Restructuring the bakery unit around innovation was part of a long term growth plan set out in 2005. With that process all but completed the Dutch company expects the investment to start delivering higher sales growth.
“The first phase was internal restructuring and the new phase is growth,” said investment relations manager Ian Blackford.
New product focus
Sales of new products doubled from 5 per cent of total bakery sales in 2005 to 10.8 per cent in 2008 and it this shift that Blackford said will drive organic sales growth.
CSM is aiming to increase the proportion of new product sales further to 15 per cent, which was the target figure for 2008 outlined in the 2005 plans.
These new products are all focused around the trends of health, convenience and pleasure. As an illustration of the sort of new growth driving ingredient that CSM has in store Blackford mentioned a new dough stabaliser that will formally launched later in the year.
Salt reduced bread
Developed for an industrial manufacturer with 12 bakeries the new ingredient helps bread makers rise to the challenge of meeting demand for good quality and reasonable priced reduced salt bread. According to CSM, the new stabaliser helped the customer high waste levels associated with salt reduced dough without compromising on taste or quality.
Such ingredients are expected to be the driving force behind growth in the bakery business and according to Blackford the first signs of that growth are appearing. He said that in the US, where restructuring was completed earlier, first quarter organic growth was healthy.
At the heart of the restructuring plan at CSM was the building of a network of four innovation centres in Europe. Opened over the course 2008 and 2009, these centres aim to develop innovative bakery ingredients, bakery fats, frozen bakery products and sweet ingredients.
Now that they are all up and running CSM is turning its attention to sales growth. Over and above organic sales growth, the company may also turn its attention to acquisitions. Blackford said shareholder value will be the yardstick for judging any future purchases.