjerg is primarily a coldwater shrimp company, but it has been hedging bets by getting into the tropical species on a small scale. This involvement could become greater in the future if demand increases and difficulties remain in obtaining coldwater shrimp.

In a move toward value added products, the progressive firm has developed a line of frozen soups which will be on display at ANUGA.

Henne Rogeri

The current oversupply of salmon and the resultant fall in prices has provided something of a windfall for Henne Rogeri. According to Export Manager Jorgen Clausager, the decrease in the price of raw materials allowed the salmon smoker to lower its prices by 5% which resulted in a 50% increase in turnover last year. However, it has to be believed that the company's aggressive sales efforts and plant expansion had something to do with this sharp rise as well. The firm now claims to be the biggest smoke house in Scandinavia.

Ninety percent of all production is sold throughout Europe, and 5% is now going to the recently opened Australian market. The Middle East accounts for an additional 5% and a high priority is now being given to this area. In a new venture, gulf shrimp is being imported from Arab countries for distribution to Europe.

When asked about the dropping of EEC barriers, Mr. Clausager replied that "1992 means very little since we think of the whole world as a domestic market." Stating that Henne Rogeri will be able to compete better in Europe and that distribution will be improved, he cautioned against companies concentrating on Europe too much at the expense of other markets.

Currently under construction is a new facility to produce pate, salmon roe and proteins from waste products. When completed, it is expected to be the first facility of its kind in Scandinavia. Samples of the new items will be exhibited at ANUGA.

Mou Dybfrost: Cautious Growth

Esbjerg-headquartered Mou Dybfrost has built up a strong, profitable business by selling traditional products such as soups, meatballs and dumplings. It also makes ready meals. But you won't find exotic ethnic dishes, but rather products that local people are familiar with.

With a strong base in the Danish and German markets, Mou is now looking to the U.K., reported J.C. Jespersen. A cautious, studied approach is being taken and from May 1, an agent was appointed for one year to contact the catering and retail sectors. A determination of what products are needed will be made and Mou will develop a range suitable to the British palate.

On the home market, sales were up in 1988. This year is seeing some improvement although soup sales are off due to one of the warmest winters on record. Newly developed for the Danish market is a line of frozen sandwiches based on ham, salad and egg salad fillings. Two or three new items are planned for launch at ANUGA.

Frigodan/Falster Frost

As previously alluded to in this article, vegetable producers Frigodan and Falster Frost were merged earlier this year by SN Invest. Administration for both companies is now handled out of Frigodan headquarters in Brenderup, where Christian Haldon of Falster Frost commented on the situation.

On the surface, it would seem that the new operation is the only game in town in the Danish market. The only other vegetable company is Svendborg Konservesfabrik and, being owned by FDB, it can sell only to the co-op. However, Svendborg is looking for a buyer and according to Mr. Haldon, Danish retailers are just as happy buying outside of Denmark if prices and quality are equal. Therefore, in order to compete in their own country as well as the EEC, the merger was a necessity.

Currently, the two companies have the capacity to produce 40,000 tons of frozen vegetables and will import what they can't produce to meet demand. Last year this amounted to an additional 8,000 tons.

Size alone is not enough to compete in today's market. The firm is investing heavily in mechanization to cut down on labor costs. Equipment to control waste water pollution is being installed to comply with Danish requirements. It is believed that these same restrictions will be placed on other EEC processors in 1992, thus putting the Danish company at a competitive advantage.

Despite the efforts being placed to prepare for 1992, Mr. Haldon stressed that management is looking beyond the EEC countries. He commented, "We want to sell in all areas where our products are consumed."

SWEDEN

After several years of relatively flat growth in Sweden, per capita consumption of frozen food is once again on the march. Excluding poultry, intake rose by 4% to reach 23.5kg. Poultry, which actually declined in 1987 due to adverse publicity, has seen a strong recovery. Consumption including poultry stood at 27.3kg. in 1988, representing an increase of 5%.

Looking at the individual categories, it is difficult to get an accurate picture of where the market is headed since some sectors seem to be fluctuating wildly from one year to the next. Pizza, for instance, was off by 8% in 1987 but enjoyed a rise of 50% last year. Other areas of the pastry products category rose by 44%, reflecting a 93% increase in bake-off items. It should be noted that all figures given are for volume and not value.

The fish category saw considerable activity with raw and breaded products increasing by 6% and 26% respectively. Prepared fish, however, experienced a drop of 37%.

Pasta dishes posted a strong 30% gain while the meat category rebounded by 8%.

Milk and dessert products (not including ice cream), which lost 13% in tonnage in 1987, increased 21%. Ice cream consumption rose by 4% due to favorable summer weather.

Ready meals continued to be a strong growth category by posting an 11% increase. However, 1987's gain was 25%, indicating the market may be nearing maturity.

