Last weekend, the Belgian newspaper La Libre published an interview with our CEO, Yvon Guérin. The journalists came to our Food Experience Center in Ghent for an in-depth talk about the impact of the current global challenges, as well as the solid sustainability basis on which Vandemoortele is built.
"I come from a family of Breton farmers, with my feet firmly planted on the ground." When he describes himself and when he talks about the Belgian Vandemoortele group, of which he has been CEO since March 2020, Yvon Guérin shows humility.
Born in 1965, this father of two "grown children" studied food engineering and an MBA in Paris before joining the French group Lactalis, owned by the Besnier family. He worked there for 28 years, notably in Brazil, the United States and Italy, where he accomplished "his last mission", namely the takeover, in December 2018, of the Parmalat group, present in 29 countries, for 4 billion.
He also had "a bit of trouble with the Italian authorities", who were not happy that an Italian agri-food flagship was being bought by a foreign group, and a French one at that. When he arrived at Lactalis, the group "weighed" 700 million euros. When he left, its turnover was around 22 billion, he says - while pointing out that he is obviously "not the only one responsible" for this enormous growth. Which must have been one of the elements noticed by the headhunter, who spotted him to succeed Jules Noten at Vandemoortele.
He joined Vandemoortele in January 2019 as head of the Bakery division, with the prospect of becoming CEO about a year later. As the new boss, he intends to continue the internal and external development of the group. A development that is intended to be "sustainable". "The family is interested in continuity, not to put their name on anything. We all want to continue on this path", explains the man who works at the group's Ghent headquarters during the week and returns to France at the weekend to be with his family.
What are the repercussions of the war in Ukraine for the Vandemoortele Group?
Yvon Guérin: From the start, we took very clear positions and decided to leave Russia. Our sales there only represent 0.5% of the total volume. The big influence of the geopolitical context comes indirectly. Doubly, since it impacts Russian and Ukrainian wheat and sunflower oil, and therefore our two branches, bakery products and margarines and oils. We are in the middle of the storm. Especially since this is not the only crisis: with avian flu (also know as the bird flu), we also have a problem with eggs.
With the known consequences on prices...
The war in Ukraine and the sanctions have driven up costs. Up to more than 100% for energy and raw materials. A sudden and monumental increase. A shock! We have no choice: we have to raise our prices. Because we have very low margins. And all our markets are affected: supermarkets, restaurants, artisanal bakers and industry.
"Certainly in the food sector, raising prices is a matter of survival."
Do some have it easier than others in the food industry?
The discussions with the industry are less difficult than with retailers, because they are closer to the markets... The customers are not happy but they are not fooled: we have an educational role to explain the 'why' at the end of the contracts, and we are free to deliver or not, if there is no agreement. There are conflicts, but we are a loyal company that respects its contracts. Dialogue is always possible. There is always common ground. The problem for us is the deadline. The increases are so strong and sudden that we can't pass them on immediately in the prices we offer our customers. This can only be done as contracts expire, but more regularly for our brands.
You talk about a doubling of energy and raw material prices. How much will the price increase be?
From 20% to 80%, with the most significant increases in oil-based products. It's not easy to pass on double-digit percentage increases. Especially since we have been living with low inflation for 20 or 30 years. Customers don't believe us, just as we don't believe our suppliers of raw materials (smiles).
When exactly did these increases take place?
In 2021, we were already in an inflationary context and we already had to review our prices. But the increases have been amplified by the war in Ukraine. And I don't know how else to do it. Faced with such a scale, raising prices is a matter of survival. Certainly in the food sector. If the company wants to develop, it must have the means to make investments. We have to be able to do that. And we're going to do it.
Is there a drop in consumption?
There is no change in our sales, as we are active in basic products.
Have you changed your recipes? Your sources of supply?
We are proactive. The important thing is not to disappoint the customers. What counts for us is customer service, the taste of the products and quality. We try to offer them reformulations. If we don't have sunflower oil, we can use rapeseed oil.
For industry, there are more solutions, more alternatives. The problem is to see how the situation will develop. It is assumed that raw materials will remain expensive for several more months, or even a year, and that we will have to get used to these increases.
The increases are so strong and sudden that we can't pass them on immediately in the prices we offer our customers.
Would an end to the Russian-Ukrainian conflict have the opposite effect and could your prices then fall?
