1. How was the year 2016 for Agricola in terms of business development, sales and brand expectations?
From a marketing viewpoint, this has been a challenging year. For the first time after many years we have seen what we call market up-trade, more relaxed consumers, and a moderate growth in consumption – things that are interesting premises for the FMCG market. From a business-related perspective, Agricola has recorded quantitative growth across all its business lines, which naturally reflects into higher sales. From a brand perspective, we continue to enjoy high consumer recognition, with relevant awareness indicators shown by consumer research, resulting directly from product quality and the investments we made in our brand through the integrated advertising campaigns we ran over the past four years.
2. You represent a company with Romanian roots and strong engagement towards Romania. What does Agricola mean in terms of business, jobs created, facilities and perspectives?
We can look at Agricola International Bacau as a constant example of business excellence. It is not an exaggeration to speak of ourselves as one of the leaders of Romania’s meat industry, a statement that is supported by such crucial arguments as the professionalism of our staff, the business results, which are obviously backed by exceptional product quality, and the brand equity, considering we operate in an increasingly crowded and competitive market.
Agricola is a company whose most valuable asset is its people. We work here as a large family, with clear tasks and following performance indicators, proud of our brand and products. 3,000 jobs, each business line offering facilities for the wellbeing of people, to make them feel appreciated by providing them with a proper workplace and fair pay for work – these are just some of the relevant aspects for our employees.
3. What is the trademark of this brand? What makes it stand out from other brands in this segment?
Agricola’s competitors have initiated a trend toward modernity and youth – they are putting out brands that are less steeped in tradition and closer to family and the daily life. The uniqueness of Agricola brand consists in its link to tradition, to which we have managed to give a contemporary flavor, so that in addition to projecting the image of a specialist company, thanks to our decades-old market presence and constant preoccupation with quality and innovation, we have built our communication around living traditions like family reunions around the table.
4. The Romanian economy has been the subject of a major tax cut in 2016, after a significant VAT cut for food in 2015. How has this tax cut influenced your sector? Did this tax cut come at the right moment?
It is obvious that the VAT cut came at the right time. On the one hand, it drove up consumption, and on the other it contributed to introducing order to the market and curbing tax evasion in our field. What is more interesting is that after the VAT cut (which in 2015 was accompanied by other macroeconomic changes, such as increasing pensions, increasing wages of the civil servants in education and health care, along with a growing average income) we can see a slightly growing trend in the consumption of premium products, until not long ago just aspirational for medium income people. Today, thanks to the VAT cut, such consumers find these more affordable and obviously less prohibitive to test. The quality of our products matters to consumers and if the price to quality ratio is also right, consumers can be more easily won over to premium products. This way consumption goes up, life quality gets better, and consumers can happily mix savory meals and lifestyle, with subsequent benefits to their health. All these have changed the consumers’ mindset and influenced their purchase behavior.
5. Within your company, for the first three quarters of 2016, what were the highest performing segments and why? What segments decreased and why?
Agricola Group companies continue last years’ trend of growing and differentiating on the meat market. Thus, the first semester of 2016 saw increases of 10% in the sales of poultry meat, of over 13% for pre-cooked and ready-meal products, 20% for dry sausages, and 10% for boiled/ smoked products.
But other segments were affected: the market of raw and powdered eggs was severely affected by ‘uncontrolled’ imports, coming especially from Poland. Also, pig farming and pork processing were hit hard this time of the year, with prices dropping, at one point, way below 4 lei/kg for live animals, which is below production costs. Staying on a positive course, Agricola Group has recorded an almost 9% turnover increase in the first 9 months of 2016, compared to the same period of 2015.
This positive result is also driven by high-performing, differentiating Agricola products. The differentiating chicken products – Puiul Fericit (Happy Chicken), Puiul Familist (Family Chicken), and Puiul Antistres (Stress-free Chicken) – have all recorded significant sales increases year after year. The Sibiu salami has maintained its leading position in the premium dry meat products category, as did Nuggets and Strips din piept de pui (Breast Chicken Strips) ready meals, which have no competitor.
6. Is there still fuel for the increase remaining from the tax cut or is the effect of the VAT cut starting to fade?
The positive effect of the VAT cut is already fading after one year but the purchasing behavior has changed in comparison to the previous years: consumers do not go shopping as often but they spend more for every purchase. This uptrading is important because it accounts for a more relaxed purchasing behavior; people do not stick that closely to their shopping list as they did before and even if they are still looking for better prices, the trend of buying on the cheap seems to have abated. To us, the following is also relevant: the uptrading-driven market growth is only happening on modern retail channels, where figures show a trend that sets it apart from traditional retail.
