Planning for healthy growth

By Rebecca Goozee, Deputy Editor

In just five years, Ad Veenhof has turned Dutch producer and distributor Royal Wessanen into one of the continent’s business success stories – and he doesn’t plan to stop there. Veenhof is on a mission to become the market leader in quality health food products – and most importantly, to prove to a sceptical public that such foods can be delicious.

“The common factor that characterises all of our products is authenticity. This is driven by a firm belief that our customers want, above all, food that is true to its origins, either in terms of its ethnicity or the purity of its ingredients”
-Ad Veenhof, Royal Wessanen

Health food has traditionally suffered from something of an image problem. Think of healthy eating, and images of brown rice, lentils and pulses most likely spring to mind: undoubtedly good for you, but tasty? Forget about it. Most of us would rather have our teeth pulled than sit down to a dinner of alfalfa sprouts and wholewheat pasta. But is this an outdated stereotype? Ad Veenhof’s Royal Wessanen certainly thinks so, and aims to change that perception by providing healthy alternatives that are both nutritious and tasty.

“The common factor that characterises all of our products is authenticity,” explains Veenhof. “This is driven by a firm belief that our customers want, above all, food that is true to its origins, either in terms of its ethnicity or the purity of its ingredients. We believe that Wessanen brands can differentiate themselves in the marketplace by adhering to true authenticity – not just in terms of the product itself, but also in the way each product is marketed and through packaging and promotion.”

Wessanen has a long heritage in the food business, reaching back to 1765, when it first began trading in mustard, canary and other seeds. Today, the company has a fully diversified global sales market, producing and distributing natural and organic products as well as quality food products. In recent years, under the guidance of Veenhof, the company has experienced redesign, restructure and rebuilding to create a highly efficient and cost-effective method of getting products to the marketplace, using state-of-the-art logistics and marketing techniques. Distribution operations have been benefiting from Wessanen’s Smart Assortment service, for example, as well as several other value-added services.

In 2004, after detailed consumer and market research, Veenhof’s team identified two groups of food products that they felt offered the best opportunities for growth: pure, natural and organic foods, and ethnic specialties from around the world. “We called them Health and Premium Taste,” he says. Now, with a focus on these products, Wessanen is ready to launch its Health and Premium Taste brands in both the European and North American markets. Due to the significant potential of the health and gourmet market – particularly with increasing numbers of consumers becoming more aware of what they eat – Wessanen, with Veenhof at the helm, is preparing to become the market leader in this area. “We aim to differentiate from mainstream health categories by offering an attractive portfolio of great-tasting natural and organic products for the so-called conscious consumers,” he says.

Profits
Total revenue for Wessanen’s first quarter of 2008 was an impressive €384.6 million. Veenhof believes this can be attributed to good performances in all four businesses, across both Europe and North America. “Growth in our branded operations was mainly the result of increased brand quality, strong innovation and intensified marketing efforts,” says Veenhof. He goes on to explain that European business contributed to approximately 50% of the growth.

Organic sales growth was 5.1% in the first quarter, excluding currency variation, and Veenhof is committed to growing European revenue by a further five to seven percent and American revenue by 6 to 8%, with both branded divisions predicted to reach higher margins of 10 to 12%.

But how does Veenhof plan to reach these targets and overcome today’s tight budgets? Product innovation and cross-border expansion have been, and continue to be, key strands in Wessanen’s growth strategy, explains Veenhof. Specialist European Category Innovation Managers are employed to generate ideas for new products in key categories, and once an idea has been accepted by the board, a project team is assembled to ensure all-inclusive and speedy product development. “This innovation process has been very successful for us,” says Veenhof, “leading to the creation of products such as SOjuicY, the soy-based beverage range that has recently been rolled across the Netherlands, Belgium, France and the UK.”

Sustainability
Wessanen is committed to making a contribution to sustainable development in all of its businesses. Veenhof claims that Wessanen products are brought by discerning consumers for whom social, environmental and ethical issues are important. “These consumers want to be sure that the ingredients are pure and natural, and that the supply chain carrying the product from field to table is environmentally, ethically and socially responsible,” says Veenhof. “It is therefore essential to show that we are passionate about maintaining a business approach that is built on purity, fairness, safety and environmental responsibility.”

Veenhof has been systematic in his approach to sustainability, creating a framework that enables the company to monitor social, environmental and financial performance across the organisation as a whole. Waste volumes, carbon footprint and cooling agent consumption have all been monitored, as well as the number of employee training hours, injury frequency and severity. Data is gathered annually and published in the company’s Sustainability Report.

Wessanen’s Sustainability Report measures and monitors the impacts and responsibilities of the supply chain, giving insight into responsibilities with regard to products, people, planet and profits. Along with Wessanen’s Sustainability Report, the company’s sustainability policy also includes several themes. “Since we want to think of sustainability as a core element of our organisation, we integrated this concept in our business principles, which describe our responsibilities and commitments towards our stakeholders.” Based on these business principles, seven themes have emerged, namely: transparency and accountability, supply chain responsibility, governance, environment, employees, human rights and product responsibility.

Product responsibility
One element of his themed policy means that Wessanen maintains product responsibility, which for Veenhof means that besides being safe and bona fide, products have a pureness of taste, contribute to a balanced nutrition or are based on recipe heritage. “We carry a large assortment of health products, including organic, natural, vegetarian and dietetic,” explains Veenhof. “The key to our success in this area is marketing, and in particular consumer information. A number of our brands have helpdesks in place, offering personal advice with regard to the use of our products. Furthermore, we make sure the health claims on our products are valid and assessed on a regular basis.” Veenhof is keen to point out that product packaging plays a key role in the development of new products in terms of marketing, as aside from its protective function it is also a chance to convey the correct message in terms of marketing, being attractive and authentic, and consumer information, containing the correct labelling and health claims.

