Interview: Alpro reaps rewards of portfolio expansion
By Dean Best | 28 October 2013
Deryckere claims Alpro already leads some segments it recently entered
Alpro has had three owners in four years but one executive that has been at the company throughout is CEO Bernard Deryckere. He talks to Dean Best about the success Alpro, now owned by US firm WhiteWave Foods, has had with the recent expansion of its product portfolio.
Twelve months ago, Belgium-based dairy alternatives business Alpro effectively changed hands for the second time in four years.
Last October, US dairy giant Dean Foods completed the spin off of its soy and organic products arm, including Alpro, and shares in the newly-formed WhiteWave Foods started trading in New York.
The move came three years after Dean Foods acquired Alpro from family-run Belgian business Vandemoortele to diversify into the growing soy products category. However, last year, Dean Foods moved to list Alpro, alongside other brands including Silk, to return value to shareholders and help pay down debt. Nevertheless, Dean Foods insisted WhiteWave would prosper as a stand-alone entity.
One executive who has been at Alpro throughout is CEO Bernard Deryckere, who joined the business from Unilever in 2001 and is well placed to suggest what the change in ownership has meant for the business.
Speaking to just-food, Deryckere says Alpro's turnover 12 years ago was EUR80m. Last year, sales reached EUR300m. "It's a different kind of company now," Deryckere tells just-food at the industry trade show Anuga.
Being part of the family-owned Vandemoortele, Deryckere acknowledges, "has its good sides and less good sides". Nonetheless, he says: "Vandemoortele allowed us to invest in the business long term, invest in R&D. That's how Alpro developed very good products."
In 2009, Alpro joined Dean Foods, the largest dairy processor in the US and then (and now) one of the top ten worldwide. Alpro was a small part of the Dean Foods empire but, Deryckere insists, the company was "respected".
"We were very happy with Dean Foods. It is a big, strong company in the United States, $12.5bn. We were quite small there, we were about 3% of the total business, but we were respected for our professionalism, for our entrepreneurship - we were still a small company - and for our passion," he says. It was, Deryckere insists, "a very, very good relationship".
WhiteWave, Deryckere, who sits on the US-based firm's board, is, he says, "all about brands". He adds: "We invest in brands [and] we invest enormously in R&D. We always need to launch products and be before private label etc. That's the big change, even more going forward to continue to invest."
Alpro's most recent significant innovation started before the establishment of WhiteWave. Over the last 18 months or so, Alpro has expanded its product portfolio to become a "plant-based" business, rather than simply focusing on soy. The company has rolled out almond, hazelnut, oat and rice milks in its key markets of Belgium, the UK, the Netherlands and Germany.
Deryckere says the move has broadened Alpro's consumer base. "A lot of people who didn't want to come to soy, or have had soy but also had other kinds of products suddenly find in our brand all the products they need. We see our penetration growing and our repurchasing growing very heavily. We have become the reference of plant-based non-dairy," Deryckere says.
Despite some significant competition in some of the categories, including brands like Hain Celestial's Rice Dream, the Alpro boss claims the company has already become the leader in some of the segments.
"Before we launched into rice, we needed to be sure we were better than Rice Dream as they were the reference in rice. We will not launch products if we feel we don't have the top of the bill. In most of the markets where we launch other ingredients, we have bcome the number one in plant-based [products]. If you exclude soya and look to other plant-based, we are number one already in a lot of countries, including the UK."
Alpro has four plants in western Europe - one each in Belgium (which it announced in August it would expand to meet demand), the UK, the Netherlands and France. The first three of those countries, plus Germany, are Alpro's "most important" markets, Deryckere says, and the company has sales offices in each of those markets. When WhiteWave reported its second-quarter results in August, it said the countries were Alpro's "strongest-performing geographies", a period in which the unit's sales were up 13% year-on-year, thanks to the spread into other "plant" segments.
Alpro also has a presence in some southern European markets notably affected by the downturn in recent years, including Greece, Portugal and Spain. The company's sales figures demonstrate it has managed to withstand the challenging trading conditions throughout Europe but is Deryckere seeing consumer sentiment improve in the region?
The Alpro chief, who acknowledges the company "suffered" in markets like Portugal and Spain, is upbeat about the prospects for Europe.
"It depends. What you have is two kinds of people - people who are very, very positive and people who are less positive. I am an optimistic guy and I am saying Europe is, together with the UK, coming back, certainly in food," he says.
While sales have remained strong, Deryckere indicates Alpro has had to battle to protect profits. Asked if Alpro has had to lower its prices to protect its market share in some markets, Deryckere says: "We were fighting more below the line than above the line, that's for sure."
Private label has started to appear more often in the buoyant dairy-free category, a trend Deryckere acknowledges, but he says Alpro has been able to withstand that competition. "I was in a company - Unilever - where we always complained about private label. The best thing against private label is to continue to build your brand, invest in your brand and continue innovating and that's what we do. We continue to invest a lot in innovation and in quality. That's the way to do it. We see that our market share in plant-based - and private label - is growing but the other brands are a little bit in difficulty."
The conversation turns to possible international expansion. Deryckere rules out the US as a market for Alpro. He explains WhiteWave will use Alpro's product "concepts" but develop products under the US brand Silk. "They took over our yoghurt concept and launched a yoghurt in the US under the Silk brand. The US will remain the Silk br and Europe will remain the Alpro brand."
Alpro, Deryckere says, is present in markets that neighbour Europe including Russia, Turkey and the Middle East. "We are already in Russia, we are already in Turkey but perhaps not strong enough," he says. "We review the whole time if there are possibilities. Alpro's region is mostly Europe, Russia and what I call the Middle East - and that's where there are a lot of possibilities; I believe in the Middle East."
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