"Agricola" Bacău invests 3 million Euros in its own network of stores

"Agricola Bacău", one of the biggest Romanian producers of poultry, will invest about three million Euros between 2011 and 2013, into expanding its network of stores across Romania and to remodel the existing ones according to a new concept.

According to the strategy, the network of "Agricola" Bacău will grow from 43 stores on December 1st, 2010, to a total number of 170 stores - at the end of 2013, Grigore Horoi, the president of the company said in a press conference. He said that the average investment in the remodeling of the existing stores is estimated at 15,000 Euros/unit, not including the freezers used for displaying the products.

"The expansion of our own network of stores represents an adequate strategic direction for supporting our development plans. It is a good source of cash, as well as an important vector used for raising awareness of the company"s values and brand. Last but not least, our own network of stores will allow us to be more aware of the realities of the market and also allow us to control the prices of our products", the president of "Agricola" said.

The new store concept was created following a detailed research, conducted together with "Ideasie" of France.

The concept emphasizes fresh products, because this is what consumers favor lately, the officials of the company said, and they are promoting the traditional products of some of the small local producers. Also, the new "Agricola" store will feature a spot for warm products.

"Agricola Internaţional" - the company in the "Agricola" group which raises and sells chicken said that the company"s own network of stores accounted for 11% of its sales in 2010. Grigore Horoi said that the goal is to increase the sales generated by the company"s own store chain to 30% in 2013.

The representatives of the company yesterday said that the process to lease a retail space of 40-60 square meters is rather difficult, especially since the owners refuse to put the entire amount on the contract.

By the end of the year, the number of stores opened by "Agricola" on the Romanian market will grow from 43 at the end of December 2010 to 65.

The company currently has ten stores in Bucharest and others in cities like Braşov, Constanţa or Ploieşti. "We focused predominantly on Eastern Romania, due to reasons tied to the very high logistic costs", the president of "Agricola" Bacău said, and he stressed that the aforementioned costs are a lot higher than in other countries, due to infrastructure. The borrowing costs are also higher than in other countries, said Grigore Horoi, who stressed that despite such things, in Romania the in-store price of chicken is 17-20% below the average price on the European market.

• "Agricola Internaţional" estimates a 22% increase in sales

With a capacity of 8,000 chicken per hours, "Agricola Internaţional" had a market share of 14% at the end of last year, and expects it to increase to 15%, in the case of modern retail networks, because it does not take into account its own network when determining the market share, the president of the company said.

The company exports 22% of its output to Germany, Holland, France, Greece, Italy and England, seeing an increase in its exports compared to 2010, when it stood at 11-12%. Refrigerated products account for 65-70% of the total volume of exports.

The company has also planned its plan to raise its turnover this year, by 22% compared to 2009, from 279.2 million lei to 341 million lei. According to data published on the website of the Ministry of Public Finance, "Agricola Internaţional" had losses of 41.5 million lei last year. The representatives of the company have explained these losses by mentioning that the results for 2009 also included government subsidies, whereas the figures for 2010 only include the company"s earnings, which according to the quoted sources, is the same as it was in 2009.

Poultry consumption per capita is slightly down in Romania, to 21 kg a year, compared to 29-30 kg per capita in Europe and 40 kg in the US, Mr. Horoi added.

• The "Agricola" group will have a turnover of 500 million lei

After the chicken division, which accounts for about 60% of the turnover of "Agricola" Bacău, cold cuts account for approximately 30% of the group"s revenues. 70% of the turnover generated by the cold cuts plant comes from the sale of raw-dried cold cuts. Thus, in 2011, "Salbac" (one of the companies in the "Agricola" group) saw a growth of 30% compared to last year, on the raw-dried cold cuts side, as consumers switched from the boiled-smoked cold cuts segment.

The representatives of the company are saying that "Agricola" Bacău is a leader in Romania, with a market share of 19% of the convenience foods and ready-meal type products, as the Romanian specific "Sibiu" salami had a market share of 45% in May 2011, up from 38% last year.

Producing refrigerated chicken, boiled-smoked and specialty meat products, raw-dried salamis, convenience foods and ready-meal products made from meat and vegetables, as well as eggs and egg powder, the "Agricola" Bacău Group is a business whose portfolio includes nine companies: "Agricola Internaţional", "Salbac", "Europrod", "Avicola Lumina" - Constanţa, "Aicbac", "Comcereal", "Suinprod" Siret, "Agriconstruct and "G.A. Nutriţie Animală".

The turnover of the group will increase 21% this year compared to last year, from 413 million lei to 500 million lei, Grigore Horoi said.

The "Agricola" group has 2,500 employees, and 146 will be laid off, after 350 employees were laid off in 2009. All the divisions of the group are being downsized, in order to improve efficiency, the president of "Agricola" said.