7. You had a very successful campaign, ‘The Happy Chicken’, that was followed by ‘For Fairytale Meals’. How have the emotions generated by those concepts helped your business and what can you tell us about the perception of the consumers?
Our ‘Pentru mese de poveste’ (‘For Fairytale Meals’) campaign has been running for more than two years and targets Agricola Group’s product categories: poultry meat (Agricola International SA), dry sausages (SALBAC SA), and pre-cooked and ready-meals (EUROPROD SA).
The family table is one of the closest witnesses of our life events; this is why the whole campaign has it front and center. Be it the one in the kitchen, the living-room or the terrace, the family table is like a storybook: it preserves all the events and moments it witnessed. In its latest brand campaign, Agricola tells three such stories, one for each of us, and this year has included three TV ads that center on moving or funny stories, about the importance of having family and friends sharing together a meal, a traditional as well as contemporary value. One of the TV ads featured Puiul Fericit (The Happy Chicken), a differentiating product for Agricola, as its main character. Romanian consumers pay increasingly more attention to the ingredients of the food they buy for themselves and their families. Agricola has always tried to meet the demands of this generically named ‘healthy food’ market. For this purpose, the company’s portfolio has innovative products both in terms of certification of origin and manufacturing processes, and in terms of packaging, thus meeting the consumers’ needs. This is simply normal. We keep researching and surveying the habits and times of consumption, in order to permanently bring about innovations benefiting our targeted customers.
8. In your industry and in your business, how have you seen the exports and the internal markets in 2016, in terms of evolution?
Exports of poultry meat account for about 12% of the total sales and the main destinations are the UK, Germany, Austria, Spain, Italy, France, and Malta.
Both the exported meat and that sold on the domestic market bear the quality certifications required on the EU market: BRC, IFS, GC-MARK, ISO 22000, ISO 9001.
The poultry meat sold on markets abroad is of superior cuts: boneless, standard-size products in fixed-weight packaging, with a long shelf life.
The main export markets for meat products are: Spain, Italy, Great Britain, Austria, and France. We have recently begun shipping merchandise to Malta and Switzerland. But Salbac has ambitious projects targeting the US and Canada.
Our most successful exports are Micii Gusto?i (Tasty Mititei) and the Sibiu salami, followed by grill sausages, minced meat, and Salam de Vara Extra (Superior Summer Salami).
In the case of pre-cooked products and ready-meals, EUROPROD has developed strong ties with partners in France, Great Britain, Ireland, Malta, and Denmark. We are currently negotiating access to the respective category markets of Germany, Austria, and Spain.
Not least, our frozen and refrigerated pre-cooked products are among the most requested by Europrod’s foreign partners.
9. Which are the latest marketing trends in the FMCG market (especially in your segment)?
The most important marcomms developments in our field are taking place in online shopping – this is a Western trend that is growing in Romania as well. The general idea is that urban consumers are increasingly turning to online shopping. As a manufacturer and marketer, we are now involved in a process of putting our digital assets in order, so we can be present where our consumers are looking. As to the management of the online community that took shape in the wake of the Mese de Poveste campaign, we try to follow social media’s established guidelines through the digital assets we have developed for the purpose: avoid flooding consumers with messages about the Agricola brand or our products, generate quality content and then keep a genuine dialogue going. As to building the community, the fact is that Agricola cannot (and will not) take on the role of a community ‘builder’. Rather, we prefer to be seen as a sort of catalyst and facilitator for a community that grows organically and by itself around our brand – for as long as Agricola’s digital content is viewed as relevant by consumers.
10. What are your prospects for 2017?
The world has changed and its dynamics is no longer predictable. My generation was used to think in terms of competition and consumption, under the tyranny of growing the business, but the complexities of this new age require other values for us to perform adequately.
Romanians score above average for the desire to ‘feel good’.
This is why we believe that ahead of us there is a window of opportunity for building customer loyalty. Therefore, it is only natural for us to develop a strategy with a clearly defined focus on that. People expect brands to do something for them, to make them feel part of a community; this is why I believe 2017 will be a more challenging year in our product categories.