22 minute read
Interview: Christian Traumann, MULTIVAC Managing Director and Group President, and Andreas Eyd, Managing Director, FRITSCH Bakery Technologies
Built for success: a lucrative partnership
Since its acquisition by MULTIVAC in 2019, the FRITSCH Group has been soaring: sales grew by 40% in 2021, a year that saw various pandemic restrictions throughout. It also recorded the best quarterly result in its history, in 2022, and a record-breaking EUR 35 m in incoming orders, while new equipment was also introduced. Christian Traumann, MULTIVAC Managing Director and Group President, and Andreas Eyd, Managing Director, FRITSCH Bakery Technologies, shared with us the strategy of the two companies, leading up to these results, and how it continues to nurture the success at FRITSCH.
+Catalina Mihu: FRITSCH Bakery Technologies recently announced it recorded a sales growth of 40% in 2021. Where were the biggest sales recorded? Andreas Eyd: We registered a tremendous fourth quarter, and the momentum is continuing this year, starting from the first months of the year. We’ve seen the biggest growth in Eastern and Western Europe, but also in North America and elsewhere. MULTIVAC’s organization, with 83 subsidiaries worldwide, has been hugely beneficial as we are able to reach many countries; and the results are showing.
Mihu: Which segment saw the biggest sales increase? Andreas Eyd: Our customers typically look for the highest possible line flexibility, to support product diversity. They want to follow trends and the ability to easily introduce new products on their lines. This is why they frequently choose our IMPRESSA universal solution, which has the highest flexibility. In addition, our MULTITWIST pretzel solution is highly requested all over the world. Typically, pretzels are considered very European – German, or even Bavarian regional specialty. But, we have sold these machines in Asia, in the U.S., and the demand for the MULTITWIST continues to grow. A customer from Southern Europe recently visited and requested this line. As customers are looking for product diversity, this line can also be used with sweet and soft doughs, which are preferred in Asia, for example. Having these options available helps to give bakers new ideas for new markets.
Mihu: As FRITSCH is reporting impressive growth, events outside of the bakery world call for attention nevertheless. How do you perceive the war in Ukraine? Christian Traumann: First of all, it must be said that we deeply admire the bravery of the Ukrainian people and President Selenskyj. MULTIVAC is doing everything we can to support them. Our thoughts are with all those who risk their lives to protect their freedom, and, by extension, our freedom, too. In addition to our daughter company in Ukraine, we also employ good, hard-working people in Russia, and we admire those who take to the street to protest against this war there. Generally, this is a grief-filled humanitarian issue; business-wise, Russia, Ukraine and Belarus account for only 2% of our global turnover, which will be around EUR 1.5 bn this year, according to our first estimation. The impact on our business will be limited.
Mihu: How is FRITSCH utilizing MULTIVAC’s sales and service network? Christian Traumann: We are active in close to 170 countries as MULTIVAC and have 83 daughter companies. We follow the same strategy whenever we acquire a new company. When we took over FRITSCH in August 2019, we immediately put our efforts into our own sales subsidiaries, to support their portfolio. We put our people through very intense training, as many had limited knowledge regarding bakery. It was a cumbersome process, but now we have the people up to speed. At our World of Bakery in Kitzingen, we trained people, in person as well as online when possible, due to COVID. On the other hand, FRITSCH has given us a great headstart, with its amazing people! The results are showing in our current order intake: we are taking full advantage of having FRITSCH be a part of an international organization.
Mihu: What new doors opened right away for FRITSCH after joining MULTIVAC? Andreas Eyd: Going back to August 2019, when FRITSCH came out of insolvency and was taken over by MULTIVAC, our customers were reassured to see things stabilizing and FRITSCH back in the market. The reason is simple: we provide high-quality lines and the resulting end products are also excellent. Some might have wondered about the association between FRITSCH and MULTIVAC, “What does MULTIVAC, a packaging machine specialist, know about dough?”. What we saw instead was a high cross-selling potential: we brought many customers to meet MULTIVAC and learn about packaging and automation solutions and, in turn, MULTIVAC brought a lot of customers who were interested in our bakery technology solutions – a huge benefit for all of us.
Building the business plan
Mihu: What investments were made at MULTIVAC’s subsidiaries to create specialized sales teams for bakery, aside from staff training?
