Continental Bakeries in France

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Continental Bakeries in France

• Best in France Case Study
• September 2006 - December 2006

By Szilard Buksa, Jacques de Sonis, Jordi
Guitart Clermont, Heather Hurst and Diana Lupusor
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Agenda

• Company overview
• First Phase
• Why it came to France?
• Constraints in France
• Adaptation to France
• Second Phase
• Benefits of direct investment
• Essential advice

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• Company overview
• First Phase
• Second Phase

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Company overview

• Leading producer and distributor of private
  label biscuits in Western Europe

European Leader

• 6 European countries Netherlands, Germany,
  Belgium, Austria, Hungary, France

• Top three positions in all of the segments it
  operates in.

• 1999 have been acquired by IK funds, private
  equity Nordic company with a portfolio
  encompassing 24 companies

• Sales went up 40 from 126 million in 1998 to
  175 million in 2005

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Products
Operating in the European food industry, the
company is focused on the following specific
segments pastry products, biscuits and bread
substitutes
A comprehensive range of international and
regional products

• The Company designs, produces and distributes
• sweetened (sandwich biscuits, wafers, honey
  cake and cookies)
• unsweetened (toast, rusk and rice cakes)
• savory biscuits (puff pastry)

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Brands

• The Company owns a limited number of strong
  international brands including Haust. The major
  brands in the Haust portfolio are Haust, Bussink,
  Barkhuis, Brink, Van Kooten and Pirou. In
  addition, Haust also produces private label
  articles within the group and for fellow
  manufacturers.

Wafer rolls to accompany a cup of coffee or an
ice-cream dessert
Toast, savory biscuits, rusk and breadcrumbs
Deventer gingerbread and honey cake
Puff pastry, savoury biscuits, rusk, cake
products, sandwich biscuits, butter biscuits,
shortcake biscuits and ladyfingers
Cookies, spiced biscuits, butter biscuits, wafers
and rice wafers
Groningen gingerbread and deluxe cake loaves
Wafers, ice wafers and chocolate covered wafers
Kokoskuppel.
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Head Office
The Continental Bakeries (Haust) is headquartered
in Dordrecht, the Netherlands employs
approximately 800 FTEs in 11 locations.
The Head Office accommodates the following
corporate departments - Automation - Board of
Directors and Secretariat - Finance and Accounts
- Purchasing and Logistics, including order
handling and sales planning - Human Resources -
Production and Technology, including quality
assurance - Project Management - Marketing and
Sales, including packaging development and export
- Central Warehouse and Dispatch Department
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French subsidiary

• 1996 - entrance in the French market as an
  importer
• Transportable products(even if partaining to food
  industry)
• Feasible transportation from single location
• Advantages of scale economies
• 2001 - establishment of the Sales Subsidiary
• Number of employees
• 3 with mainly commercial responsabilities
• 60 commercial agents
• Top ten sales in France

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French clients
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Company values

• Adaptation to every single client
• Focused on
• Innovation
• Proactiveness
• Leadership
• Internationalization

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• Company overview
• First Phase
• Second Phase

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Why it came to France

• Why did they enter the French market?
• Companys goal to be number 1 in Europe
• France is the biggest market in Europe (1,35 B
  euro)
• Why did they establish a French subsidiary?
• Better convenience for clients (administrative
  procedures and taxes)
• Necessity for local differentiation of products
• Specificity of sheltered French market easier to
  compete with local producers
• Avoidance of duplication of facilities

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Constraints in France

• Foreseen Constraints
• Protectionism
• France is already well known for its bread
  products
• Must modify product to French tastes
• Discovered Constraints
• Diverse and varied taxes and paperwork
• TVA system end distributor must add the TVA
  (TVA Law art. 283.1 since 1st September 2006)
• Shop Culture
• Distributors from same group (ex. Leclerc) not
  well connected
• Cost of transport

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Key Constraint Costs

• Communication
• Difficult to find many experienced bilingual
  talents in France
• Taxes
• Wide array of taxes leads to costs in figuring
  out how to pay them and who should pay them
• Transportation

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Adaptation to France

• Recruitment/Selection only French and
  distribution agents to deal with shop culture
• Innovative products but still low prices
• 20 years experience - Anticipating clients needs
• Administrative procedures
• Communication policies
• BUT

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• further adaptation needed

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• Company overview
• First Phase
• Second Phase

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Benefits of direct investment

• Their perception about the benefits of an
  investment in France
• Cheaper labor force compared to Netherlands
• Current high transportation costs
• Increased coordination and control
• Distributors prefer local producers (because of
  logistic and TVA issues)
• Easier to find labor force
• The possibility of monopsonycal situation on
  local labor markets

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Essential Advice

• Buy an existing French company
• Hire French employees
• Favor royalties

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We thank

• Antoine CONSTANS
• French and Belgian Regional Director
• 19 rue Steffen - 92600 Asnières sur Seine
• Haust.fr_at_wanadoo.fr
• 01.41.11.03.66
• Professor Michael SEGALLA

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Our Team

• Szilard BUKSA
• Buksaszilard_at_gmail.com
• Jacques DE SONIS
• Jacques.de-sonis_at_mailhec.net
• Jordi GUITART CLERMONT
• Guitartclermont_at_gmail.com
• Heather HURST
• Heather.hurst_at_bba04.mccombs.utexas.edu
• Diana LUPUSOR
• Dianalupusor_at_yahoo.com

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Thank you for your attention

• Any question?