Agrokor – A history of innovation Agrokor

AGROKOR – A HISTORY OF INNOVATION

The Agrokor Group is the largest privately owned company in Croatia and one of the leading regional companies with almost 60,000 employees and reported consolidated total revenues reaching HRK 49 billion.

The Agrokor Group’s core businesses are the production and distribution of food and beverages and retail. Corporate members include Jamnica d.d., Croatia’s largest producer of mineral water, Ledo d.d., Croatia’s leading ice cream company, Zvijezda d.d., the biggest domestic producer of oil, margarine and mayonnaise, the largest Croatian meat industry PIK Vrbovec d.d., Croatia’s leading agricultural and industrial company, and leading largest retail chains Konzum d.d. and Poslovni sistemi Mercator d.d.

The leading positions of Agrokor’s companies are reflected in their dominant market shares. Ledo dominates Croatia’s ice cream market. Zvijezda enjoys the biggest share of the margarine and edible oils market, while Jamnica fronts Croatia’s bottled water market. Konzum is Croatia’s biggest retail chain and PIK Vrbovec is the leading meat company in the region. Since it was established 30 years ago, due to a clear business vision, a consistently applied company-wide strategy and well-planned investment projects, Agrokor has grown from a small family-owned

company for the production and sale of flowers into the leading food industry and retail group in the region today.

Having achieved and strengthened its indisputable leadership in the domestic marketplace by staying ahead of changing market demands, Agrokor is now focused on making a step further in an attempt to realise its long-term strategic goal – becoming a major player throughout the region.

In addition to its Croatia-based companies, in recent years Agrokor has acquired companies based in several neighbouring countries, including Ledo Čitluk, Sarajevski kiseljak, Velpro Sarajevo, Frikom, Dijamant, Idea, Mercator, Ledo Hungary and Fonyodi.

Innovation in the Agrokor Group

Innovation is a very important category in the companies of the Agrokor Group. It is recognised on all levels, same as the contribution of innovations to business results in today’s dynamic and challenging business environment.

Agrokor Group continually strengthens R&D activities by developing new and improving existing products and processes. Focusing on innovation as an important part of business strategy brings a comparative advantage to its companies in an increasingly demanding, highly competitive marketplace.

R&D activities within Agrokor Group are realised through research and development centres within individual companies, according to specialised fields. This way the development of expertise within the teams is enabled, and its expert teams can quickly and effectively respond to the challenges and proactively offer new solutions in line with consumer trends and new technology developments. New product development strategies are based on the recognition of benefits important to its customers and are offering solutions through improved ingredients and flavours, their health and functionality, as well as improved packaging for the purpose of extending product freshness, shelf life and convenience. Open innovation

The past decade saw business conditions in Croatia and the region changing significantly. Even to a greater extent, similar trends could be expected in the forthcoming times in the highly competitive open European market.

Not too long ago, it was enough to rely on one’s own strength in developing innovative products and technology solutions to ensure the required growth. Despite considerable investments in own R&D and human resources, today it is clear that the current ‘invent by yourself’ model is no longer sufficient. Market cycles are getting shorter, innovative companies are getting increasingly important and it is becoming a key good to be networked with external partners and customers. This makes it possible for ideas, knowledge, technology and skills that go beyond one’s own capacity, as well as a knowledge base branched across different industries and technical disciplines, to become available, which is the only possible way to quickly and effectively respond to the needs of an ever more demanding market.

In accordance with the world’s leading trend, within the Agrokor Group an initiative for getting closer to the new concept of innovation - open innovation has been launched. The initiative assumes to connect internal and external resources in order to innovate faster and more efficiently.

By investing in the development and adoption of this model, Agrokor Group aims to ensure greater efficiency of innovation processes, better flow of knowledge and utilisation of internal and external resources, to implement new ideas in the areas of innovative product development, solve technology demands, increase the efficiency of processes, create conditions for cost reductions and optimise internal processes, as well as to address the challenges of corporate social responsibility in the companies of the Group.

Therefore, in early 2013 Agrokor signed a cooperation agreement with the Company NineSigma, one of the world’s leading companies

in implementing the open innovation concept. By investing in the cooperation with NineSigma, Agrokor Group has gained access to the largest worldwide network of innovators and a knowledge base branched across different industries and technical disciplines. With this investment the adoption of a new innovation strategy started - open innovation, which will be continuously strengthened and applied across all of its business processes, with the aim of strengthening its own R&D capacity to integrate new knowledge, expand the product portfolio and implement innovative solutions to successfully meet the challenges of competition.

NineSigma works with Agrokor Group companies on the precise definition of specific issues or requests to the global innovation network. It also actively participates in choosing the best innovative solutions offered and in defining optimal ways of cooperation between innovators and Agrokor - whether the potential cooperation involves the purchase of license, consulting, research project or some other form of cooperation.

Readers with an idea or a recommendation for a new product, flavour, ingredient or packaging, are encouraged to contact Agrikor at inovacije@agrokor.hr

Innovation areas

At corporate level, strong communication as well as sharing of knowledge and best practices and research results is ensured. The leading market position in key product categories is achieved through capitalising on several important market trends, such as health and wellbeing, naturalness, authenticity and superior flavour. Through the concept of vertical, field-to-table integration, its customers are provided with a wide range of fresh and authentic products of superior quality.

