Confectionery: Interview: ISM 2014: A-brands central to Natra's growth plans
Natra wants business with brand-owners to account for bigger portion of sales
Spain-based chocolate supplier Natra generates the bulk of its business through supplying own-label products to retailers. However, the company is looking to significantly increase its work with brand-owners, as EMEA sales director Ferran Infante told Dean Best at the ISM confectionery trade show last month.
Natra, the Spain-based chocolate supplier, manufacturers products from spreads to countlines for retailers and manufacturers, as well as selling its own brands.
However, it is its work producing own-label products with retailers that accounts for the majority of its business. In Europe, Natra does business with 29 of the region's top 30 food retailers. Europe is the largest chunk of a wider EMEA business division that accounts for three-quarters of Natra's turnover. Supplying the grocers is, then, key to Natra's business as it stands.
Speaking to just-food at the ISM confectionery show in Cologne last month, Ferran Infante, sales director for Natra's EMEA business, says sales to retailers makes up 70% of the company's global revenue, which in 2013 stood at EUR355.5m.
Nevertheless, Infante says Natra's business with "A-brands" - which accounts for 20% of its sales - is on the rise and the company wants that to continue.
"We are growing in A-brands and we are putting a special effort into A-brands," he says. "One of the reasons is we like to create value and sometimes the retailers are not innovative enough. Some are but most retailers across the world are not ready for innovations."
Infante indicates there is an unwillingness among some retailers not want to take a gamble on a new product, particularly in current trading conditions. "That is probably one of the reasons. At the end of the day, when you are launching a new product, it is a risk, either for an A-brand or a retailer."
However, Infante says Natra sees its business with brands accounting for between 30% and 40% of the company's sales in the next decade. He will not reveal with which brand-owners Natra works but says its contracts are with companies around the world - from Europe, through the Middle East and Africa and out to Asia-Pacific and the Americas.
Natra expects its revenue to become more spread internationally. Infante forecasts the proportion of Natra's sales to come from EMEA willl fall to 60% by 2020, with the Americas and Asia-Pacific both moving to 20% from 17-18% and 7-8% respectively.
Last year, Natra opened an office in Hong Kong in a bid to boost its business in Asia, where chocolate consumption is on the rise, as demonstrated by recent significant investment from others in the supply chain, such as cocoa and chocolate ingredient giant Barry Callebaut and Hershey. When Natra announced the opening of the office, it said it wanted to triple its sales in China. Infante says Natra's business "in China and the rest of the region is growing" and the company could look in the future to establish local production in Asia.
The Natra executive also highlights "opportunities" in the former Soviet Union, in the Middle East - pointing to a "growing" confectionery industry in Saudi Arabia - and some "emerging countries" in Africa, including South Africa, where the company has launched its own brand, Tiger, in recent months.
However, Infante does still seem avenues for growth in western Europe. Natra has just opened an office in London and has set its sights on the UK accounting for more of its EMEA sales in the next five years.
At present, the UK accounts for under 3% of Natra's turnover. Infante says he expects the UK to become 10% of the company's sales in five years. "We have big plans for the UK. We have plans to grow in three segments. We are present in practically all the big retailers but not in all categories. Today we have a lot of sales in chocolate spreads but we want to be very active in countlines, pralines and spreads. In business to brands, we have very interesting projects. And we want to grow in the gifting sector, the more specialist chocolate shops. The market is the most diverisified and the most innovative. Everything changes, you find plenty of new products, which is not something that is happening in the rest of Europe."
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