Interview: Pierre Tossut is the new CEO of Puratos

© Puratos

Taste Tomorrow, every day

Puratos has been guiding its strategy in line with the findings of its ‘Taste Tomorrow’ study, an extensive consumer research program undertaken every two years. It is now regularly updated as findings guide decisions to fast-paced consumer changes, the company’s new CEO, Pierre Tossut, shared with us.

+Catalina Mihu: Congratulations on your new role. Please share your thoughts on taking on the CEO role at the beginning of a new year in an unprecedented global business environment. Pierre Tossut: As Daniel Malcorps was preparing to step down from his CEO role (Malcorps led the company for 20 years, until the end of 2021 – eds.), we had started a transition process two years ago, so I could step in starting from the beginning of January this year. Cédric van Belle also took on the role of Chairman of the Board at the same time; we have been working together for the past two years in preparation for taking over the new assignments.

Mihu: What has the transition entailed? Tossut: When we first communicated the plans internally, two years ago, we had initially envisioned a transition in which we would travel to all the countries where we work, to meet our colleagues. We had worked intensely on reviewing and updating our strategy. But then COVID-19 came; we had to reconsider all these plans, and we set up a crisis team instead. I took over the management of the crisis team for two years, as the situation progressed, starting from Asia, then with infections spreading throughout Italy and Europe, followed by the Americas. There were many unknowns managed by the crisis team, about how the situation would evolve, when (and if) it would end and what the impact would be. The upside to this situation was that we were forced to review everything we were doing. Our first priority was, of course, protecting our people in factories and making sure they didn’t get sick. But then we also reassessed our ongoing projects to make sure we were focusing on what consumers need. Early in the crisis, we did a study to see what was changing at the consumers’ level, which helped us shape the product portfolio that we needed to have in order to please them. We saw, for instance, people increasingly looking for health and wellbeing products, for foods helping to boost their immune system and products with less fat. We had to modify our product focus and make it even sharper during this time. A great deal of that effort went towards trying to make processes lean, focusing on

aspects that were truly relevant in the moment. We did that for a period of two years. There was an impact on sales in the beginning, but then we started to recover as we made sure to return to some kind of normality, at least in as far as sales were concerned. It was an entirely new range of activities during this timeframe and an incredible learning curve as we had to reconsider many aspects within the company. We had to review our strategy in a more structured way, while we carried out what we coined as ‘the new normal exercise’ and we looked at all the changes that came with COVID-19 and what would stay after that. We were then able to redefine the purpose of the company and realign everything with the company’s strategy. We started to implement many things in the past two years and we are now continuing with this work. Mihu: What key aspects from the last two years in business will be reflected in your management of the company? Tossut: The consumer study was the starting point. We used to do our ‘Taste Tomorrow’ study every two years, but we decided to do it on a much more regular basis. We took some of the findings from the study to adapt our plans. In product ranges, we increased the focus on everything that is plant-based to match the big movement that we see – I would call this trend almost a tsunami in magnitude, which started on the West coast of the U.S. and then spread all over the world. Meat was first to be replaced and then milk; the trend has since evolved to encompass alternatives for flexitarian lifestyles. I think this is now the target, to provide options for people who want to follow fully plant-based diets for a certain number of days, and less frequently also consume meat, cheese, or other animal-based products. We have been intensively working on this approach, we have

created a dedicated business unit with a specially-appointed team for this trend alone. Looking into well-being, we observed that people have been looking for products with less sugar and more fruit. We have reviewed our offer”In product ranges, we increased the focus on ings including fruit in response and have reduced everything that is plant-based to match the big sugar while increasing the movement that we see – I would call this trend fruit content up to 85% in some cases. almost a tsunami in magnitude, which started on We also continue to invest the West coast of the U.S. and then spread all over in digital. We had started the world.“ Pierre Tossut, CEO, Puratos online sales back in 2015, but we saw e-commerce becoming prominent as a result of COVID-19 measures. Consequently, we accelerated our efforts in this direction and we now see triple-digit growth in e-commerce. We also invested in virtual reality, because there is a growing number of customers that our technicians can help remotely with tools such as smart glasses. We envisage that we can help more people all over the world in this way. We have also been working on AI: we have brought experts on board who are researching how we can use AI to work on new product development, for instance. There are several things on which we have been working and which we will continue to develop. Mihu: You bring a comprehensive knowledge of the company to its helm, gained from 26 years with Puratos. How does such intimate knowledge in many areas starting from R&D to marketing and product management translate in your approach to product development going forward? Tossut: Although I have spent many years in R&D and seen numerous developments, I still think I know very little. The best learning experiences I get are going out and speaking with specialists and customers, because that is where you learn what their needs truly and specifically are. I try to spend a lot of time meeting with and listening to customers, to understand both the needs that they actually recount, as

