The troubles on the German market are getting Vion's full attention. The organization is being overhauled, with a new business unit being set up to tackle the problems in Germany thoroughly. With this, the top of Vion is making another attempt to finally solve the German headache file. An analysis.
It is no exaggeration to call the German meat market a battlefield. Animal numbers are under heavy pressure, leaving slaughterhouses with large overcapacity. This affects all slaughterhouses, but especially Vion. Out recent figures Industry organization ISN shows that the number of pig slaughters at Vion locations fell by as much as 17,1% last year to 5,8 million. Since 2020, there has been a decline of almost 25%. Nowhere was the shrinkage so great.
In an industry where fixed costs are preferably spread over as many slaughter hooks as possible, such a decline is very hard. Especially now that the purchasing prices of pigs are extremely high and cost inflation is also taking hold in many other areas.
Decline in slaughter and consumption
The number of slaughters in Germany is declining rapidly, not only in pigs, but also in cattle. Two weeks ago, Vion announced that it would close another beef slaughterhouse in Bad Bramstedt, North Germany. In addition to the shrinking livestock population, this decision was also taken because of declining meat consumption in Germany, Vion explained. This week, Vion announced that it would centrally manage its activities in Germany through a new business unit. COO Philippe Thomas will lead this, of course under the watchful eye of CEO Ronald Lotgerink. This means that the German branch will be completely separate from the activities in the Netherlands and Belgium.
Special approach
With the reorganization, the meat company recognizes that the challenging German market requires a special approach. More measures are likely to be announced in the near future. The press release states that the new business unit is the first change. Whether the curtain will fall for other production locations is anyone's guess, but Vion indicates that it wants to work more efficiently. In other words: costs will be cut significantly. In any case, Vion's top management is showing leadership with the announced plans. You can also read from it that Vion - despite all the problems - sees a future on the German market. Disposing of the German branch, as happened in 2013 with the also heavily loss-making activities in the United Kingdom, does not seem to be an option. This is also not likely, as Vion's turnover would then halve.
Annual figures not yet known
Vion's annual figures for 2022 are: still not published. A spokesperson said that it is not yet known when the figures will be released. The announced reorganization is currently a priority, according to the response. The suspicion is that Vion has had a difficult year and, just like in 2021, will have to report a significant loss of millions. Sources close to Vion say that the Dutch activities were profitable last year, but that the German market overshadows everything. This would cause some internal frustration.