“I want us to be an example for the branch”

It has come full circle for Roland Gels. After having worked in the fruit and vegetable trade at home and abroad for years, he returned to the Netherlands from China last year. He joined Levarht for the third time, this time as general director. The interview is about the main lessons he learned abroad, the potential of Asia, the future of the Dutch horticultural sector and his personal motivation: “I want Levarht as an organisation to be an example to the branch by contributing positively to the chain and stimulate collaboration.”

Tell us, what does your career in the fruit and vegetable trade look like? 

I started with Boers Holland in 1995, where the recently deceased Adri van de Vrede taught me the tricks of the trade. Later Boers joined the Greenery and I worked for Levarht. After this I travelled to Mexico where I was active outside of the branch for a while, at an inland container terminal. In 2005 I returned to Levahrt. In 2010 I started working for Olympic Fruit, after which I left for China in 2012, and worked for various fruit and vegetable companies. Last year our family situation changed with the arrival of a little one. By then I had moved from Shanghai to Shenzen and had to drive for an hour and a half to and from work. I looked around more. Working outside of the Netherlands would have been an option – my wife isn’t Dutch – but then Levarht called.

Yes, I didn’t have to think long about returning to Levarht. I know the company and they know me. We are made of the same stuff and I love the company culture. I’m really enjoying it.

When I was abroad I learned to value others’ opinions. I worked with Chileans, South Africans and Chinese people in Shanghai for a long time. It was great and I really learned that diversity makes a team stronger. And, to be honest, I also learned a lot of patience.”

Can you describe the Chinese fruit and vegetable market in a nutshell? 

The Chinese vegetable area is huge. It is a concatenation of small scale local productions. Food safety is a big issue there. As a result of recent food scandals there is a lot of distrust from the Chinese consumer towards local produce. There are a lot of small growers and that makes checks difficult, if not impossible. There are large scale cultivation projects, often financed by the government, but you often see that there isn’t enough technical knowledge among these businesses. On the other hand the good quality of the local product on the shelves surprised me. Logistics is the second big item. Distribution is one of the keys to success in China, but still has a long way to go. If you don’t have the logistic functions and the network, it’s difficult to supply the retail. Although the Chinese retail is going through the same development as we have gone through in the last thirty years in Europe and the United States, China is moving through it faster. The Chinese supermarkets have huge potential due to the development of the middle class. The spending pattern doubles and continues. People start to buy and cook in a different way and start to eat out more. This also goes for other continents. However, the acceptance of online sales of fresh products is moving quicker in China.

I see opportunities for Dutch produce in China, but I sometimes think that those in the Netherlands imagine too readily that there is a lot of money to be had in China. I don’t believe this. Actually, I doubt whether there are many Dutch fruit and vegetable companies making money in China at the moment. There are golden periods, but the prices can also suddenly collapse in China. The export of Dutch Conference is an example of it not being that simple, although this is due to multiple causes. I don’t understand why they would send an unknown coloured pear to the wholesale markets on a commission basis, where they mainly know the local ya and nashi pear. This should have been done on a more programmed basis to the retail. I certainly see opportunities for Conference pears in China, but mainly in retail and not on the wholesale market. I think the Conference is a great pear, but Chinese consumers want to eat products immediately and if the Conference pear is still hard it doesn’t taste particularly good. This is why awareness is essential. I hope they won’t make the same mistake in peppers. I hear a lot of people say they ‘have’ to go to China, but I don’t share this opinion. Of course it would be good to build up and export there, but Asia is bigger than China. I think there are other markets with much more potential due to better accessibility, a more developed retail and a more accessible middle class, such as Vietnam, Malaysia and Indonesia. Whilst we’re talking about markets with potential, I believe even more strongly in Africa, although that’s in the future. Because the drought limits the production opportunities and the rising middle class stimulates the demand for fruit and vegetables, there should be opportunities for the fruit and vegetable export.

Back to China for a moment, what role do you see for Levarht there? 

We are orientating to enter into collaboration with local producers. We want to take careful steps into the local cultivation, in which we purely play our role as a marketing company. There are various projects on the go for this that I can’t expand on too much at the moment. It isn’t easy getting these projects off the ground. The most important step is to find the right partner, where there is mutual trust. We don’t believe in starting a sales office in China as a Dutch company or importing to China. Collaboration is a pillar of our company; we want to integrate into the chain horizontally and vertically. We also have no ambition to grow. We aren’t growers and don’t want to be, but we do want to have a close collaboration and connectivity with the cultivation, in which we aim for mutual goals.