Meet Pierre Tossut

Pierre Tossut has been in charge of the company’s R&D, marketing, product management and sales divisions. He is behind the group’s health and well-being approach and, as of January 1, Puratos’ CEO. With a background in agriculture engineering, Tossut joined Puratos 27 years ago, as a sourdough R&D specialist at first. He has since managed different business units and perfected product and process development throughout his career. For 16 years, he was the head of the Group’s R&D, a role he also held in parallel with other roles. One of the latest such tasks included setting up the channel structure, specializing the sales force from the perspective of the different channels in the baking industry. “I had the privilege of working in many aspects of the business, but always with the customer in center-focus, and how to be relevant to the customer,” he emphasizes. He has traveled around the world many times to learn all the subtleties in breadmaking, in patisserie and chocolate, to gain a profound understanding of what the customers need, how the ingredients work, and what the consumer wants. “Our work at Puratos over the past 12 years goes much deeper into consumer understanding, which influences how we develop innovations, in that we make sure the work we are developing for the client is also relevant to the consumer. This has fueled the Group’s innovation pipeline, which was my responsibility,” Tossut shared.

well as needs that are, sometimes, not clearly expressed or even identified. I am not alone in doing so; the innovation driven by our ‘Taste Tomorrow’ insights is based on the close observation of the customer as a priority. We identify the relevant trends this way and what we need to develop, respectively. This is, obviously, a subjective assessment – sometimes, the choices prove to be correct and sometimes, not. These are risks in any innovative company, and, while success is never guaranteed, this is our innovation pipeline. I believe Puratos is a fantastic company because we have a long-term vision. Courage is one of our main values, as well as vision. We are always asked what comes next; now we have COVID-19, what comes after? This is what drives us to envision what is going to happen, to stay innovative and stay ahead of the trends. Sometimes, you can be too early and develop something for which the market is not yet ready for. But, you have completed it, you have mastered it and you can quickly have it ready when the time comes. For example, we had worked on a number of things that we implemented when COVID-19 came along. We had been developing health and well-being, sugar-reduction solutions for 12 years although they were not always gaining traction. However, when the need for these was accelerated by COVID-19, we were ready because we had envisioned the trend and we were prepared. This is the way we do things and we aim to continue to do better. Innovation is not a theory, it is a journey and you learn by doing it, with new methodologies always coming out to be inspired by, to be faster and leaner. You have to explore, try things, sometimes fail, pivot, do something else when needed, and continue. This requires a mindset that we are lucky to have embedded in the DNA of our company. It is not a forced process, on the contrary – sometimes, we need to tone down the stream of ideas and re-center around the portfolio. This is a fantastic way to work, where ideas continuously effervesce thanks to the creativity in the company. The challenge is to select what is truly relevant and will be successful in the market. Mihu: So this is where the expertise comes into play, in addition to the beginner’s mindset that you consider to always be an important asset. Tossut: Yes, we have experienced people and processes in place to try to select the best ideas and then to bring them to the market. Mihu: With this stream of ideas for new opportunities, what are the strengths, values and R&D workflows at Puratos that you are aiming to preserve and build on? Tossut: Understanding the consumer is an important first step. ‘Taste Tomorrow’ is key, but we also have the Sensobus

