Investment in organic growth is more valuable than acquisitions that hold challenges of merging cultures and adjusting knowledge, according to the CEO of Puratos.
The Belgian bakery ingredients firm pulled in a ‘solid’ €1.3bn for 2011 and has since committed €80m to an organic growth strategy dedicated to manufacturing plant upgrades and new research and development (R&D) sites.
In 2011 Puratos did make a handful of buys, including Latvian fruit fillings firm Pure Food and a majority shareholding of Brazilian chocolate maker Floresta do Rio Doce Agroderivados, but Daniel Malcorps, CEO of Puratos, said that for 2012 continued internal investments will be the company focus for growth.
“We believe organic growth is helping us more than acquisitions,” Malcorps told BakeryandSnacks.com.
“With acquisitions you have the issue of merging cultures and adjusting knowledge,” he said.
“We are evolutionary rather than revolutionary,” he added.
Organic growth is about striving to improve operations and knowledge on a daily basis, he said, and it is hard work “but something we have completely mastered.”
However, the CEO did not write-off future acquisitions, although any company buy on the cards would need to fall exactly in line with Puratos’ approach.
“It would have to be an accelerator of our existing strategy, be that technical or geographical,” he said.
Puratos is dedicated to investing in baker and chocolatier knowledge to enable the firm to service customers, Malcorps said, as well as continuous innovation in ingredients and technology.
“Research and development is fundamental for us,” he noted.
The bakery firm has put aside €15m for a three year project to build a new R&D centre in Belgium that will be operational by 2014 and the CEO detailed that is a case of capacity building, as the firm works to increase abilities and speed to market.
There is also a new site in China, situated just outside of Guangzhou, he said, set to commence operations in the coming weeks.
The €22m facility is “extremely modern” and will be dedicated to manufacturing and innovation for the Asian market and will eventually be Puratos’ Asian R&D centre, Malcorps said.
“Consumers want food to positively contribute to health and wellness,” he said, and this demand is driving certain segments within our business.
Fat replacers, egg replacers and water-based fillings instead of fat-based are in strong demand, he said, and Puravita Breakfast soft bread is doing extremely well as it is high in cereal and fruit content and offers a healthy, easy breakfast choice for busy consumers.
“We’re not in an easy business. We really need to work closely with our customers and also understand consumers,” he acknowledged.
But one thing that is clear, is that “the entry door to food manufacturing is taste,” he said, and so extensive efforts are made at Puratos to produce good-tasting end products.
The core focus for the business remains on developing high quality products that give pleasure to the consumer and ensure convenience and health and well-being, he said.