Christian Traumann, MULTIVAC Managing Director and Group President
© MULTIVAC Christian Traumann: Luckily, the merger took place in August, which is when we do our business planning for the following year. We immediately gave every daughter company the task to set up a business plan that would include a budget for bakery to build expertise and participate in trade shows. Moreover, we have just opened a new World of Bakery center in Canada for the North American market and we are soon opening more, in South America, Asia and Australia. We are investing extensively in bakery, in addition to what we have been putting into FRITSCH. We are investing in our sales organization, to give them the ability to sell. We are already seeing a boom in sales.
Mihu: What did the new business plan include for FRITSCH right after the takeover, what aspects did it include that were not accessible to the company before? Christian Traumann: To evaluate the situation at the time honestly, FRITSCH did not go into insolvency without reason. During our due diligence and the takeover process, what we found at FRITSCH was a perfect brand, very good technology, and highly motivated people. We also found a poor organizational structure, which we needed to tweak and adjust. We saw that we were not globally present, which was also something to work on. The plan was to bring all these aspects together, including investments (such as the enormous building investment that we are now tackling, and in IT, to name a few), to bring FRITSCH back to a technology level where they could operate internationally. To summarize it in one word, the plan was to internationalize FRITSCH.
Mihu: What changes did the organizational structure require? Andreas Eyd: To combine MULTIVAC’s huge organization with the one at FRITSCH, we had to adapt our sales team, and to coordinate with the Group’s daughter companies. We now have sales directors who are responsible for certain areas – for North America, Eastern Europe, or Asia, for example. We understand the daughter companies and MULTIVAC’s subsidiaries all over the world as customers; we try to help them to grow their bakery technology business in their markets. It is a completely different setup in terms of sales. The same thing is true in terms of service: we have a small team, which we call “the flying doctors”, that steps in to help out if there is a major problem on the line. They are flying around the world, helping out. All the smaller problems that might arise on the line can already be carried out by MULTIVAC. They have the knowledge and great experience in MULTIVAC lines as well, which is an important asset. If you compare a MULTIVAC line with a FRITSCH solution, they are 80% similar, from the mechanical to the electric setup, elements that are easy to understand and replace when needed. Differences revolve around the parts of the equipment coming into contact with the dough. For these areas, we have our 20 Master Bakers who provide assistance.
Christian Traumann: In addition, we have close to 1,000 service technicians on our payroll, spread out all over the world. There are six of them even on the south island of New Zealand, for example, so we can make sure that bakery companies are thoroughly looked after.
Mihu: What about the team of “flying doctors”, who are they? Andreas Eyd: They are eight specialists based here with us, in the factory. They also cover training, if we have live sessions on-site and they are available. They are highly specialized in the equipment. Christian Traumann: With a very similar organization to our traditional products, we will also have a key team here that can take over situations at any time. But, generally, the staff manages quite well within their facilities – also because they have received great training from FRITSCH. The team at FRITSCH has contributed immensely to help train their colleagues from the world-wide MULTIVAC organization. Andreas Eyd: We founded the FRITSCH Academy, by the way, where our specialists train all the Group’s employees in the world who are working with FRITSCH lines, from sales to service.
Building on each other’s strengths
Mihu: The teams are closely coordinated in their work, in this way. How do you see the partnership between FRITSCH and parent group MULTIVAC now, almost three years since the takeover? Christian Traumann: When we first learned that FRITSCH was up for sale, we had a very clear plan of what we wanted to do. We immediately understood that FRITSCH was a perfect fit for MULTIVAC. We had touchpoints with them even before the acquisition, because their solutions are upstream of our lines, producing all those wonderful baked goods, which we then packed. This was a great starting point for us as we knew that, if we want to generate growth, as a world market leader in packaging and processing, we need to look for new, lucrative fields. We clearly identified the bakery business as one of them, a growing industry everywhere in the world. From our organization, we delegated Andreas to be responsible for the sales and organization, and Frank Gabriel, together managing directors at FRITSCH. They brought the history and culture of MULTIVAC on board and are familiar with the touchpoints in the factory. But, we tried to keep the management team of FRITSCH alive and acknowledge their expertise. We clearly wanted to preserve the know how and experience of the team at FRITSCH. Andreas Eyd: Exactly, the MULTIVAC Group is like a big family; that is what we live and what we feel since day one, minute one in August 2019, when FRITSCH was integrated into the Group. It’s a truly sustainable integration, in which people are taking care of us and we take care of them. We learn from each other as we have become an even bigger family with FRITSCH as a new member. I have seen mergers and acquisitions that turn out like a collection of brand names; they buy, they sell. Companies are left as they were, without any real integration behind them. Our case is entirely different: we are a real member of not just the group, but the MULTIVAC family. Christian Traumann: We are making a very clear statement: FRITSCH is here to stay.
