Agromousquetaires is France’s number one private-label supplier. However, three-quarters of the company’s EUR4bn in annual sales is generated through business with Intermarché, its sister company under the umbrella of manufacturing and retail business Groupement des Mousquetaires. John Shepherd met Agromousquetaires chief executive Christophe Bonno to discuss the company’s plans for growth.
Christophe Bonno, the CEO of French food group Agromousquetaires, is a man on a surprising mission. He is spearheading plans by the private-label supplier for a major sales push into the UK, just weeks before the country formally tells the European Union it is leaving the bloc.
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It is irresistible to compare this move with the swashbuckling style of the famous fictional musketeers who are the namesakes of Agromousquetaires and its parent, the French food-to-retail conglomerate Groupement des Mousquetaires.
However, as Bonno tells just-food in France last week, the raison d’etre is far more down to earth. “We want to work with the number one European market for private-label products and that is the UK. We have the know-how, the capacity and we can do it regardless of Brexit.”
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But for Bonno, that does not mean taking his eye off the ball at home. He believes continuing to grow its presence in the ultra-competitive French market, stepping up its ambitious programme of new product development and nurturing cooperative-style partnerships with farmers, will give Agromousquetaires the springboard it needs to succeed at home and overseas.
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By GlobalDataExtending reach in Europe
Three-quarters of Agromousquetaires’ EUR4bn in annual sales is made through manufacturing private-label products for Intermarché chain. However, Bonno says in addition to making moves on the UK, Agromousquetaires is also eyeing opportunities to advance sales in markets where it has already gained a foothold – such as its sales of breads to Poland, Spain, Italy and the Benelux region. It aims to sell bread products to Germany, too.
Bonno stresses the intention is to use its existing facilities in France to produce whatever orders it receives from the UK and elsewhere, ramping up investment in additional production capacity in its home market “if necessary”. He says “sizeable investments” have been made in recent months including a new automated packaging preparation unit for fresh produce costing EUR26m.
And Bonno said his goal over the next five years is to push turnover up to EUR5bn, “which is EUR500m more than our 2017 forecast”. “Half of this turnover will be in France with a focus on two key areas – the retail market (Intermarché) and foodservice. The other half will be achieved through exports and a greater focus on Europe.”
“For the UK, our target by 2020 should allow us to reach a turnover of EUR60m,” Bonno said. He said the UK market covered by the group’s range of products is estimated to be worth around EUR1bn.
Entrepreneurial spirit still strong
The Agromousquetaires of today is a far cry from the foundations laid in 1969 by entrepreneur Jean-Pierre Le Roch, founder of France’s Intermarché supermarket chain and wider distribution group Les Mousquetaires. The group bought its first factory, specialising in the production of frozen burgers, in 1974.
Forty years on, Agromousquetaires has more than 60 production sites and around 11,000 employees and produces more than burgers, although Bonno says even in those early years the spirit of the musketeers was evident.
“They started with frozen burgers because at that time it was a new technology product in the food industry from the US.” Bonno says, adding while production processes and tastes have changed, there is still room for a good burger. “We recently launched a pork BBQ burger, which won an award and we continue to produce burgers because the French are actually among the highest consumers of burgers in the world, eating more than 1bn a year.”
However, Bonno says as befits an agriculture-based business, the company continues to nurture the foundations on which it is built – the food producers themselves. “This is what we see as one of our advantages,” Bonno said. “Our strategy is to develop the business from farm to fork and we really mean that. We are able to provide a complete meal, which sets us apart from our competitors as we are not capitalistic. For example, companies like Nestle and Danone specialise in the products that bring the most profits such as chocolate or bottled waters. Our strength and strategy is based on our variety. We have more than 3,500 products and we invest EUR100m each year in modernising our lines, diversifying production or building new factories.”
Holistic investments in producers
And there is practical as well as holistic investment in the farmers with whom Agromousquetaires works, which Bonno claims is another reason the group can compete at home and abroad. “We have built and continue to build a strong and unique partnership with our farmers,” Bonno asserts. “We work with farmer associations who produce only for us and in this way we can help them be assured that their farms and livelihoods will continue to be sustainable.
“The idea is very similar to a cooperative, but we do not share profits in that way. We have other mechanisms that are similar however, such as paying for some products at a higher price in exchange for getting the specific products we know our customers will buy. We pay a higher price, but our products remain competitive because we have fewer intermediaries as we distribute them in our own stores.”
Agromousquetaires also seeks to promote the relationship with farmers to consumers by placing photographs and details of farmers and their farms on the products they have produced, which satisfies increasing demand to know the origin of what they are putting on their dining tables. “We don’t forget the importance of telling the human side of the story, in this case our farmers, which in turn translates to a better quality of product and is reassuring for our consumers,” Bonno says.