We are dealing with something strong. War is one thing, sanctions are another, as is the change in Europe's attitude. These are rather long positions. The commodity price situation will continue. We have turned a corner, fortunately. If there is a change, it will be gradual, not sudden.
Nor should we forget that the world's population is growing, as are everyone's needs, but the availability of raw materials is not. As for the evolution of our prices, we will adapt to the market where competition is fierce. But maintaining a certain margin allows the company to push for sustainable development, alternative energies, etc.
How did Vandemoortele experience the Covid crisis?
It has been a pretty tough time. In one month (March 2020), we lost 50% of our sales. But there was a tremendous momentum, a solidarity and a global mobilisation of our associates. We guaranteed jobs, changed our working methods,... And we were rewarded because when we were able to restart, it was directly implemented. The company has tremendous resilience.
In which areas is there room for development?
To advance in both the bakery and the food/oil industries, in a profitable and sustainable way. To innovate and create new products. Be even more present in the vegetable sector. But external growth is also being considered. Vandemoortele has the means to do so.
The company has passed the Covid hurdle, it is digesting another crisis and it has a formidable team behind it, an R&D base.
It has the assets to be the European leader in each branch. This means expanding into European countries where it is not yet present; pushing exports outside Europe; having more weight in the restaurant sector, like it has in retail; daring to have more distinctive origins by developing traditional culinary products associated with a particular country (Belgium, Italy, France, etc.); offering countries products that others distribute. We are indeed present in many markets but not with all our ranges, except in Belgium.
How does the Vandemoortele Group want to position itself as a sustainable company?
We consider that we have financial obligations, but also social and environmental ones. We have defined three priorities: balanced nutrition, protecting nature and enhancing lives. We work on healthy products but also on fatty products. In the presentation of our 2021 results, we have a financial part and a part on sustainable development. Vandemoortele will be successful in the future if it achieves profitable and sustainable growth. We are not afraid to show our objectives and say where we stand. Transparency towards customers and partners is also important. Vandemoortele is a transparent, loyal and ambitious company. We want to move forward on this double growth and say so. This can set us apart. Also, our customers and consumers are requesting this.
What are you doing to ensure that your products meet sustainability criteria?
By paying attention to nutrition, for example by reducing sugar and salt and increasing fibre. We have sustainable growth targets and we post them: some are achieved more easily and others more difficult. The biggest battle for us is sugar and salt. But our products have to taste good. We have to reduce sugar and salt gradually, because we don't want to replace them with additives. We have to go slowly, gradually. People won't change their taste overnight. Our products must be healthy, but also be enjoyable.
"The biggest battle for us is sugar and salt."
What is your position on organic farming?
In our business (bread and margarine), this is not a very developed market. We respond to this demand, just as we respond to local demand. These markets, which were growing during Covid, are not evolving in the same way: organic products are in decline because prices are high, whereas demand for local products is growing. Our strategy is to accompany the market. We are working on the ingredients. We are focusing on sustainability and offering organic is one aspect of it.
Does Vandemoortele have 100% Belgian products?
Belgium is too small of a producer of raw materials, so it is difficult to be local. But it's also difficult for Italy, which imports 50% of its raw materials. So it's impossible to be 100% local. For us, the local is more located on a European scale, even if we also produce 100% local products.
Does the recent salmonella problems in the Ferrero factory in Arlon, Belgium have any significance?
I don't know enough about this particular case. Quality is important. There is no brand leadership without quality leadership (taste, quality, service). Let's face it, quality incidents can happen. The important thing is to find it as quickly as possible and to react immediately. Vandemoortele is a company that stands for industrial quality. It is in its DNA to be irreproachable and to control quality. You can destroy a brand with a quality accident. This is the fear of every food company.
THE VANDEMOORTELE GROUP IN FIGURES
The Vandemoortele group is based on two divisions: BP (Bakery products) and MCOF (Margarines, Culinary Oils & Fats). It had an operating profit of 119 million in 2021 (compared to a record 152 million euros in 2019). It is still 100% family-owned and unlisted.
"And there are no plans to go public," says its CEO. "What we want to do is develop the company. And we have the financial and managerial capacity to do so." The board of directors, in which the family holds half of the seats, includes representatives of two generations, "the fourth preparing the next generation". But there are none in the operational side.