Strategies for the future
January 01, 1995
by Teresa Acklin
Jean-Michel Soufflet is the deputy managing director of Groupe Soufflet, Nogent-sur-Seine, France, and the fourth generation of the family to direct operations. Mr. Soufflet described the company's operations and its future vision in the keynote speech to the AgraEurope/Sosland Publishing Co. conference on “The Grain Market in the post-GATT World” in Brussels, Belgium, in October 1994. Following are highlights of his remarks.
Groupe Soufflet's culture is essentially agricultural. In spite of the major growth experienced by the trading and industrial divisions, the Group's culture continues above all to be based on the world of agriculture, with the trading and industrial activities being merely a logical continuation of our culture.
Nonetheless, each division within the Group operates as an independent profit center aiming to achieve leadership within its own market. Costings are not calculated in reverse; we don't start with the price of the end product to work out the cost of the raw material.
GRAIN ORIGINATION. Grain origination within the Group currently represents 2.1 million tonnes (including CERAPRO), and the main procurement regions are Champagne, Burgundy and Ile de France, as well as Charente, close to our port silo at La Rochelle.
It should be noted that in order to consolidate the Champagne-Burgundy-Ile de France outlet, we have constructed a port silo at Rouen, while in the Charente-Maritime and Vendee regions, we have built the grain origination from scratch to maintain supply to our silo at La Rochelle.
Besides grain origination activity, we distribute agrochemicals (460 million francs), seed (24,000 tonnes), fertilizers (347,000 tonnes) and petroleum products (5,000 tonnes) to more than 6,000 farm buyers, who have no long term obligation and whose confidence we must win back each year.
TRADING. Trading is without doubt the most well known activity within the Group. The global tonnage sold by the Group during the 1993-94 season amounted to 12.3 million tonnes, consolidated, which puts us among the top three European Union exporters. To achieve these results, we have a solid commercial and logistical structure. This includes subsidiaries in England, Spain, Holland and Italy; and port silos at Rouen, La Rochelle, Southampton and Schiedam, which give us a total capacity of 400,000 tonnes.
Our geographical location in Europe enables us today, by being close to the consumer or producer, to trade commodities with the best results and to provide a high standard of service. We are also preparing to become a fully international trading organization by taking part in operations from third country to third country.
Milling. With mills in France and Belgium, the Group grinds 2.5 million tonnes of wheat per year. It has a presence from the small bakers to industrial markets and is heavily involved in the export market.
With 18% of the world market, i.e. 1.1 million tonnes of flour, we are the leading exporter, our tonnage being higher than that of the United States.
Today, we estimate we are the leading European miller, with facilities located in various ports and production areas, and with our cost controls, we are ideally located to respond to the export markets.
Maize processing. We are maize processors with a plant at Strasbourg processing 600 tonnes per day. This plant, which formerly marketed products destined for cattle feed, has totally redirected its sales toward products destined for the brewing industry and human consumption.
Industrial bakeries. As is the case for numerous millers, we have become bakers by accident as a result of the financial difficulty of one of our customers.
Today, we have seven industrial bakeries in France, where our annual production consists of 18,500 tonnes of bread and 9,300 tonnes of Viennese pastries. The market is essentially located in Northern Europe, and our production is strongly directed toward pre-baked frozen bread.
Unfortunately, our growth in this sector will be difficult in the future; the fact that we are both millers and bakers in France means that we are suppliers to and competitors of our customers, a situation that does not follow tradition, unlike in other E.U. countries.
Rice and pulses. As with industrial baking, the fact that we have become involved in this sector is by way of an accident, but this time, it is really an accident. We became involved in the rice and pulses processing and packaging industry when we acquired a plant which was part of the takeover package of our maize plant at Strasbourg.
This processing, which nevertheless represents a production of 60,000 tonnes, is completely outside of our other activities. We have had some disappointments, and the Group's agricultural experience has not been enough to ensure the success of this division. Our marketing errors disillusioned us.
Happily, today we are back on course. Indeed, we have taken advantage of a period of recession where brand name products have suffered, and while being loyal to our policy concerning costs, we opted for winning back business with the lowest prices and supermarket brands.
GROUP UNIFICATION, SYNERGIES.
The fact that we call ourselves Groupe Soufflet does not just mean that we are a group of companies and that we are of a certain size. Beyond that, the concept of “Group” indicates the existence of synergies between the different divisions and a common company culture led by cost awareness and the value of our staff.
Today, synergies are for us more and more clear. They have obviously always been there, in relation to the expenditure incurred by each of our divisions, our light central structure and our concern for economizing, which has been systematically drummed into the companies we have acquired.
In our case, synergy has also always been directed toward the quality of the products as well as the logistics. Indeed, if between the divisions there exists only a commercial relationship, we try each time to make economies in terms of logistics and quality, notably for deliveries of high quality products for our port silos and our plants, by choosing adequate lots.
Nevertheless, today a synergy that was less evident in the past is more and more important, bearing in mind the internationalization of the market. It is a synergy between the processing and trading divisions of the Group.
Indeed, our stance in international trade enables us today to have a better understanding, to be tuned into the management of the European Commission, as well as to world prices and export restitutions. Our objective is to have the maximum throughput of our plants, throughout the season, in order to provide the dividing coefficient of fixed costs, thereby allowing them to be more competitive.
Today, how can we take positions on commodities and certificates without having a good understanding of the world market? This strategy enables us to envisage promoting a different idea with the customers, as well as with the government authorities, the first processing industries in general and more particularly, the milling industry.
Our group has grown within the cereal industry, where we think we have acquired expertise and knowledge in our activities, and our size enables us to consider the future with confidence, in order to take the benefit from it and to ask ourselves why we should not consider new development.