Mihu: So you are finding the value in preserving the identity of FRITSCH as a part of MULTIVAC. Christian Traumann: That’s right; it’s about using our synergies to provide the customer with a unique customer experience. Andreas Eyd: That is also part of MULTIVAC’s philosophy: acquisitions are integrated in many ways; but, they keep the identity that made the company valuable in the first place. We are keeping our red logo – FRITSCH is a good brand name, with a good value. Everything else is thoroughly integrated.
Mihu: FRITSCH was previously represented by its own subsidiaries and network of sales and service partners. After the integration, it no longer has its own subsidiaries and instead uses MULTIVAC’s network. How was this decision taken? Christian Traumann: After the acquisition, we immediately aimed to integrate FRITSCH’s sales organizations into our existing network. We integrated the people working for these sales organizations into the Group. Our own sales organization is always structured with business units: there is a ‘FRITSCH’ business unit within the individual country sales organizations. We did have many dealers, with which we tried to find amicable solutions – and, in many countries, we succeeded. We had to terminate some, and for a few others, we found alternative solutions (such as looking after special segments). We always try to identify individual solutions. This is what I think is special about MULTIVAC, because we absolutely agree that there is no one-size-fits-all solution. We are trying to learn and understand all the details: was the dealer interested in working with us?, how good was their performance in the past? That is how we find solutions in each case.
And building solutions together
Mihu: You mentioned integrated solutions; how are such complete solutions developed, with equipment from FRITSCH and MULTIVAC? Andreas Eyd: FRITSCH and MULTIVAC cooperate closely to provide complete solutions, from A to Z, from FRITSCH baking equipment to MULTIVAC packaging machines. More than this, we also work closely together with MULTIVAC to expand solutions in areas such as automation, digital services and hygienic design. There is a huge demand for automation, not only for industrial customers, but also (more and more) for mid-sized operations that need automation to cope with
Andreas Eyd, Managing Director, FRITSCH Bakery Technologies
the lack of people or skills. We are developing our digital services jointly, which helps the process to gain considerable speed, always with the ultimate goal to produce integrated solutions from FRITSCH and MULTIVAC, whenever possible.
Mihu: How are custom solutions automated by FRITSCH together with MULTIVAC? Christian Traumann: We have a traditional automation business at MULTIVAC, which slightly exceeds EUR 100 m in annual turnover. Our products are also very individual, so we are used to building one-off machines; it’s in our DNA. Our products vary: we have lines that run up to six different packaging products, with a high degree of automation, for example. Andreas Eyd: It’s the same with FRITSCH. These are highly individual solutions. Our discussions with customers always start with their idea of an end product, this is what our customers show us first of all. Then we talk about the process that is needed to achieve it, and develop the solution together with the customer. Automation solutions are also highly individual, developed by FRITSCH and MULTIVAC together with the customers.
Mihu: What trends can be inferred from the best-sold solutions last year? And how are they reflected in the R&D going forward? Andreas Eyd: There are big challenges regarding R&D. Markets are developing and flexible solutions are highly sought-after. People want to be flexible and no longer want to buy mono-lines. It is a conclusion we reached in many conversations with customers recently: the end of the mono-line is here. While bakeries would run a single product for as long as three years in the past, they now have to change the product every couple of months, if not sooner. Mihu: And what do such trends mean for your combined strategy? Christian Traumann: We have a basic research team of around 50 people in addition our traditional business units. We also have additional R&D teams within our business units, which conduct focused, individual research. These R&D teams at the Group headquarters and at FRITSCH work closely together to jointly develop solutions and new technologies for our customers. As Andreas said, these integrated lines are not only integrated from dough to ready-packed product, they can extend from flour to stored product, for example. That is where we can add substantial value.
