Make hay while the sun shines, goes the old adage, but for the late billionaire investor Sir John Templeton, who passed away in July, there was always likely to be more investment value at the point of “maximum pessimism”. With the global economic outlook appearing overcast at best, the Templeton maxim offers an interesting economic backdrop to the ongoing expansion of leading fresh produce provider Total Produce which, over the next few years at least, expects to make a number of new acquisitions in order to extend its reach, drive competitiveness and build group turnover and profitability.
Should it do so, the group will have started from a solid base. Total Produce already stands at the forefront of the European fresh produce industry: operating out of 13 countries, the company achieved a 30.6 per cent increase in sales to over €2.4bn last year – driven mainly by the acquisition of UK firm Redbridge – and now distributes more than 225m cartons of fresh fruit and vegetables annually to a broad customer base across Europe.
Chief executive Rory Byrne contends that the foundations for this accomplishment are to be found in the intrinsic strength of the Total Produce network at an operating level. “We’ve continued to focus on our supply chain; identifying efficiencies, delivering synergies, adding value and differentiating both our produce and the service we provide,” he says. This emphasis has delivered robust trading performances across the group, providing a strong platform on which to build further. Ambition burns bright in Total Produce, according to Mr Byrne. “Our five-year objective is to double the company’s turnover, and in our first year we managed to increase it by 30 per cent, which is encouraging,” he says. “But it’s very much a a case of a lot done, more to do.”
To this end, acquisitions will continue to form a key part of the group’s overall strategy for growth in the coming years, Mr Byrne confirms. “We are constantly looking for opportunities to expand our business and obviously we would welcome the opportunity to do so in a number of countries,” he tells Eurofruit Magazine. “France and Germany are of particular interest, and we would like to grow in Italy, where we already have a good partner in Peviani. Scandinavia is also likely to throw up new opportunities but we will continue to examine the opportunities for expansion on a case by case basis, looking at markets not just in Europe but across the globe, including the US.”
Certainly, Total Produce’s track record in acquisition-led growth is impressive. That, suggests Mr Byrne, is attributable to a business model that embraces constructive partnership. ”Total Produce is an easy company to work with,” he believes. “Our managerial philosophy and organisational structure is focused on empowering local management and encouraging entrepreneurial freedom.” What Total Produce offers, Mr Byrne argues, is the capacity to place the collective resources of a multi-national group at the disposal of local and national operators. “We open markets to new partners, we add value and help them deliver more to their customers,” he says. In an increasingly volatile marketplace, he feels this is a win-win proposition for Total Produce, prospective partners and their clients alike.
With major operations in several markets including the UK, Netherlands, Italy and Slovakia, Total Produce is already the leading fresh produce company in Ireland, Spain, Sweden, Denmark and the Czech Republic. Mr Byrne believes recent additions to the Total Produce network, in particular leading Dutch distributors Haluco and Nedalpac, will provide it with the tools necessary to expand in other areas. “These companies are a huge addition in terms of personnel and will also help us to take a quantum leap in the Dutch produce industry and broaden our customer base,” he says. “Both of them have a particularly strong presence in Germany and Scandinavia, for example, so we therefore have a valuable opportunity to increase our business there, mainly on the retail side but also for wholesale.”
Consolidation of the fresh produce supply base is a necessary and constructive response to an evolving marketplace, Mr Byrne argues. As the requirement for pan-European distribution becomes ever more evident, being the market leader in certain markets has its advantages in terms of delivering and maintaining an efficient, integrated distribution model, he suggests. Some retailers have begun to establish pan-European procurement structures, but these are only at an early stage of development. All the same, Total Produce is intent on staying one step ahead by building up its own supply network across Europe, says Mr Byrne: “Our objective is to offer a pan-European service. We will retain our focus on individual markets, but our overall aim is to be a pan-European company that, in the medium and longer term, can meet this requirement from larger retail customers.”
In Scandinavia, subsidiary companies Lembcke (Denmark) and Everfresh (Sweden) offer a good example of how consolidation in certain parts of the Total Produce network is working in practice. “By running the companies as one group, we are able to offer the best service to our clients and the best returns to growers,” explains Mr Byrne. In Spain, meanwhile, the company plans to achieve a new level of efficiency over the next 12 months by consolidating all of its procurement activities across the country through a single point, thereby delivering further synergies.
Total Produce is unlikely, however, to make huge investments in production during the next few years, says Mr Byrne, who sees the group more as an efficient conduit bringing together key producers and markets. “Our business is built on the trading relationships we have with our growers and suppliers,” he points out. “We have some strategic investments in certain areas, such as with Rapiprop in South Africa, but we prefer to focus on developing partnerships with producers.”
Nevertheless, Total Produce’s capacity to collectively procure, distribute and market across each of its European territories will become more evident this month when Brazilian melons lead the way in becoming the first product to be marketed in Europe under the new Total Produce TOP brand. Due to be launched in the last week of August, TOP-branded French apples and South African table grapes will follow shortly afterwards. The company plans to roll out the brand across Europe during the second half of the year and early 2009, and expects some 8m cartons of fresh fruit to carry the TOP brand next year. “For us, it is a natural progression,” insists Mr Byrne. “We believe our supply chain delivers superior produce. Through branding, we are empowering trade partners to identify produce grown to Total Produce standards. Most importantly, in applying our own name to our goods, we’re making a strong statement of confidence in the quality of the produce we sell.”
Mr Byrne believes the company is well positioned to negotiate the current economic downturn, crucially by minimising costs and working to enhance available sources of supply in order to meet rising demand across the globe.
“We’re very ambitious and keen to continue growing,” he adds. “We’ve got an experienced, energised team behind us, one that believes we’re building something very special here. I am confident we will continue to find innovative and cost-effective solutions that will serve to preserve and extend our position at the leading edge of the fresh produce trade.”
» This article appears in the August 2008 issue of Eurofruit Magazine
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