A dominant force in European milling

by Arvin Donley
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Overseeing the operation of 32 flour mills in seven countries that this year will process more than 3 million tonnes of grain, Vienna, Austria-based LLI Euromills Gmbh is not only one of the biggest milling companies in Europe, it also likely ranks among the largest in the world.

LLI Euromills is a holding company that has majority ownership in milling companies in Germany (VK Muhlen AG), Poland (VK Muhlen Polska), the Czech Republic (Unimills), Hungary (Pannonmill), Austria (Vonwiller-Group), Romania (Titan) and Bulgaria (Sofia Mel) and a minority ownership in Loulis Mills in Greece. Total sales revenue in the company’s flour milling segment reached a record-high €1.1 billion in 2007-08, exceeding 2006-07 sales (€729.2 million) by 51%.

Christoph Kempkes, general manager of LLI Euromills, said expansion has been at the heart of LLI Euromills’ success story. The growth of LLI Euromills, which employs more than 2,800 staff members, is clearly illustrated in the rise in quantities milled in the past few years, increasing from 430,000 tonnes of wheat in 2003-04 to 3 million tonnes in 2008-09.

During the past three years, LLI Euromills has built three news mills in Poland, and the company’s mills in Romania and Hungary were also built fairly recently.

THE PANNONMILL PROJECT

The Pannonmill flour mill in Csorna, Hungary began operating in April 2005 with a production capacity of 300 tonnes per day and underwent an expansion in 2008 in which capacity was increased to 450 tonnes per day. Cost of the new construction and eventual expansion of the five-story, 3,000-square-meter facility was €11 million, Kempkes said.

Through Pannonmill and its other investments, LLI Euromills has gatherered nearly 30% market share in Hungary, he said.

Pannonmill processes soft wheat, which Kempkes said is exclusively sourced locally — mainly from farmers in the area. The mill produces a wide variety of flour, including semolina, whole grain flour, and four types of soft wheat flour as well as different types of bran.

"The customer universe comprises leading food processors, industrial as well as artisan bakeries, and the retail trade," Kempkes said. "In general, our group-wide ambition is to contribute to make the business of our customers more successful through a holistic approach toward their needs with the objective to become their supplier of choice."

To upgrade its operations in Hungary, LLI Euromills earlier this decade decided to tear down five small, older mills and replace them with a new, modern mill in Csorna. Uzwil, Switzerland-based Buhler AG was chosen as the equipment supplier.

"The key rationale for having a ‘greenfield’ project was the aim to cement our leading position in Hungary by deploying state-of-the-art Buhler technology," Kempkes said. "The latter supports efficient processes and excellence in operation and thereby enables us to deliver top flour quality on a reliable and consistent basis. Moreover, our group-wide international standards require superior standards in product safety."

Kempkes said the mill is ISO-, IFSand AIB-certified and operates with a closed-air system, allowing for "slight overpressure," thus supporting state-ofthe-art hygienic standards. He also noted that the production process allows for "closed chain" tracing back from flour output to grain input.

Wheat arriving at the mill is stored in a concrete flat-bottom silo with a storage capacity of 10,000 tonnes or 16 steel bins with storage capacities of 750 tonnes each. The wheat enters the facility’s cleaning section, which is equipped with Buhler equipment, including a Z+ Sortex optical sorter.

The milling section includes 14 Buhler Newtronic roller mills and three Sirius plansifters as well as Buhler’s newest technology — Antares roller mills and Polaris purifiers — which were added as part of the 2008 expansion.

The highly automated mill features an online control system that automatically indicates corrective action in case of production disruptions. Kempkes said the high degree of automation allows the mill, which employs a total of 35 people, to be operated by a minimum of two workers (excluding packaging) during the nightshift.

Finished product storage capacity is 2,000 tonnes, with approximately 70% stored in bulk and 30% bagged using a single-spout bagging station. Kempkes noted that, as a quality control measure, all flour runs through a rebolt sifter prior to bagging and shipping. The vast majority of finished product is transported by truck, but there is a train connection on site and the small harbor of Gönyü is located just 30 kilometers from the facility.

Kempkes said that while the mill in Csorna is designed so that its milling capacity can be doubled and its on-site storage silo capacity can be upgraded from 22,000 to 30,000 tonnes, there are no immediate plans for expansion — at least as long as Pannonmill operates another mill in the nearby city of Komarom.

FUTURE EXPANSION

Kempkes said LLI Euromills’strongest market from a sales standpoint is Germany, where VK Muhlen operates 12 mills and is the market leader at around 20%, followed by Poland, where VK Muhlen also has a leading share of the market.

He said the biggest immediate growth opportunities for the company are in Poland, Romania and Bulgaria. Last December, LLI Euromills acquired all shares for the Loulis Group’s mills in Romania and Bulgaria, giving it a 98% stake in Titan S.A. in Romania and 100% ownership in Sofia Mel in Bulgaria. Titan holds a national market share of approximately 8%, which LLI anticipates will increase in the near future, while Sofia Mel holds a 17% share of the Bulgarian flour market.

"We continuously screen what is on the market to fill our ‘white spaces’ in both the Adriatic Regions and also farther to the east," Kempkes said. "Thus, conquering new markets or business is an important element of our ‘strategic triangle,’ namely optimization, collaboration and expansion. All of the latter combined should translate into business growth of more than 1 million tonnes of wheat processed over the next three years."

Kempkes said one of the keys to growth has been developing a keen sense of consumer trends and demands in each of its markets.

"Consumption habits certainly differ across our markets, which stretch from the Northern Sea to the Mediterranean Sea," said Kempkes. "However, research indicates that customers will favor frozen and bake-off products over fresh bread and put more emphasis on health and convenience. We are staying at the forefront of this development through our high-tech milling entity — Kampffmeyer Food Innovation — in Hamburg."

He said customers are also requiring an ever-improving price/performance package, such as tailor-made flour, costoptimized recipes and innovative product ideas, which he says LLI Euromills is addressing through its "people skills, marketing-affinity and technology."

Customers are also demanding better corporate citizenship, he said, adding that LLI Euromills is going to great lengths to succeed in this area. He pointed to one example of this at the company’s mill in Graz, Austria, which includes a new photovoltaic (solar-powered) component that produces enough alternative energy to package its premium flour brand, "Farina."

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