Mihu: Speaking of flexibility, what projects have you recently developed in collaboration? Andreas Eyd: For all types of products, from bread to pizza or laminated products, we see a trend for variation. We have a presentation with over 160 slides of just product innovations, which our customers are excited to see. We can find ways to produce them together at the World of Bakery. Variations can be in shapes or recipes. We see growth in ancient grains and a revival of gluten-free products, for example. There are increasingly more customers looking to combine high volume with high-quality, artisan-style products. This is one of the things we are currently working on, to develop solutions for the challenges in this process. Christian Traumann: On the technical side, we are now introducing a new, compact bread line into the market (the PROGRESSA bread line). Solutions for extruded products are also in demand. Consequently, we deliver respective innovative technical solutions in close cooperation with our
© FRITSCH
customers. The product is what everyone wants to touch and inspect, as I have learned over the past few years. Andreas Eyd: There is virtually no customer who will ask for a certain machine, indeed. They are always showing the product, which is something highly emotional in the bakery business. You can see it with our customers and our Master Bakers. The line we just launched is a mid-sized solution with high weight accuracy, low oil consumption, and a hygienic design. It is already receiving excellent feedback, and orders are coming in.
Mihu: On the topic of innovation, the World of Bakery provides the stage for new developments. What work should be noted? Andreas Eyd: We look at the major trends influencing our business, from digital services to cloud-based solutions, to connecting all process steps and harmonizing our HMIs. Sustainability also ranks high on this list and we are working with MULTIVAC to provide solutions in this regard. We are looking into lowering the total cost of ownership, having less oil on the line, less scrap dough and using less energy and, for example. These are requests we are currently receiving at the World of Bakery. In addition, customers also ask about the latest trends in packaging materials like reusable packaging solutions with fiber-based materials, which is where we find the value in having FRITSCH work in combination with MULTIVAC.
EUR 1.5 BN
MULTIVAC’S ESTIMATED 2022 TURNOVER
A new building entirely
Mihu: FRITSCH is currently looking for a new location in Lower Franconia. Please share details about this project and the facilities planned. Christian Traumann: When we bought FRITSCH, we saw from the beginning that the facilities were not fully suitable. This is why, at first, we just rented the facilities instead of buying them outright. At the moment, we have five facilities spread around Kitzingen and Einersheim, on a radius of around 15 km, which is not efficient or sustainable in the long run. We went through a feasibility study and reached the conclusion that we need a completely new factory in the same area, because we want to maintain our existing, well-trained and highly motivated personnel. We need a state-of-the-art production and a facility that accommodates the expectations of our employees and those of our customers. And, last but not least: we want to grow, so we need more space anyway. This is why we are now looking for 100,000 sqm of land for the new facility. Mihu: What will the new facility comprise? Christian Traumann: It will house everything to make sure we do not need to travel, from sheet metal production, drilling and milling, to R&D and offices.
Mihu: You mentioned a very important aspect: sustainability. How is it considered in everyday operations and in the strategy going forward? Christian Traumann: At MULTIVAC, there is a standard process for developing products. If there is no digitalization to a development project or no sustainability benefit, it will not go into production. All developments in the MULTIVAC Group must take into account sustainability and include digitalisation. Andreas Eyd: We share the same philosophy at FRITSCH in this regard, so we follow the same policy. We just launched a new line, which uses 10% of the oil similar machines require, for example. As customers are asking for lower costs of ownership, this amounts to significant savings in oil costs over 10-15 years. Highly efficient motors, for example, are also in demand. We are now offering retrofit kits for existing machines to bring motors to the highest possible level of efficiency.
Mihu: What work is being conducted at the Technology Center currently and what are the plans for this resource after the facility expansion? Andreas Eyd: The current workload is great. Not many customers could visit during the lockdowns, obviously, but we used that time to brainstorm product innovations with our Master Bakers. This is where our huge product list was developed. We now have three customers working on the lines almost every day, on average, to test the lines, their existing products, or new innovations. We organize demonstration runs and help with recipe development, as even products older than a decade can have changes in their formulations. The easiest way to do this is by running tests at the World of Bakery, to reduce sugar or yeast in the dough, for example. We also organize ‘Live Experience’ exhibitions for up to three customers at the same time who send in advance details of what they would like to see. We prepare a program and host a complete day on a specific topic. At the end of the day, they leave with a few boxes of end products and they are thrilled to see the results first-hand.
