Interview Chris Dane
'Aviko chips turnover has fallen by 70%'
Chris Deen, the brand new CEO of Aviko, is, as he puts it himself, "with his nose in the butter." He has been managing the Royal Cosun subsidiary since this year. The company is in a precarious position, now that the demand for chips and other potato products has almost disappeared. To limit the damage, it now requires a solution from the government.
Deen, CEO of the French fries company since January 2020, sent a letter last week burn letter to Minister Wouter Koolmees (Social Affairs and Employment). The Emergency Bridging Measure for Employment (NOW scheme) is now not applicable to Aviko, because it is an operating company of Royal Cosun. Relaxation of the regulation should make this possible. Boerenbusiness Deen spoke about the current situation, which is severely affecting the company and its growers.
Do you expect a positive response from the minister to your fire letter?
"On Tuesday, April 14, the House of Representatives will debate the NOW scheme and a possible relaxation. At the moment there is no clear indication that this will be relaxed. Of course we hope for this. Aviko has about 2.000 employees, of whom 1.100 in the Netherlands. Support is urgently needed, otherwise we will end up deep in the red. In Belgium we can use government measures. How this will work in Germany is still being investigated. Flakes company Rixona is less affected by the current crisis and falls out here."
What measures is Aviko taking now to limit the loss?
"Our new cold store in Steenderen (Gld) had just been completed. A lucky break. Production has taken place for storage. This storage is almost full, after which we will scale down lines. Investments are put on hold as much as possible. We all collect potatoes. These are destined for the animal feed industry or bio-fermentation. The door to starch producers remains closed."
You say that investments are being stopped, what does this mean for the new factory in Poperinge?
"Construction has been delayed due to the necessary corona measures, but is now starting again. These plans will not come to a halt. takeover of the Chinese chip factory Hongyuan Louis is going ahead as planned. We see that the consumption of chips in that country is increasing again, now that the crisis is abating. At its peak, sales fell to just 5%. I think it's now 50%. Part of it is supplied from the Netherlands, which is a small bright spot. At the moment there are still sufficient stocks in Southeast Asia."
Speaking of sales. What does that look like for Aviko in Europe?
"Everyone knows Aviko from the freezer section in the supermarket. Retail accounts for 15% of our sold volume. Due to the hoarding behaviour, slightly more sales were made, but that was short-lived. People who stay at home are more likely to eat pasta, rice or boiled potatoes. The foodservice segment accounts for 85% of our sales and it has been hit hard. Turnover has fallen by 70%. Couple that with personnel and overhead costs and the potatoes that we have to pay growers. A combination of factors means that we will be at a loss this year."
Aviko's profit is an important pillar for Royal Cosun and also supports the sugar beet price. What are the consequences of this loss?
"That is a question for Dirk de Lugt (chairman of Royal Cosun ed.), but the fact is that 2020 will look very different. Above all, we do not want to let growers become the victims of the crisis and therefore stick to all agreements made. despite the fact that this costs a lot of money. As far as possible, we are working on a future scenario when the corona crisis weakens. The restaurants, company and sports canteens and chip shops are expected to slowly start up again. That sales will not be back up within a few weeks. 100%. We are now trying to visualize this in order to make plans for the future. We are trying to boost sales through retail channels. Think of promotions, home delivery and other smart ideas."
What does this mean in concrete terms for the grower, who is now busy putting his potatoes in the ground for the next harvest?
"We are looking at which coverage percentage fits our calculated future scenario. Many of the contracts for the 2020 harvest had already been completed when the crisis hit us. We will not change the existing contracts for the 2019 harvest, but those for the coming season will be changed. we also make differences per country. My first priority – as CEO – is to retain our staff. We don't want to lose these great people."
Niels van der Boom
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