for sensory analysis at the point of purchase. We collect and analyze all of this data. In addition, we gain insights from client observations, all of which we funnel in for analysis. We select the best ideas based on their potential and differentiation considerations (e.g., can we protect it with a patent?). This is a good workflow, but it can take time. We do fast-track some ideas, skip certain steps and use a simpliEUR5BN: fied stage-engage sequence to bring the products to the market PURATOS’ TURNOVER faster. In any case, we supervise the workflows to make sure we TARGET BY 2030 continuously improve them and that we can measure their efficiency. We systematically track the sales of the innovations, for example, we use a very interesting and innovative tool – the Puramid* – that helps us measure the different kinds of innovations that we launch on the market. We even share it as a best practice in universities. It is based on the concept that existing and historic products in a portfolio need to be renovated all the time. If you stop renovating, you lose touch with what consumers want, which will affect product sales. There are also different levels of innovations: some that are a bit more incremental and the more radical ones, which create a breakthrough in the market. We have set up and are measuring the growth rates for different kinds of innovations that have to feed the growth of the company itself. Mihu: What local sources of inspiration does Puratos find, considering its global presence? Can you share an example? Tossut: What we know as ‘bread’ is the Western type of bread, loaf bread, toast bread, or baguette. When you travel around the world, you see other traditions. In the Middle East, people prefer flatbread and baklava-type products; in Asia, bread is steamed. We go into bakeries and observe how people work. Ciabatta, for example, was launched just before I joined Puratos. We thought it was an incredible kind of bread because you can freeze it, chill it as needed and it is always good once’s it’s baked. We launched the first ciabatta mix – typically, a long-fermentation dough that requires a lot of water. This is an example of a product originally from the North of Italy, which we launched and then it spread across markets all over the world, by developing a complete mix to consistently manufacture it. Mihu: And how should ideas that are ahead of their time be treated? How do they become trendsetters? Tossut: Back in 1998, I remember we patented a technology to soften grains and seeds, starting from a tradition we saw somewhere in Germany, which gave the bread an incredible taste, especially wholegrain bread. We tried to launch it then, but it was a bit too early. A few years ago, however, we brought it back to the market, as we felt it was the moment

for wholegrain to shine. We saw a spike in sales that showed us the market was indeed ready for it.

Mihu: Please share details about the company’s EUR5bn target by 2030. Tossut: To arrive at this figure, first of all, we looked at the historical performance of the company. The market of finished goods (breads, patisserie products and chocolate) is expected to grow in value by 3-5% in the coming years, according to our estimates. We plan to continue to have a complete product assortment of what bakeries, patissiers and chocolate makers need to make outstanding finished products. innovations will focus on health and well-being, responsible products, plant-based alternatives, and clean labels. In addition, we have to consider the portfolio of geographies. We want to continue to complete our geographical coverage, to be close to customers everywhere where there are markets for breads, patisserie and chocolate – which means not only adding salespeople and technical staff but also production units, which we aim to have close to customers for fast deliveries. To reach this goal, we will also continue to digitize our internal processes and use digital tools to help our customers be even more successful in their businesses. ”Innovation is not a theory, it is a journey and you learn by doing it, with new methodologies always coming out to be inspired by, to be faster and leaner. You have to explore, try things, sometimes fail, pivot, do something else when needed, and continue.“ Pierre Tossut, CEO, Puratos

From local inspiration to global innovation

Mihu: What is the ratio between products available globally and solutions dedicated to specific markets? Tossut: That is s tricky question. What we develop for certain countries is very local as we always aim to adapt to different local tastes. In Belgium alone, for example, three main types of bread are baked. We bring centrally the technology that we develop, however, such as new enzymes for clean-label products. They are then implemented in the countries following local recipes, which is why a clear-cut answer is difficult to share. Everything should be adapted to local preferences to entice people to buy the products, from legislation down to tastes and labeling. A lot of the work that we do has to be adapted to local needs.

Mihu: How would you summarize R&D at Puratos and its priorities? How are health and well-being supported? Tossut: We set clear goals regarding health and well-being: we work on not only improving the nutritional features of our products but also on introducing gut-health solutions. We believe bread fiber to be an incredible substrate to enhance gut micro-flora and we are investing in resources to work on that. A new team that we set up a few years ago is dedicated to health and well-being, and gut health in particular. Fermentation is also an important topic for us because it is an incredible source of innovative ingredients. We also work on fruit to make sure that we have the best possible quality raw materials for fillings. We are looking into vertical integration in this regard, up to the level where we work with farms to select new varieties and to ensure fertilizers are not overused, for example. We are also developing innovative technologies to prepare the fillings.