We started ourselves in Mexico because we couldn’t find the right partner. This is why we started 7.5 hectare pepper cultivation in Mexico with our New Zealand partner Southern Paprika Limited (SPL). This company, Freshmex, is 100% part of the holding. All products are marketed by Aalsmeer by Levarht. The cultivation in Mexico is going very well. We harvest two kilos per square meter more last year compared to the last eight seasons. We grow purely for the North American market in Mexico. To do this we invest in high value product from high tech greenhouses and not field productions. Levarht grew strong in the export of peppers to the United States and Japan. Under the name Southern Paprika Limited (SPL) Levarht has had a joint venture with ACL for the cultivation of peppers in New Zealand for sixteen years. The project started with a greenhouse of 2.5 hectares to present the Japanese market with year round supply, and today the company has grown into the largest New Zealand nursery for quality peppers (22 hectares), with customers in Japan, Australia and New Zealand. Other products may also be an option. If we widen our product scope, it won’t be straight into open ground or top fruit, as we don’t have the knowledge yet. We see a large increase in the demand for strawberries in the Middle East and Japan, but the demand for lettuce is also rising considerably. One of the things that we are good at is the export to faraway destinations. If we want to stay on the ball, we will have to play into the trend of demand for local product. But we will only do this in collaboration with local partners and only where we can add value to the chain. We don’t have to be active everywhere.

We also started a joint venture in this product group in New Zealand. The first trees were planted in December 2015 and around 25,000 trees will be planted per year over the next three years. On the northern island on New Zealand, Hass avocados will be grown on a total area of 250 hectares. We started this project based on demand from our customers in the United States and Asia, and of course the local New Zealand demand. The demand for avocados has multiplied in recent years and we only expect it to increase. We were already selling quite a large volume of avocados, but weren’t really active in the production. This will change over the coming years.

Fear seems like a bad advisor in general, but my opinion is that these projects won’t reach a competitive scale size with the current technology any time soon; I see it as more of a marketing story.

There is a growing demand for organic product and organics are becoming a more important item for us. The consumer expects a healthy and safe product, whether it’s organic, conventional or in-between. The odd thing is that we sell peppers as organic in the United States, whilst they couldn’t be classed as such in the Netherlands, because they’re from substrate cultivation. It would be great if everyone moved more towards one line, even just within Europe.

That’s what I think is so great about Levarht, we are a very broad company. We don’t have any region or customer representing a share of over 10%. This is great in terms of limiting risks. At the moment 70% of our trade consists of vegetables and 30% of fruit, in which peppers are the main product by far. I hope that we can further expand the fruit share over the coming years. At the moment we are particularly strong in melons from Central and South America and we see expansion opportunities there. At least half of the melons don’t come into the warehouse, but go straight from our supplier to the customer, including outside Europe. Our faithful suppliers tell us: let us produce and you sell, that’s your speciality. I hope we can take this step with a number of other product groups too.

The competition in export to faraway destinations is increasing. Especially after the Russian boycott fellow companies spread their wings more. I sometimes wonder whether those strategic choices really fit in with those companies. Personally I think it’s important to dare to make choices. I believe that we as a company have nothing to do on certain markets, as we don’t add enough value to the chain there. Other parties are stronger in this and it seems like a difficult task to keep all the plates spinning.

I see it as more of a big opportunity. The branch has been too fragmented and will have to work together more in the future. It’s unbelievable really. If there’s something people are worried about across the globe it’s the availability of food. If there’s one product group with which retailers can define themselves, it’s fruit and vegetables, and yet the Dutch sector lets the prices be pressured like this. Thankfully there are some structural solutions, partially due to coalition HOT initiatives, but this wasn’t done in a day. I expect the situation to change for the better and there to be more relationships throughout the chain. Then they have to look more at the optimal matrix to find a realistic product price. In my view the margin of the retailer doesn’t even have to change, if the margins throughout the chain become healthier and more stable. Stability is better for everyone and through more price agreements for the long term you can steer in a more focused way towards the consumer.

I think it’s important to stay in touch with the trade, but I don’t need to be aware of the day to day pepper prices. Thankfully we have countless people here that I have a lot of faith in. I hope to add my knowledge to theirs.

I want us to be an example to the branch, in particular in the collaboration between customers and producers. I want Levarht to be a party that no one doubts adds value to the chain. I also want Levarht to be an example of a company where people can work with pleasure, with a healthy balance between work and private life. Everyone who works here should be proud to work for Levarht and happy to come to work. That’s what I’m going to invest in.

I expect the biggest change to be that automation will play the most central role in our company, which will give us a better insight into the available data, and the transparency throughout the chain will be extended and the horizontal and vertical collaboration within the chain will have intensified.

I certainly do. Not that old that they start avoiding me, but if it’s up to me, I won’t be leaving again. I travelled the world with pleasure, but am now in a different phase and it feels like coming home.

More information:
Levarht
Roland Gels