In terms of dairy, Agromousquetaires has an association with some 500 milk producers across France who supply the group exclusively. The group, in turn, finances high-tech milk storage tanks on the farms and collects the milk in its own tankers.
Agromousquetaires’ investment in the farmers includes providing advice on topics such as animal feed, to ensure the health of livestock and continued high milk yields. “Today we do a lot of work on animal nutrition and welfare and that in turn allows the farmers to concentrate on their farms,” Bonno says.
Encouraging growth of organic products
That cooperation also involves pedagogical initiatives. “We talk to farmers about the general market and consumer trends, which is really important, because some have been used to doing things as their parents and grandparents did, which might not match the latest consumer trends,” Bonno explains. “In France, as in other countries for example, there is an overproduction of regular milk, which has been the case for about a year now. Yet we are unable to meet growing consumer demand for organic milk. So we have been working with some of our farmers to make the switch to organic products. To do this, we pay the organic price for taking the regular milk from them for two years while they make the necessary conversions to produce organically.”
The French, in common with other nations, are increasingly aware of and concerned about health issues in the food chain and are “looking more and more for natural, organic and local products”, Bonno says. The popularity of “bio” products as they are known in France is another branch of potential business growth that is being pursued by Agromousquetaires. “The demand for organic products is increasing by around 15% each year in France and at the moment we cannot produce enough to meet demand, so this is an opportunity,” Bonno says.
In addition, Bonno says Agromousquetaires helps the creation of agriculture businesses, such as organic farms, by financing the purchase of animals to help keep cashflows healthy in the early days of the business. “We might sometimes also take shares in the business,” Bonno says. To do this, Agromousquetaires favours contracts of five years or more with farmers, which ensures the company can maintain its financial commitment and obtain bank guarantees and assistance where necessary.
Bonno insists the approach is also a boost for the bottom line. “However, what is essential for us is to have producers of milk, beef and pork located very near the milk production sites and slaughterhouses to ensure the freshness of product. That is what we help to invest in today and will continue to do over the next 20 years as part of our long-term policy.”
However, Bonno takes a moment to criticise domestic regulations that he claims are “more restrictive” than EU requirements in relation to advertising pork products as being organic. “It’s an historic domestic market protection measure which should be changed,” he said. “It is basically to do with the density of animals in an area and is nothing to do with the quality of the meat. This means France’s own organic specifications make it difficult to meet domestic demand, so we have to buy in the raw materials from Germany or elsewhere, although the specifications do not apply to organic milk.”
Retaining customer loyalty part of strategy
Outlining Agromousquetaires’ future business development, Bonno says the company’s strategy includes “developing lots of new products” and increasing customer loyalty. “At one point, the role of private labels was to copy national brands, but increasingly today we trying to develop products that national brands don’t have, because they are following their national or international policies. That is what retailers such as Sainsbury’s or Tesco are doing.”
Agromousquetaires employs an R&D team of around 100 who work “close to the production processes and raw materials and work hand-in-hand with sales teams to ensure we are developing what consumers want”, Bonno says.
The group also holds an annual “100 new products challenge” in which the NPD teams’ efforts are showcased and tested at major food fairs such as SIAL, with the most popular products finding their way into Intermarché stores. These have included healthy breakfast cereal inside edible cereal bowls.
“This is all part of our effort to be different and retain and increase customer loyalty and sales,” Bonno explains. He says the move has also been successful in seeing off challenges from major discount retailers. “French retailers launched product ranges about ten years ago with very low prices to stop the development of businesses such as Aldi and Lidl, but today many such as Lidl have given up the what I would describe as the hard discounting business in France. I believe this shows we were right to invest in new, quality products that are reasonably priced.”
Burnishing CSR credentials
Agromousquetaires is also working with NGOs such as the WWF and Greenpeace to advance what Bonno claims is the manufacturer’s position as a “reference player in the agri-sector in France in terms of sustainable development practices and production”. Bonno insists this pioneering approach aims to “listen to concerns and understand consumer expectations”.
He says the group has already used the feedback to reduce the use of pesticides and promote sustainable fishing. Commitments include a halt on fishing for deep-sea species by 2025. “Of course, we will lose some products in the future through this, but we need to switch to different ways of fishing and to take fish at sea levels where there are sustainable resources,” Bonno asserts.
Agromousquetaires has also installed cameras in its slaughterhouses to assure consumers of best practice in animal welfare. The move was made ahead of a law being introduced requiring surveillance cameras to be installed at abbatoirs across France following allegations of mistreatment.
As Agromousquetaires strives to grow the business at home and beyond, Bonno says the group’s approach remained the same: “We are selling principles as well as products and that will continue to serve us well.”