Mihu: What do you consider the core innovation drivers at Puratos? Tossut: Understanding the market perfectly is the start. You can have an incredible invention, but, if it is not relevant to what the customer and the consumer need, it is never going to work. Innovation is an invention that succeeds at generating change in the market, and is at its core the ability to understand what the customer needs and to develop the invention that fulfills those needs. Local innovation is one of the great strengths of our company; local R&D expertise helps to adapt the technology to the process and the recipes. We are lucky to be an entrepreneurial company and the culture of innovation is embedded in our DNA.

Mihu: And how is change generated in the market? Could you share an example of work you have done in this regard? Tossut: Let’s look at brioche buns, for example; they normally get their shiny crust by using egg. We developed an eggwash alternative called Sunset Glaze for consumers who prefer plant-based diets. First of all, you need to convince your sales team that it is an interesting change to make, then you have to convince your customers to buy it, and eventually to make minor adjustments to the process in order to be able to spray the glaze on an industrial line or even manually. For all these small steps, you need to generate a change, and these are steps leading up to innovation. Once people learn it, it becomes a routine in daily production.

Mihu: Because the plant-based trend is enjoying such growth, how do you think it is likely to influence the baking industry in the long term? Tossut: I don’t know if it is going to transform it; there is a part of the market that wants to avoid animal-origin food, including flexitarians and vegans. We see this trend growing and we want to capture a part of it in several categories, from egg, to butter and milk chocolate, for example. We have egg-free cake mixes and plant-based, dairy-free whipped cream; this trend is opening new opportunities.

Mihu: What other market trends do you anticipate and which are you preparing for? Tossut: Carbon neutrality is an important point – how we can bake bread with low CO2 emissions, starting from the production of the wheat to milling, baking, shipping and waste handling, considering that every step contributes to a certain extent to the emission levels behind a single loaf. Understanding how CO2 is generated throughout the value chain provides clues into how to minimize it. This is a major project that we are developing for the future and is also the aim of our ‘Mission to Mars’ project – working on more sustainable finished goods looking at emissions as well as resource efficiency. There would be no baker’s yeast factory on Mars, for example; this project helps inspire us for the future. Another important project is integrating the supply chain, along with other exciting topics such as gut health, which is also a very complex one. New products will soon come to the market.

Mihu: How soon can we expect them, and what type of products will they be? Tossut: This year, we are introducing an innovative sourdough, inspired by the Mars project. More information about our other projects will come soon!

Mihu: What possible paths are there to continuously improve on sustainability? Tossut: We have big projects lined up. One of them is to be carbon-neutral by 2025. We also want to lower our water consumption and ensure the water we dispose of is perfectly treated. Beyond water analysis to demonstrate compliance, we also put fish in ponds to signal the water is entirely safe to permit aquatic life. We also have our bakery schools where we provide training to help the community. In 2022, we are having 350 permanent students enrolled in our schools. Currently, we have seven bakery schools, and we will continue to invest in providing this type of training to help the youth, with the eighth school opening this year. Through this program, we also support our students in finding jobs when they finish school. We also have an ongoing program on sustainable cocoa through which we try to have a more fair distribution of the revenue between the cost the consumer is paying for the chocolate and the cocoa price paid to the farmer. We have improved the farmers’ revenue by around 25%, for the time being. It is an ongoing process, as we help them to improve the quality of the cocoa. We run the fermentation for them, to ensure it is well done and we develop chocolate that is valued by the consumer. We distribute the generated revenue towards the farmers. It is an interesting project, as the impact in the field can be clearly seen.

Mihu: Thank you for an insightful conversation! +++

References

* The Puramid (Puratos Innovation Pyramid) has been designed to better drive implementation of innovation and renovation projects; the Puramid is also used to help Puratos’ teams to balance efforts and resources on strategic innovations, local and international innovations and renovation of regular products (historical products of the group). Each strategic business unit (SBU) has its own Puramid; regions and countries also have their Puramid, in line with their market realities.