Products with low-fat and improved fat composition Fats are an important part of a healthy diet, necessary for normal functioning of the body. However, it is necessary to take into account the composition and type of fat that we consume and the total energy value of the meal. Therefore, Zvijezda and Agrolaguna offer a range of top quality olive oils rich in unsaturated fats, the ones recommended for healthy eating. Furthermore, Zvijezda and Dijamant offer a wide range of light products with reduced calories, as illustrated by lowering the fat content in the entire category of Zvijezda margarine spreads by about 12 per cent, started back in 2008. It is important to emphasise that all margarines and margarine spreads from Zvijezda and Dijamant do not contain any trans fatty acids since 2007.

Also, 80 per cent of the frozen puff pastry assortment from Ledo switched to margarine without trans-fat, while the amount of margarine with trans fats used has decreased by 382T a year.

Meat products are an important source of protein in the diet, but can also contribute to the intake of saturated fat in the body. Therefore, PIK Vrbovec meat industry is dedicated to improve this aspect of nutritional quality. Examples of reducing the amount of fat in meat products are numerous, to name but a few: in the PIK Vrbovec salami range, fat content has been reduced by five per cent since 2007, while increasing the share of meat. In part of the assortment, fat has been reduced at the level of about 15 - 20 per cent. In bologna and hot dogs, saturated fats have been reduced by about 30 per cent since 2009, as well as the energy value of the products.

Products with reduced salt and sugar

Reducing salt is an important aspect of improving the nutritional composition of industrial products, which is the most effective way to reduce excessive dietary salt. However, the role of salt in products is manifold - salt significantly affects the taste and is important for its technological role in maintaining the quality of products. Therefore, salt reduction is a very complex development task. Examples of reducing salt in our products are PIK Vrbovec salami, where salt is gradually decreasing since 2006 and has achieved significant progress in the range from eight to 16 per cent in some product categories. In 2014 the PIK Vrbovec R&D team started with the project of salt reduction in the entire PIK brand product portfolio.

In the diet of modern people sugar is often present in excess and it is therefore necessary to control the sugar intake. An example of products offering ultimate pleasure while simultaneously helping to maintain a healthy diet is a product line of beverages from Jamnica: flavoured spring and mineral waters, juices, teas and sports isotonic drinks.

Products with functional ingredients

Omega-3 fatty acids are examples of healthy fats, they are nutrients with beneficial effects on the heart and the circulatory system and are beneficial to a large number of physiological functions. Omegol from Zvijezda is a functional product line rich in omega-3 fatty acids, with the recommended ratio of omega-3 and omega-6 and the addition of vitamin E and plant sterols. Their effectiveness in preserving blood vessels was confirmed by the Ministry of Health and Social Welfare of Croatia. From the Dijamant product portfolio, examples of products with functional ingredients are Junior mayonnaise with vitamins E, A, D3, folic acid, B12 and B6, Junior ketchup with vitamin C, Dobro jutro Fit margarine spread with vitamins E, A and D3 and calcium. An important example are also spreadable margarines from Zvijezda, enriched with vitamins A, D and E.

An example of a functional natural product is the Mivela mineral water, whose function in the body is multiple, and the amount of 1L Mivela contains the recommended daily dose of magnesium.

In the assortment of Jamnica there are a number of products with increased amount of vitamins in quantities of at least 15 per cent of the recommended daily dose. In this group are some of the juices and nectars and isotonic sports drinks.

Consumer information

Today’s consumers are confronted with a truly rich and varied range of products; the products are changing very often, with frequent new product launches, and industry strives to be dynamic and innovative. In such circumstances, it is extremely important to enable simple navigation through easily accessible, clear and comprehensive product information. Improving consumer information about nutritional features of the products is high on the list of priorities of Agrokor Group companies.

One aspect of the optional labelling of products is the content of certain nutrients in the recommended amount to be consumed in order to achieve a balanced diet. Thus, the entire range of ice cream from Frikom bears a GDA (Guideline Daily Amount) label of the calorific value in the recommended portion for consumption. Expanded nutritional value tables with calorific value data are also added to the whole range of frozen fruit, fish and the most part of the vegetables assortment from Frikom. In the assortment of Ledo, 20 per cent of the products are GDA-labelled, and 10 per cent of the products also have a nutritional statement, such as ‘Rich in omega-3’ in part of the Fish product portfolio. Data on the calorific value are also communicated in the portfolio of flavoured water Jana by Jamnica.

With its products Agrokor is trying to reach out to specific groups of consumers, e.g. consumer groups which select specific products for health reasons. This applies especially to consumers allergic to certain ingredients or having problems with intolerance to some food ingredients. For this purpose, many products from different companies carry information such as ‘no soy’, ‘gluten-free’, etc. Additionally, it communicates a variety of other information valuable to consumers, such as ‘no preservatives’, ‘natural flavourings’, ‘without artificial colours’, ‘no added sugar’, etc.

Agrokor’s values

The success of Agrokor’s corporate members is closely related to fruitful partnerships with suppliers and customers. Its common goal is to increase added value in a sustainable manner.

The Agrokor Group comprises members whose activities are governed by the same values and principles that have been driving Agrokor’s growth and development since its beginning. The company is aware that its business progress is equally dependent on the wellbeing and development of the community in which it operates as it is on the conservation of the environment.

The sustainability of its business model is based on the values and principles presented in its Corporate Principles of Social Responsibility, and Agrokor has additionally confirmed its commitment by joining the community of companies in the Republic of Croatia that have accepted corporate responsibility as their guiding principle.

The vision of The Agrokor Group is to be an internationally relevant company setting new standards of excellence in all areas of activity. n

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