Flavour of success Pågen

FLAVOUR OF SUCCESS

Sweden’s largest bakery, Pågen AB, was founded by an entrepreneur and has been passed down through several generations of the family, always growing and expanding its range of products.

Pågen dates back to 1878, when Anders Påhlsson and his wife Matilda started a small bakery in Malmö, Sweden. Though just one of many such businesses it did so well that in 1903 it opened the country’s first industrial bakery. As Malmö grew over the next 50 years from 35,000 inhabitants to more than 250,000, so did the business. In the 1950s, Pågen became the first bakery to distribute its products nationally and then the first to export bread and other bakery products.

Today, Pågen is the bakery business of Pågen Gruppen AB, under which come several related businesses including a flour mill that supplies much, though not all, of the bakery’s raw material. The firm employs around 1400 people at its three factories, two in Malmö and one near Göteborg.

Rivals unite

Pågen was already well ahead of all its competitors when, in 2000, it decided to restructure the business radically. For many years its Göteborg factory, Pååls Bageri, had been run as a separate business, duplicating many of Pågen’s products and encouraged to compete with its sister company. The thinking behind this was that the internal competition was an exciting challenge for both companies, but the market had changed, and it made sense to merge these companies into one strong entity to meet the growing centralisation and internationalisation in the supermarket and grocery chains.

The two companies were much the same size and had a combined share of the national market of about 22 per cent. Each had its own portfolio of products, but quick surgery meant that the enlarged company ended up with the same number.

Though the combined group was more effective from the start, that alone would not account for the dramatic growth that Pågen has seen since the merger. In Sweden, bread buying habits are different from, say, Germany. Though small local bakeries do exist their market share is very small: the vast majority of bread is sold in supermarkets. Pågen uses its own fleet of vehicles to deliver overnight from its three bakeries to supermarkets and grocery stores throughout Sweden.

Highest quality baked goods

Service like this helps Pågen to stay at the top of the Swedish retail supply chain, and has been enhanced by continuous improvement in the factories. Over the past few years the company has sharpened the effectiveness of its operations by streamlining its production lines and reducing production costs.

Pågen’s product range is divided into four main areas. Its breads include whole loaves, portion bread and rolls for the fast food market. The second main area is its Gifflar brand of pastry rolls in chocolate, cinnamon, saffron and vanilla flavours. The Pågen muffin range consists of an assortment of classic muffins with various flavoured cream fillings such as

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chocolate and lemon. Finally, the company’s range of Krisprolls, its best-selling export, each has a unique flavour and includes cardamom, muesli and wholegrain varieties.

The phenomenal success of Krisprolls outside of Scandinavia where they had always been popular, took even Pågen aback in the late 1970s when they were introduced to the wider European market. Krisprolls are packed loosely in bags, not neatly packaged, and have an uneven shape that gives them a hand-made feel. Being from Sweden is no bad thing in the French or any other European market, and in France Krisprolls are as widely recognised as IKEA, Saab or Ericsson. 90 per cent of Krisprolls are sold outside of Sweden, with France by far the largest market.

Home and abroad

Pågen is one of the market leaders in pastries and sweet products such as muffins and bread in the Nordic regions. Increasingly, the supermarket chains in Scandinavia are looking at Nordic concepts and Nordic buying power. For instance, the Co-op, which was founded in 2002, has developed a strategy of seeking Nordic partners among its food business suppliers. The same is true of the Danish Netto chain, which has established a presence in Sweden over the past few years. “It is a sign of growing pan-Nordic cooperation between the retail trade and the food production industry, and we hope to see much of the company’s future growth coming from this region,” says a company representative. n