Soufflet Group is the biggest private buyer of cereals in Europe. Its agriculture division buys more than 4 million tonnes of cereals in France and around 1 million tonnes in other countries. It also operates on international cereal markets via its Soufflet Négoce subsidiary.

The group focuses on wheat and barley. It is one of Europe’s biggest flour millers, with 10 mills in France and Belgium and is a significant industrial baker. It is a major player in the world barley market, with 27 plants in Europe, Asia and South America.

The company employs more than 7,500 staff in 18 countries. In 2014-15, it had sales of €4.91 billion with €578 million in plant baking and sandwich retail shops.

Jean-François Lépy, head of the trading division and a member of the Group’s Executive Board which specializes in origination, transportation and export of cereals, oilseeds and dairy products, provided some insights on Soufflet in an interview with World Grain.

“It is a group that has been created around the relationship with farmers,” he said. “This relationship is the foundation of the group.”

Soufflet advises farmers in crop nutrients and crop protection and buys grain from them. Therefore, finding markets for these grains has always been a focus, which explains the development of the value streams.

The reason for the company’s focus on wheat and barley is simple. “They are the crops produced in France in the area where Soufflet was born,” he said. “Soufflet started by developing its grain handling, based on its relationship with farmers, through acquisition and through the construction of new silos.

“The second stage beyond that was exports. At the end of the 1960s early 1970s, we started exporting grain, first to Europe and then to third countries.”

Along with the building of silos, the first processing activities started in malt and flour milling.

There was a big step forward with the 1994 acquisition of the Pantin Group.

“It was bigger than us in malt and had Grands Moulins de Pantin, which also was bigger than we were in milling,” he said. “We succeeded in acquiring this group, and so we became, at this stage in the mid-1990s, a big player in those two streams, wheat, wheat flour and bread, and from barley to malt.

“Malting barley is a difficult crop. It carries a production risk which is quite important especially at harvest. When the Eastern European countries opened up, we followed our customers in taking over malt houses adjacent to the breweries.”

The big brewers were looking to secure their procurement reliability and to get the highest quality, he said, so Soufflet developed the agricultural chain in the countries where it was implanted.

“In the barley chain, we work with our customers, the brewers, and we integrate with them,” he said. “That’s the best way I can describe the group today. It is important to focus on what the customer needs. For example, it is an important part of Soufflet’s role that our agricultural know-how is made available for the benefit of brewers.”

Soufflet signed agreements to supply malt to its factories. “We have been following the growth of our customers in the barley chain, and today we are the biggest maltster in the world with a stronghold in Europe, in South America and a presence in India.”

Soufflet is active in 10 European countries from the United Kingdom to Kazakhstan.

Flour Market Change

Soufflet has progressively refocused its milling activities to react to the changing dynamics of the international flour market.

“Twenty years ago, Europe was exporting about 2.5 million tonnes of flour a year and then suddenly in the space of a few years it dropped to less than 1 million tonnes,” Lépy said. “We, Soufflet, were exporting a lot of flour and suddenly we had to rethink our model, to something not based only on exports, but on local consumption which we succeeded in doing while keeping our capacity unchanged over the past 15 years”.

It’s a widespread problem, he said. “All of the milling industry in Europe has, basically, the same overcapacity that we have in France,” he said. “In the U.K., there is restructuring and the millers are not making that much money. In Germany, the position is dire as well. In Spain, there is very intense competition.

“We estimate that overcapacity in France is 30%-35%. It makes it a complicated job.”

He pointed out that the sugar market had gone through the same process as wheat with countries in Africa and the Middle East moving away from buying the finished product to importing raw materials to produce their own white sugar.

“All of the African importers started to build refineries in order to import raws and produce whites,” he said. “The same thing has happened to the flour market. The countries that were importing flour decided to put in the investment to have mills and import wheat.

“Today, if you go to Algeria, if you go to Morocco, if you go even to Egypt, they have overcapacity of flour production. Before, they were customers for flour from our mills.”

There are still export customers. “One of the biggest markets is Angola,” he said.

Iraq has been a big importer in recent years but is buying less. “The Iraqis are rebuilding their flour milling industry,” he said.

Soufflet considered how to strengthen its milling activity. “It became obvious to us that the integration of the baking business would bring a lot of value to the wheat stream,” he said. “That is why we made a major acquisition last year in buying the Neuhauser Group, which is one of the biggest industrial bakers in France and de facto in Europe.”

Move into enzyme technology

The manufacture of flour and malt has given Soufflet tremendous expertise in the fermentation process. In the early 2000s, the decision was taken to build up an activity in biotechnology based on that knowledge, to develop enzymes which would be used in baking, winemaking, or perhaps beverage production.

It’s an on-going research program. “There are some very big players in the enzyme world, and we are a small one, but eventually, hopefully, we will manage to add a portfolio of enzyme products that we could use in our baking and ingredients division,” Lépy said. “We have developed processes to select enzymes and those enzymes have been used in animal feeding, boosting the digestibility of the products. We have produced enzymes for the beverage and juice industry. There are a string of promising activities coming forward.”

New trends in bread

Soufflet’s activity in bread is very much centered on France, although, with a mill in Belgium, it does spread into neighboring countries.

The French bread market is changing, Lépy said. “We have had this history of artisan bakers, and I think we are facing quite a revolution,” he said. “Artisan bread makers are having to face competition from the supermarket chains, and especially from the hard discounters. Companies like Lidl or Aldi are saying: ‘We need to develop our markets, and we need to develop people going into our stores so they put in ovens, not doing the full bread-making process but just doing the baking stage.’”

Small bakers who have judged the market correctly and responded have a good future, Lépy said.

“The artisan baker who is state-of-the-art will do fine,” he said. “Our view is that bread consumption won’t change much, but there will be a shift. The shift toward industrial will continue with more sold through the supermarket.

“The second trend I see is that the quality of bread that you can buy in a supermarket is getting higher. That makes the job for the artisan baker more difficult.”

Lépy said this evolution is clearly in the center of the wheat chain strategy in creating value from wheat fields to the final consumer in serving all Soufflet’s customers: artisan bakers, industrials users and distributors.