Ter Beke NV, the Belgian fresh food group with operations across Western Europe, is preparing to take its boldest step yet. In September it will open a greenfield production site in southern Poland as part of its new joint venture company that will market its products in Central & Eastern Europe (C&EE).The plant will serve the various CEE countries, but with an initial focus on Poland, Czech Republic, Slovakia and Hungary. This will enable the Euronext-listed company to develop its vision to be a truly continental player, with a strong market position.
The Pasta Food Company is a 50/50 tie up between the company and French chilled pasta ready-meal maker Stefano Toselli. A C&EE presence is a logical move for Ter Beke as it searches for growth opportunities outside its traditional markets in Western Europe. It had considered operations in the region as early as 2000, but had not found the underlying consumer trends it needed to support the business until now.
“The C&EE region has been fast growing for some time, but the consumers weren’t ready. They were focusing on other types of products,” explains Ter Beke CFO René Stevens. “Today we see more favourable trends; an increasing demand for convenience foods as families find less time to cook, and a strong interest in pasta meals that are familiar to them. We believe the market is about to take off.”
Ter Beke began talking to its venture partners, which already sold some products in the region, and hatched the idea to combine forces in order to share the risk and prevent overcapacity in a new market. The initial deal between both JV partners was based on principles and was agreed rather quickly. We then took a bit more time to really agree on the various details of the project, and we are now happy with the outcome.”
The company also took time to examine the different markets across C&EE and found them to be at various stages of growth and readiness for their products. They eventually shortlisted Poland, Czech, Hungary and Slovakia, which already presented the required trends and consumption patterns. In addition, they offered the best local availability of technical skills and materials, access to talent, and industrial knowledge.
“We had a long list of potential locations to consider, over 50. There were other possibilities elsewhere in C&EE, but we had to start somewhere.” says Stevens. “Once the best markets were identified, we went through an exhaustive process to make sure the site location was suitable from a technical and logistical point of view, because we need roads and infrastructure that are good enough to support our business plan.”
They eventually settled on an economic zone under development in southern Poland that offered excellent utilities services (water, drainage and electricity) that are vital to the plant’s operation. Equally important was the proactive advice they received from local authorities who went out of their way to show them what they had to do and helped them understand local regulations.
“The assistance we got locally was very important,” Stevens recalls. “Even after you’ve done the research and compared the various places, you need that local knowledge and the ongoing support. The C&EE region is not a replica of Western Europe and you cannot just copy and paste your business model into it. You will encounter differences and a steep learning curve, even if the market is showing the rights trends.”