French bakery group Jacquet-Brossard is embarking on a fresh push overseas. It already exports to 35 markets but has goals in place to grow in markets like Brazil, the US and China as it tries to offset challenges at home. Dean Best spoke to Jacquet-Brossard corporate development director Alexandre Poussard to find out more.
Jacquet-Brossard, one of the largest bakery groups in France, has set out its stall for an overseas offensive.
The company, part of French agri-food co-op Limagrain, already exports to 35 countries.
However, in the last 12 months, it has added Brazil to its roster of markets, started testing products in the US and developed an international brand – Jacquet – to try to drive its international growth. And, this July, Jacquet-Brossard is set to start production from its first factory in Brazil.
Twelve months ago, the head of M&A and strategic planning at Limagrain, Alexandre Poussard, became Jacquet-Brossard’s corporate development director, tasked with expanding the company’s international business.
At present, around 15% of Jacquet-Brossard’s EUR292m (US$396.2m) in annual revenues is generated outside France. However, speaking to just-food at the ISM confectionery expo in Cologne, Poussard says the company wants to increase the proportion of Jacquet-Brossard’s sales made outside France.
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He estimates that, in around five years, Jacquet-Brossard’s annual sales could reach EUR500m – and, of that, 30% will come from overseas markets.
Brazil – from where Jacquet-Brossard aims to generate EUR20m of sales within five years – the US, China and north Africa are areas of focus for Poussard and his colleagues. Expanding in Europe, outside France, is also on Poussard’s radar.
Limagrain, he explains, wants Jacquet-Brossard to grow, to “better balance” the co-op. But, to do that, Poussard insists, Jacquet-Brossard has to significantly grow its overseas business. The baker’s domestic market, he says, is tough.
“International is where the opportunity is,” Poussard says. “The pressure from French retailers is increasing all the time. Either you have your own label or your own brand. If you have your own brand, but if you are not a Danone or a Coca-Cola, price negotiations and the financial means that you need to invest to promote your product are very difficult. Growth is very stagnant as well. You’ve got to look internationally to diversify your customers and also find sources of add growth.”
Poussard says demands from French retailers has intensified in recent months, which, when combined with volatile raw material costs, upward pressure on energy, transport and labour costs in France, puts pressure on profits – and makes growing the top line via international expansion vital.
“The volatility of raw materials makes the planning and pricing of our products very complex and has a big potential impact on our profitability. We have at least a one-year commitment with our customers and we cannot adjust our prices as fast as we get hit with the new prices,” he says.
“The pressure from French retailers is a big threat. It used to be we could increase our prices according to inflation, then it was a zero increase and now, over the last 12 months, they are asking for deflation. For branded consumer goods in the food sector in France, prices went down by 3% in 2013. Own label was flat. [Retailers] kept prices on their own brands flat to not decrease their margins. They then decreased branded prices by 3% but ask manufacturers to decrease by 5 or 6% – and kept their difference in their pocket.”
Underpinning Jacquet-Brossard’s international plans has been the development of a a new export brand – Jacquet. The brand was launched six months as it reviewed the performance of its international business.
Poussard says its existing Brossard brand had been “too expensive” for consumers in some markets. It will stay in markets where it has enjoyed success, like Saudi Arabia and Switzerland but will be replaced elsewhere with Jacquet lines – such as packets of snack cakes – that would would contain fewer products and be priced cheaper than Brossard products.
Lines under the Jacquet brand are on sale in Brazil and, after a recent deal, will soon make their debut in China. The company is set to start selling mini-cake products at an unnamed retailer in the east of the country. Poussard says the “quality” of French products would give the business an edge in China.
“We want to concentrate on the main cities with the French retailers and also the leaders in China,” Poussard says. “Also we are keen on getting listings with niche retailers in China that are specialising in imported goods.”
Poussard is optimistic about Jacquet-Brossard’s prospects in China but acknowledges it will take time – and will need support from the French government, which, he says, has recognised the international potential of the country’s bakery sector.
“Bonne Maman is already selling in China but so far French brands – in cakes and patisserie in general – have been under-represented in China. [As an industry], we’ve got to do much better,” he says. “[The French government] realises there is potential. It’s a targeted approach; they decided Asia as a zone was of good potential for our products.”
Jacquet-Brossard has its own targeted approach for the US. In October, the company started to trial cake and bread products on the east coast of the US. Poussard insists the US is part of Jacquet-Brossard’s plans for international development but says the tests are still ongoing. “We are giving ourselves another 12 months to see if we have a potential winner in the range.”
The company’s plans for international growth are not just limited to organic growth, Poussard reveals. Part of his remit is to look at M&A opportunities. Poussard refuses to be drawn on specific countries but says he is looking at Europe and north Africa. The latter region, he says, has very fragmented bakery markets with few brands.
“You’ve got one or two brands per market [but] you’ve only really got Mondelez International there – otherwise you don’t find large brands – and then you find small local players,” he explains. “We are currently exporting to north Africa and we want to grow significantly in that region as well. It’s a market characterised by the absence of large brands. That could be through acquisition or through, for example, what we are doing in Brazil. Potentially in the future we could look at setting up a plant there as well.”
However, he insists Jacquet-Brossard is not rushing to make acquisitions. “We are very pragmatic. I’m looking at options but it’s a long process. We don’t want to set any targets. The priority this year is to succeed in Brazil because we are launching local production; to progress in the US; and to increase our sales abroad through the Jacquet brand,” he says. “In the meantime, I am working in the background, in Europe, in north Africa, to identify the best potential way of growing, either through acquisition or through internal growth with a factory start-up.”
Jacquet-Brossard is a business facing some challenges at home, while battling the cost pressure seen by manufacturers across the sector. And it is to international markets that the company is turning to drive its growth.