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Hein Deprez, Univeg, after 30 years of investing (part1/2)

“There is lot of time between 'being right' and 'becoming right'”

Thirty years ago, in the summer of 1983 Hein Deprez wrote his first invoice. He needed thirty years to turn Univeg into the company it is today. "You can't plant a tree and expect to harvest after 12 months, but it's important to think on a long term basis." Meanwhile, the second generation is being prepared and Hein has every faith in his children. "They are entering a dream situation, in a company that doesn't solely depend on its shareholders, but is carried by the management. I hope to live for another fifty years, but if I were to die tomorrow, the company would go on. I have a team I'm very proud of. Everyone is aiming for the same goal. No one in this sector has as strong an organisation of people and it's our strongest weapon for the future."

---In this interview Hein speaks about the present, past and future of Univeg. Francis Kint, the CEO of the Univeg Group supplements him regularly. Another interview will follow about the future of Univeg Group.---

What was the main reason for buying back Univeg?
Hein: "As the largest individual shareholders we know the company very well and have built it up ourselves. We are very happy that we have been able to get it back complete with the partners and we now want to continue building for the future as a group. It's not a collection of companies, it's a single entity. Everything is tuned into each other. We have built up very interesting positions in Europe and other countries. With a good concept, philosophy and knowledge we could expand this over the entire world."

Was it difficult to take a back seat in the 'interval'?
Hein: "I was still the president of the Board of Directors, of course, so I was still involved. We have always followed the company and been in contact with our own people. But besides that, I had more time to work on other activities. It gave me more space to work on other areas, such as frozen vegetables, vegetables conserves, sub street and real estate. In this interval Francis Kint was in charge of the largest division of Univeg, fruit and vegetables, and this created huge stability. He has been the backbone of the company. Due to his good and focused way of working in this division he was able to hold the group together. Not all divisions of the company were lead equally well, but this is all in the past. What we have in the group right now, will stay in the group and is part of the future."

How has Univeg grown and how is the company doing now?
Hein: "Twenty years ago it was frowned upon if you went to the bank and everyone who used their own money was loud and tough about it. But if you take a look at it now: all the people who used their own money are hardly even in the sector any more. Look, Univeg has done nothing but invest in recent years. We have 450,000 square metres of cooled distribution centres, 40,000 hectares of land, of which 7,000 is production. We also have the most modern packing stations and ripening installations. A snowball starts small, and it takes time to grow. We have worked for 30 years to create this fantastic company. We had enormous growth in the period of 2006 to 2009. If you look at 2005 Univeg was a company that made a billion Euro in turnover. In 2006 the step to CVC was taken and the goal was to grow as much as possible in as short a time as possible. In 2009 we had tripled our turnover, to three billion. Of course, we’ve had difficult years with the crisis and the EHEC period also caused a lot of damage. What is very important is that the CVC story brought Univeg good things. All of our important members remained active and the customer base has developed well. We came out of it stronger. To realise all of this, it's important that you can build the organisation professionally and that the team is all on the same page, regarding the long term strategy and vision as well. In recent years Francis has made a huge turnaround by training and educating people. This is the plan we want to communicate to the outside world. Like you can see at our stall in Berlin, we're not just toasting glasses of champagne, we're a professional team. We work hard preparing all year round and our days are filled to the brim with meetings and programmes. People know what we do there and what our priorities are."

What are the main priorities for the next few years?
Francis: "If we have to paint a quick picture of the trends in our sector then the first one would have to be purchasing. First of all, the sourcing will be more difficult in the future. Not that there will be scarcity, but it remains a challenge to fill a year round programme. It will need other sourcing capacities. Another part is the changing relationship with the customer. From a pure selling-buying relationship you are moving to a category management in which you are adding knowledge of the product. Filling in these points can be done in different ways and the goals is to have everything under control in the future, in the areas of sustainability, environment and social policy too. We think that retailers will aim for a top fruit and vegetable shelf with people who have experience and can fill this in in the future. In the area of megatrends we are fine. We can see perspective in health trends and initiatives and are working on them." Hein: "We have to think about ecological footprint and handle natural resources the right way. If you were to indicate how much water you need for a kilo of tomatoes and for a kilo of meat, it would be a difference of around 15,000 litres."

How important are own productions to you?
Hein: "At an organisation like Univeg you have to be able to think integratedly and certainly have a link to the production. It's important to make to connection between the consumer and the production and to control every link in the chain. We don’t necessarily focus on own productions, but we do focus on controlling it. We build partnerships with producers and influence it. Retailers and consumers want transparency in the chain and that's why integrating backwards is certainly applicable. Univeg is a company that can control the entire chain. If it is too difficult and too far apart, it can be a problem. It is a process that has to be followed from the development of a certain variety to when the product is on the shelf. it is a must to keep the connections between the consumers and the production as short and as involved as possible. This means that useless links must disappear."