As well as this responsibility Veenhof is also keen to look at improving other areas, in the coming months for example, a number of frozen snacks will be awarded the ‘Il kies bewust’ or ‘conscious choice’ logo, informing consumers that these particular products conform to a number of health criteria in that particular product segment and, as such, are a healthier option.

Food safety
As customers become better informed they will increasingly insist on quality and safety in the food chain, and companies will have to be more creative in how they source products to meet the growing needs of an expanding and diversifying population base. Food safety is a top priority, says Veenhof. “For one, all our production facilities comply with BSC, IFS and in the near future the new ISO 22000. And in addition to this, the Wessanen Food Safety Plus (WSF+) standard goes beyond the legal requirements and builds on HACCP and the new ISO 22000 standard regarding food safety.” Reaching beyond ISO 22000, the WSF+ includes additional requirements in the field of contamination risks, transport, training, purchasing, traceability and new product development. In the future, Veenhof aims to incorporate external audits on issues such as food safety, product responsibility, social and ethical indicators.

Along with food safety, transparency and traceability are two key issues in the food industry that are essential for operations to run smoothly. In 2007, Wessanen made a general analysis of all possible sustainability issues in the food supply chain. This analysis resulted in a WISE (Wessanen Identified Social and Ecological issues) list. Next, a Wessanen team identified the 10 most used ingredients in their branded products portfolio and established a sustainability risk profile for each of them. “In order to make a direct link between our products and supply chain responsibility, we will integrate criteria for sustainability into the lead buyers and new product development processes by the end of 2008,” says Veenhof. “By disclosing the origins of our products we are able to fulfil our promise of authenticity. In this process, we achieve transparency and create internal and external pressure to become more sustainable.”

Health food
There has undoubtedly been growth across the spectrum of the health food market in the last decade, and despite rising food prices, this trend looks set to continue. Veenhof believes that today’s consumers are increasingly better informed through a mixture of media, marketing and globalisation, resulting in an increased awareness of environmental and health issues. This awareness triggers a desire to eat more healthily and pay attention to their food with regard to food safety and production methods, says Veenhof. On the whole, more and more consumers study product labels for information about the origin of the food they purchase, as origin reflects quality and authenticity.

“Supportive trends in the past couple of years have been healthy eating on-the-go, such as fruit drinks, smoothies and breakfast beverages,” he suggests. “There has also been a growing popularity in natural and healthy herbals and botanicals, such as herbal energy drinks and energy bars.”

Wessanen’s focus on health foods concerns healthy and authentic food products that are cultivated in an organic manner, containing no artificial additives or that have undergone no processing, or are exclusively vegetarian. “Our health food range comprises of a rather broad portfolio of products and brands, varying from organic breakfast cereals to multigrain chips, herbal teas and vegetarian spreads.” Target consumers are principle-conscious, who are critical about their social and natural environment. “These consumers shop at neighbourhood natural food stores and general grocery stores, where our brands command trust and respect thanks to our reputation for purity and authenticity,” says Veenhof.

Wessanen also have a Premium Taste portfolio, aimed at specific segments and categories, such as authentic Asian foods, Mediterranean specialties and French gourmet products. “Target consumers are adventure-conscious, and have an international orientation, taking pleasure in exploring new flavours. These consumers shop for our authentic premium-quality products in specialist ethnic stores or in the international aisle of the general grocery store.”

Future focus
“Our strategic focus for the future is on generating more organic growth by fulfilling the increasing demand for food that is natural, wholesome and authentic. We will continue to develop our key brands, refine our innovation pipeline and create opportunities for multi-country product launches,” says Veenhof. On the distribution side, Veenhof is striving to enrich the quality of retail relationships by achieving an exceptional level of product, market and consumer expertise. “We will also look for further opportunities to exploit buying synergies in Europe, and to build partnerships with out suppliers. Within this process we will remain mindful of financial implications and the constant need to measure activity by its cost-effectiveness.”

After 32 years at Royal Philips Electronics, working his way through the ranks, from Management Development Officer to CEO of Domestic Appliances and Personal Care, Ad Veenhof joined Royal Wessanen in 2003 as President and CEO. Since then he has successfully turned the company around, substantially strengthened the overall financial position and is now in the process of embarking on growth in all four division: Europe Branded, Europe Distribution, North America Branded and North America Distribution.

Sustainability strategy

Over the next five years Wessanen is embedding a culture of sustainability into the company through:

• The involvement of top management on the Sustainability Board
• Continuous improvement of sustainability performances by setting SMART targets, using the Plan-Do-Check-Act cycle and promoting a fact-based approach
• Maintaining transparency by providing internal and external stakeholders with a fair representation of our activities and goals
• Taking an integral approach towards sustainability – products, planet, people and profits – and integrating these in our existing management systems and processes
• Focusing on our direct sphere of influence and thus creating the foundation to widen the scope of our sustainability strategy in the future to include our indirect impacts up and down the supply chai

Seven sustainability themes

Transparency and accountability: Being honest, clear, open and timely about performance, business activities and products.
Supply chain responsibility: Striving to optimise the supply chain by co-operating with supply chain partners. Important elements of this are the pursuit of transparency, a controlled supply chain and a constantly improving supply chain.
Governance: Honest stewardship and good management is vital for a company to be successful.
Environment: Minimising the negative impact of products and processes on the environment, from both the perspective of internal environmental care and supply chain orientated environmental care.
Employees: Wessanen guarantees the conditions for its employees to make sure they are engaged, motivated and involved in business processes.
Human rights: Wessanen respects and supports human rights of its employees and all other parties affected by its business.
Product responsibility: We have a responsibility in guarding and contributing to the health of people. Honest, explanatory information about food is part of this responsibility.