Vegetables and juices were in the minus column, each down 1%. Soups and sauces, which gained 13 points in 1987, declined 6%.

Gains in consumption are due in part to Djupfrysningsbyran, the Swedish frozen food institute, whose efforts over the last two years are now being felt in the market place. Former Director Per Olaf Carlbaum has retired and Kjell Olsson, previously with Findus, is now in charge.

At the institute's new headquarters in Helsingborg, Mr. Olsson explained that a series of studies has been undertaken to improve product movement and the profitability for retailers. Greater industry participation has been achieved and the institute membership stands at 20, up four from last year.

A direct product profitability (DPP) study was performed which indicated a 17.4% margin for frozen foods against an overall supermarket margin of 14%. It was found that costs for frozen foods were lower than average due to effective packaging and faster turnovers. Armed with this information, the institute will work with retailers to help them increase sales.

In conjunction with companies from the production, transport and storage side, a case study was performed with the Jan Larsson, ICA Toppen store in Eskilstuna. Major changes to the frozen food department took place including the installation of doorless, vertical cabinets from Electrolux CR. An igloo motif was created to encompass the entire department along with pictures of eskimos and stuffed penguins and polar bears. Placed opposite the deli counter in the middle of the store, the department became a meeting point, attracting family shoppers.

Volume has increased dramatically since the changes were made. In 1988, after the new cabinets were installed, weekly sales rose from $8,500 to $10,000. Sales since the igloo theme was adopted this year, are $12,000 per week and still climbing. Reportedly, sales in other departments have increased as well. Total costs for the re-modeling were around $150,000, and the payback period is expected to be less than a year and a half.

In the autumn, a two-week frozen food promotion will be conducted. A contest for consumers will be held as well as a competition for the best retail display. A similar two-week promotion is planned for next spring.

Frigoscandia

"Where we have the facilities and where we can coordinate freezing, storage and distribution, we will do it." This, according to Leif Rynnel, sums up Frigoscandia's policy of total integration. The equipment and distribution giant can now offer processors complete service from cooking, coating and freezing to storage and retail distribution. In the case of seafood, Frigoscandia can do practically everything except catch the fish and sell it. Marketing Director Ingvar Jonsson added, "We can offer processors a per kilo price from freezing to retail distribution."

Frigoscandia is in a unique position to take advantage of the growing trend among processors toward letting others handle their storage and distribution needs. Not only does it have a well developed warehousing and transport system, but the Helsingborg-based company has long been an industry leader in freezing equipment. Through the acquisition two years ago of coating and cooking equipment manufacturer Stein, Frigoscandia can now offer processors very complete lines, tailored to their needs.

Frigoscandia's biggest package deal involved Sara Lee, U.K. Faced with rapid growth and the need to expand, Frigoscandia supplied the baked goods manufacturer with GyroCompact spiral freezers, a chiller and ancillary equipment. Eight vehicles per day transport product from the plant to South Kirby where Frigoscandia has operated a cold store since 1973. From that locale, 200 deliveries per week are made throughout England while major customers are supplied directly from the Bridlington factory.

Commenting on the European cold storage situation, Mr. Jonsson mentioned that due to excess capacity a number of refrigerated warehouses in Europe were for sale. Frigoscandia has taken advantage of this situation to expand its chain of cold stores. As part of a Scandinavian consolidation, four stores totaling 115,000 cubic meters were bought in Norway. The Danish Cold Store group was purchased at the end of 1988. Located in Jutland, the outfit is well placed to serve the EEC countries.

Greater opportunities are also seen for the transport side. The trend toward just in time deliveries places a greater emphasis on more frequent movement of smaller consignments. The only way to provide this service is to combine shipments, giving transport companies a distinct advantage over the customer's own vehicles. This will also make distribution for smaller processors more economical.

Further development of both Stein and Frigoscandia equipment is an ongoing project, with an eye toward making all pieces compatable.

Drawing on its spiral freezer expertise, a Stein GyroCooker has now been developed. Designed for high volume applications, the compact cooker can handle a higher tonnage per square foot than any other cooking system.

Not forgetting the smaller processor, a new Euroline system has been created. Utilizing a 400mm belt width, virtually any batter-breaded product can be run from the initial coating applications through frying and freezing.

Frigoscandia and Stein equipment will be on display at ANUGA where new equipment will be introduced as well.

Stal Refrigeration

The issues surrounding chlorofluorocarbons (CFCs) and their damaging effect on the atmosphere's ozone layer have had a strong impact on the refrigeration industry. Stal Refrigeration in Norrkoping has been at the forefront of the debate and has taken effective steps to make sure that all its equipment complies with current and future regulations. Marketing coordinator Sven Whilborg explained that all of the firm's compressors are designed to operate on R-22, and there is an ongoing program to find even better solutions to the CFC problem.