Mihu: Right after the takeover, the world started going through unprecedented disruptive changes, from COVID-19, to the energy crisis, price volatility and then the war. How do you plan to stay prepared for such waves of changes, some of which we can predict, and some completely unpredictable? Christian Traumann: It was by luck that we joined forces in late 2019. Because we have our daughter companies all over the world, FRITSCH teams didn’t need to travel as even remote places were accessible. This is how we could
even grow during the pandemic, FRITSCH and MULTIVAC alike. We all learned how to utilize digital tools, from remote learning to video conferences. We also showcased our products in full detail, using video recordings, which worked out great. The pandemic has been awful, with so many lives lost. But, it also gave us significant advantages as a Group. Looking at material availability, we were lucky: we produce a lot of the materials we need ourselves. We have a factory in Bulgaria, two big factories here, in Germany, and others in Austria and Spain. FRITSCH could gain from the fact that, somewhere in the group, somebody could manufacture something that they couldn’t otherwise get from the regular supply chains at the time.
Mihu: With communication moving online, to what extent are you considering having it stay online in the future? And when will you prefer to meet in person, instead? Christian Traumann: What we see from our customers is that they love to see us. They love to experience the machines themselves, so we will always have a certain amount of direct contact with the customers. We will also meet with our associates around the world. But, many things can be easily done online, and we have become accustomed to it now. My personal estimation is that we can save about 50% of our traveling time by holding our meetings online. The bottom line is that nothing replaces personal contact, though. Andreas Eyd: I wholeheartedly agree, maybe half of the meetings can take place virtually. It saves us all time and it is more sustainable, which is great. But, I have been in sales for 30 years now, and I like to see people sitting at the same table and talking to them directly when we can.
Mihu: We went over the strategy at the moment of the takeover. At which stage are we now, of the plans established in 2019? Christian Traumann: I think that we have shown that our investment and our hard work from both sides have fallen into place after two years, as we see an enormous order intake, which is growing heavily and seems to be sustainable. Also, on the technical side, we see new developments from FRITSCH coming to the market. We see that more and more line integration takes place concerning joint control systems, for example. We also see that our organization is growing more stable as a group because we have common IT systems. I am beyond excited and I think that this is just the first step, and FRITSCH will be a major pillar of the MULTIVAC Group in the future and will represent an important part of our revenue and our income.
Mihu: The first goal has been reached; what are the next two or three steps? Christian Traumann: Internally, I always say that I expect FRITSCH to be our biggest business unit! At the moment, our biggest business unit has EUR 350 m turnover, and FRITSCH is at EUR 70-80 m at the moment. They do have a way to go, but I see no reason not to. There is nothing that can stop us, because we have the best people, the best product, and we operate in a great market. Andreas Eyd: I am in close contact with most of the subsidiaries. I can see the enthusiasm everybody has when it comes to our products: they all love the bakery world, they love the machines and the dough. I also know the power of this organization, having worked for MULTIVAC for some years now. FRITSCH is gaining traction more and more, I can see a bright future here.
Mihu: The pandemic did not hinder the growth at FRITSCH or MULTIVAC; on the contrary. What do you anticipate for the current year and the next? Christian Traumann: We are not negative, let’s put it that way, under the current circumstances. There have always been issues that could negatively impact the business. Unfortunately, war is the worst thing that could happen to humanity. We have a solid organization that can tackle such issues and we are positive about the years 2022 and 2023. We are anticipating a roughly 10% growth this year, and hopefully a little more than that for the next year.
Mihu: What is your combined vision for the future-ready bakery, from manufacturing to packaging? Andreas Eyd: We are looking at high volumes but still flexible lines; digital solutions are going to a new level, including artificial Intelligence. Sustainability is another big focus, and MULTIVAC is spending a lot of resources in this direction. Automation will be a big topic in the future; several cross-company automation solutions are under development.
Mihu: What would be an example of such cooperation between the teams at FRITSCH and MULTIVAC? Andreas Eyd: We have a large team that is exclusively dealing with automation, a EUR 100 m revenue team. It doesn’t place a special focus on bakery, but now, with FRITSCH, we have a completely new entry into this world. We also closely cooperate with MULTIVAC regarding digital solutions, as we both have digital service teams developing new features. We are sharing our progress regularly. We are also working on having a new generation of hygienic designs for our lines, an area in which MULTIVAC has extensive expertise. You can already see it in the new PROGRESSA bread line.