What links do you think are useless?
Hein: "An example is an import, who has an office and whose largest investment is a private car. This is not added value and can even disturb the market. These kind of links need to be removed. Most fruit and vegetable companies still think to much from the perspective of horizontal bundling, a typical cooperative thought. The power thinking in which products are bundled and 'fired' into the market in different ways. This methods adds nothing, it creates inefficiency and pressure on the price, which is completely unnecessary. An efficient method is building a vertical column. This eradicates useless links faster as well. In a vertical chain you follow a line from the start and you are producing for a specific customer. An important advantage is that goods in a vertical chain do not compete with other vertical chains. Something was made with a certain retailer in mind and this is that retailer can differentiate with a certain variety, a certain packaging, presentation and price. This way you create unique products that are separate from other products. That is another vertical column. Horizontal columns always compete."

Will the retailer continue to need you in the future?
Hein: "There is the possibility that the retailer may concern themselves with other links, such as production, but then they wouldn't be doing their jobs. It is possible that they may become specialists down to the details, but a retailer has too many product groups for this. For them it's uncontrollable. Retailers need top companies who have a wide view of the entire market in certain areas like fruit and vegetables. The desire for sourcing is there among retailers, but we don't see it as a threat. Our tagline is "“Univeg, your DIRECT connection to the field”. We show the retailers our producers and from our organisation we ensure direct contact from retailers to producers. We are very open in this. Supermarkets know that we can add value as a group. We bring methods to them so that they can communicate with the customer. It is our task to supply the right information so that the consumer can be informed in the correct manner. Within Univeg we are working on a database with varieties, product information, recipes and such. We don't have to communicate directly with the consumers. We do this through our customers. They send our a brochure every week and this has a huge effect. This way everyone has their own job."

Does this not make Univeg more of a logistics supplier than a trading company?
Hein: "We are much more than that. Logistics and trade are two aspects that are evident. If you can't do this, then there is no longer a place for you. Univeg today is a company that has knowledge of the chain from the beginning to the end. We also partially participate in it. We are busy choosing breeds for new varieties over the next few years. We also have influence on the cultivation, for instance with the crop protections. Univeg was built and shaped by creating partnerships in all parts of the column. We are at the top of all these areas and continue to develop ourselves in them. For instance, take the ripening of bananas and other products. We started with this added value very early on and it has been successfully placed in the market. We want to have as much information as possible so we can pass it on to whoever buys our product. We are a high tech company and are constantly building towards the future. We want to make sure that of 100 kilos of apples we grow, 95 kilos actually go to the market, and there is not a waste of 35 kilos." Francis: "The infrastructure of Univeg is huge. We have a total of 450,000 square metres of distribution centres. You can see how it attracts business."

Do you see more companies switching from product orientated thinking to market orientated thinking?
Hein: "I was one of the first in the sector to do this. I started trying to bring the production and the retailer closer together years ago. We wanted to work in function with the market and not in function with the product. It has been an ideological battle, as the producer feels they need to defend their product. But you can only really defend it when you defend the interests of the consumers. If you understand that, you know how you need to produce. We chose this direction 25 years ago and many have slowly followed us. We were right." He laughs. "There is sometimes a lot of time between 'being right' and 'becoming right'. I think there are a lot of companies in the fruit and vegetables sector today who are doing well, but it's hard to find a company that controls the entire chain."

Did you consciously choose not to have your own brand? Is everything done through a private label?
Francis: "Our strategy is Customer Intimacy, to put it in management book terms. This conflicts with building a consumer brand. Of course there are companies who have proven that they can build up a consumer brand, but the question is whether you would still be able to do that nowadays, as those successful companies started this after WWII. What we are seeing today is that the customer is placing their own brand on the product. This is a good trend for us. Hein: "If a retailer puts their own brand on their product, it shows they have a good supplier. You shouldn’t forget that if a retailer puts their name on the products and there is something wrong with them, it will damage their reputation. So suppliers who are able to fill in programmes, have very strong suppliers themselves, and well organised organisations. You can't do it if you don't." Francis: "I prefer customer label to private label. Private label have something cheap about it, even though it isn't at all. We do have a brand that we've been carrying for years, the Alara cherries. A very strong brand, but not a consumer brand, it is a trade label, well known by trade insiders."

Author: Gertrude Snoei and Izak Heijboer