Fruitful relationships Agrana

FRUITFUL RELATIONSHIPS

AGRANA is one of the leading sugar companies in central and eastern Europe, and the world market leader in fruit preparations for the dairy industry. Joseph Altham spoke to Gabriele Findenig, AGRANA’s sales director for eastern Europe, to find out what makes fruit preparations such a growth area for the company.

AGRANA’s activities are divided into three main segments – sugar, starch and fruit. The company has a global business, with 52 production sites worldwide, around 8000 employees and an annual turnover of almost €2 billion.

AGRANA’s roots are in the sugar business. It owns the well-known Austrian brand of sugar, Wiener Zucker, and has seven sugar plants and two raw sugar refineries in Europe. AGRANA’s four starch mills are located in Austria, Hungary and Romania. It has a potato starch mill in Gmünd which is Austria’s only potato starch mill. The company’s factory in Romania makes glucose syrups and modified starch from corn starch for the food sector. AGRANA uses the by-products from the production of starch to make animal feed, and the company’s corn gluten feed, Maisprot, is manufactured at its corn starch mill at Aschach in Upper Austria.

The starch division is also responsible for the production of bioethanol. AGRANA’s bioethanol plant at Pischelsdorf, the first of its kind in Austria, uses wheat and corn as the basis for an environmentally friendly fuel, Super Ethanol E85. The Pischelsdorf plant is capable of producing around 190,000 tonnes of bioethanol per year.

Fruit preparations

Fruit has become the single most important business segment for AGRANA, accounting for some 40 per cent of the company’s turnover. AGRANA produces fruit juice concentrate from apples and berries, while in fruit preparations it is the world market leader. AGRANA makes these fruit preparations, which are either pieces of fruit or liquids, for use in biscuits, yoghurts and ice cream. Despite its scale, fruit is actually the newest of the company’s three business segments.

“Originally, AGRANA was a sugar business in Austria,” Mrs Findenig explained. “In 2003, due to the restructuring of Europe’s sugar market regime, AGRANA initiated the biggest strategic reorientation in its history and expanded its core business by setting up the new fruit segment. This approach resulted in the increasing globalisation of AGRANA’s business operations. Fruit preparation was a good opportunity and the best fit for the business.”

The fruit preparation segment was created through the acquisitions of the French Atys Group, the German DSF and the Austrian Steirerobst AG. In the course of merging and integrating these companies into the AGRANA Group, the company created a global business division capable of delivering innovation and developments close to the market. Fruit preparations are a complex product, as Mrs Findenig explained. “The production technology is quite challenging. It’s easier for a yoghurt manufacturer to buy fruit preparations from us than to make them for themselves. The fruit preparations must be pasteurised and microbiologically safe, and they have to confirm to the yoghurt’s shelf-life claims. Our fruit preparations are tailor-made, and we supply the major dairy producers all over the world.”

Expansion in emerging markets

In fruit preparations, Agrana has been expanding its global footprint. Agrana has had a factory in China since 1999, and Agrana Fruit Brazil, with a factory near São Paulo, was established in 2006. Russia, says Mrs Findenig, is another growth country. Agrana’s Russia subsidiary in

Serpukhov, 100km south of Moscow, began operations in 2005 and employs around 200 people. Russian consumption of fruit yoghurts is still lower than in western Europe, but is set to rise as Russians become better off and more health-conscious. For this reason, Agrana plans to increase production capacity at the Serpukhov site from its present level of 38,000 tonnes per year to 62,000 tonnes.

“We will invest over €20 million over the next five years,” said Mrs Findenig. “The focus is not only on production capacity, but also on innovation and designing lines for the future. Per capita consumption of yoghurt in Russia is growing and we sell a healthy product. So we have a positive outlook and expect organic growth.”

Local knowledge

Agrana understands that consumer preferences vary across different national markets. “Agrana’s strategy is to be close to customers,” said Mrs Findenig. “We have local product development centres to ensure that we can really capture people’s tastes. This is a major consideration. For example, when it comes to fruit for yoghurt, the Scandinavian market has very different expectations from the Russian market.”

Agrana is careful to obtain fruit of the best quality for its fruit preparations. “Agrana is still a fruit farmer,” said Mrs Findenig. “Poland is the fruit-garden of Europe, and we have farms in Poland and Ukraine. We grow 30 per cent of the fruit we need on our own farms, as well as sourcing our fruit through contracts with local farmers. We have full traceability and strict quality control.”

Agrana aims both to satisfy the tastes of local markets and to set new trends. “Our global organisation for innovation and marketing is developing the tastes of the future. We want to add value for the end-consumer market, and we are working in close collaboration with our customers to help them stay ahead of the competition.” n