The company should have an advantage over the rest of the industry in future years since it must comply with Swedish environmental rules which are stricter than those being taken in other countries. Current regulations outlaw the use of CFCs in new installations by 1994, and all refrigeration plants must be closely monitored and maintained.

However, Stal has found a silver lining in the CFC cloud. As part of the strict regulations, installers and maintenance personnel handling CFCs must now be licensed and Stal has opened a school to train not only its own people, but their customers' as well. Operated as a profit center, the school offers programs which range in duration from one day to a week. The courses deal in theoretical and practical aspects of compressors and electronic controls. All aspects of refrigeration are considered, with the main emphasis being on CFCs. Begun last autumn, 8,000 students are expected to be trained per year.

Overall, business has been very good with both the shipping and industrial refrigeration sides making a strong showing. Profits in 1988 were nearly double the previous year's, and all subsidiary companies made good contributions.

The shipping side has seen a good uptick with increased demand for plate freezers to be fitted aboard factory trawlers. Italian manufacturer Samifi was acquired in 1986, giving Stal entree into the plate freezer market.

The newly built Norwegian factory trawler, Ottar Birting, provided a showcase for Stal's latest equipment. Everything about the ship was designed to produce a quality product in an efficient, labor-saving manner. Three Stal Samifi Pressmatic plate freezers were installed. In addition to being fully automatic, the freezers apply counter pressure during the freezing cycle which results in more accurate dimensions. All refrigeration for the ship is provided by three Stal-Mini screw compressors and the entire operation is controlled by a Stalectronic 600 microprocessor. The equipment provides the trawler with a capacity for producing 75 tons of fillets per day.

Electrolux CR

As the attractive presentation of products becomes more important to European retailers, the commercial refrigeration division of Electrolux has enjoyed steady growth. At the firm's Arvika facility, Marketing Manager Torbjorn Lindskog stated that Electrolux CR is expanding through product development and acquisition. In an effort to increase its share of the service counter business, Minks-Marynen was recently bought. The Dutch company produces an extensive line of service counters which are enjoying increased popularity in Germany, Holland and France.

Mr. Lindskog explained that demand for frozen food cabinets has been strong as well. Many retailers are upgrading their frozen departments as it has been proven that a proper display of products can help increase sales.

Swedish Open, the company's doorless, vertical cabinet, continues to be popular. In the U.S., the opposite has been true with doors being seen as an effective way to control energy costs. Asked if this wasn't true for Europe, where costs are higher, Mr. Lindskog replied that while energy savings is a factor, sales were more important and doors are still seen as presenting too great a barrier.

Electrolux CR is also feeling the effects of CFC legislation. However, it has already responded by reducing the content of Freon in the insulation used in cabinets by 50% with no decrease in effectiveness. Reportedly, they are the first European company to do so.

The goal at Electrolux CR has always been to not only produce quality products but to make cabinets that will actually help increase sales for retailers as well. With this in mind, the firm's latest cabinet, Pointer, was designed.

A study of other gondola cabinets indicated that due to their height, products were not visible from more than a slight distance. Designed largely for impulse sales, where eye appeal is 50% of the battle, Pointer is lower than other cabinets, causing the products to reach the buyer's eye level at a greater distance. Due to a clever re-design, in which the evaporators are moved underneath, both height and wall thickness were reduced while enabling the net volume area to remain competitive with other cabinets. At the time of QFFI's visit in May, market tests were being conducted, early indications of which showed an increase in sales over continental gondolas.

PHOTO : The new head of the Swedish frozen food institute, Kjell Olsson, at his Helsingborg

PHOTO : office.

PHOTO : Leif Rynnel of Frigoscandia shows off a piece of Stein equipment at the firm's food

PHOTO : technology center in Helsingborg.

PHOTO : Stal Refrigeration has started a school to educate personnel about the proper handling of

PHOTO : CFCs. Sven Whilborg stands with equipment in one of the classrooms.

PHOTO : Stefan Duurland (c) of recently purchased Minks Marynen is joined by Electrolux's Torbjorn

PHOTO : Lindskog (l) and Christer Strandberg, posing before a Swedish Open cabinet at the

PHOTO : Electrolux showroom in Arvika.

PHOTO : The new Pointer cabinet from Electrolux is built lower than other gondolas so that

PHOTO : products catch the customer's eye from a greater distance.

PHOTO : Sales increased dramatically at the ICA Toppen supermarket in Eskilstuna after the frozen

PHOTO : food department was redesigned. In addition to adopting an igloo motif, new Electrolux

PHOTO : vertical cabinets were installed.
COPYRIGHT 1989 E.W. Williams Publications, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1989 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:frozen food market; includes related article on Sweden frozen food market
Author:Williams, Andrew
Publication:Quick Frozen Foods International
Date:Jul 1, 1989
Words:9921
Previous Article:Look out Peking Duck, doing chicken right is a 'white-bearded old man' from the USA.
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