Interview Kees Kraijenoord, CEO Plukon
'Keeping poultry meat affordable is a challenge'
Plukon Food Group has experienced strong growth in the past year, under the leadership of CEO Kees Kraijenoord. The food group, one of the largest producers of poultry meat in Europe, focuses on a solid local-for-local strategy, retail concepts, innovation in convenience products and alternative proteins. Although the poultry meat chain is flourishing thanks to relatively high prices and strong demand, Kraijenoord sees significant challenges for the future. "Scarcity is coming our way, while consumption is growing."
A few weeks ago, Plukon's employees moved to the brand-new premises at its head office in Wezep. Kees Kraijenoord, CEO of Plukon, calls the new head office an important step in the company's evolution. For example, flexible working has been introduced, making it easier for employees from different departments to work together. "It not only offers more space, but also stimulates cooperation and innovation." Surprisingly enough, the CEO mentions the kitchen that has been built in the hall as the most striking innovation in the new building. "Our innovation team can now test dishes and demonstrate them live to customers. Think of convenience products such as ready-to-eat or ready-to-heat. It ensures shorter lines between product development and the market."
The new head office is built on the foundations of the old building. Plukon consciously chose to stay in Wezep, a large village near Zwolle. "We believe in a strong connection with farmers, our production and customers. This location fits our rural image and is essential for our supply chain," says Kraijenoord. "It also reflects well what we stand for as Plukon: a traditional industry that is professionalizing and modernizing enormously."
Denmark as seventh home country
Kees Kraijenoord has been active at Plukon for over ten years, one of the largest producers of poultry meat in Europe with an annual turnover of more than €3 billion. He joined in 2013 as a corporate business analyst and held the position of CFO from 2016. In April 2023, he succeeded Peter Poortinga as CEO, after his 22 years of leadership. So he has big shoes to fill. "Peter has laid a strong foundation, and I am determined to build on his legacy by stimulating further growth and innovation," he said at the time after the transfer.
In the more than one and a half years as CEO, he has fulfilled this promise. For example, Plukon acquired two companies in Spain (Redondo and Samba) and bought the poultry processor Algas SP in Poland. The most notable acquisition was that of HKScan Denmark A/S. With this poultry slaughterhouse and processing company, Plukon not only adds €230 million to its turnover, but Denmark also became the seventh 'home country' for Plukon. The company now has 38 production locations and branches in the Netherlands, Belgium, Germany, France, Spain, Poland and Denmark. Plukon announced another acquisition this week, which is that of Spanish Grupo Avícola Hidalgo.
Local-for-local strategy
With such acquisitions, it is common for a group to look for efficiency and cost reduction. For example, by restructuring or merging production locations, in order to benefit from economies of scale. Plukon consciously looks for other solutions. "Our vision of the market is that we believe in local-for-local. You are active in a country, have a supply chain with farmers who deliver their products, and sell these as much as possible in that country. We believe in that."
Kraijenoord emphasizes that Plukon can realize this ambition through the strong automation in production. "Our entire production process, from processing the chickens to packaging, is increasingly automated. As a result, fewer people are needed on the work floor than before. These are very different processes than, for example, in pigs and cattle, where much more manual labor is needed for dividing. In terms of structure, they are very different branches of sport, which also largely determine your strategy."
Despite the large number of production locations, Plukon manages to work efficiently, according to Kraijenoord. "You can't transport chickens over long distances, so you have to be in a region where the chickens are locally available. In countries like Germany and France, a product of our own origin is also more appreciated. That is our strongest point: that we can serve retailers with a local meat concept according to the qualifications they want. Then we offer added value that we can also pass on in the chain."
Acquisitions and collaborations
The potential of a company, its management and the local market in which it operates, are important pillars for Plukon when choosing potential takeover candidates. For example, the HKScan Denmark A/S group, better known as Rose Poultry, had been on the radar for a while, Kraijenoord admits. "Rose Poultry is a great, well-positioned company with a lot of potential. With the management that is currently in place, they have managed to turn around from a loss-making to a small profit position since 2019. Combined with our knowledge, we are going to try to accelerate this growth. We have every confidence in that, especially in a 'farming country' like Denmark where there are enough chickens."
Financial parameters are important, but Plukon weighs the quality and mentality of the management heavily in the decision to incorporate a company. Kraijenoord points to the takeover of the French DUC in 2016. "That company was in a bad financial position at the time. You could replace the management, but we sat down together and made a plan, invested and executed it. With the same people at the helm, DUC is now growing on its own strength and is doing well." This approach is appreciated, Kraijenoord notes. "Companies like to be part of Plukon. They know that they will continue to exist as a company and the management does not have to fear for its position."
Innovation in the chain
It is striking that Plukon is not only involved in poultry meat. The group is active both forwards, with convenience products, and backwards in the chain, with hatcheries and feed companies. The choice for these so-called integrations is deliberate, Kraijenoord explains, but also a necessity. "We are mainly active in Southern European countries with integrations, where it is also very common. In a country like France, you cannot operate without integration. This is because there is too little competition, also partly due to the large distances. You do not want to become dependent on one regional party as a supplier, then your price risk is too great. In North-Western Europe, you have much more competition in the chain anyway due to the short distances. The market forces are good here."
There is an exception. Plukon has also taken up positions in other links of the chain in North-West Europe. In recent years, the group has incorporated the hatcheries Optibrut and Munsterhuis. "That was not in our original strategic plan," Kraijenoord admits. "But in the hatchery world, a consolidation is taking place in North-West Europe. Our customers cannot become dependent on a single third party. That is why we have made a strategic choice to offer counter-pressure in the market."
Implementing integrations is instructive, Kraijenoord continues. "You can compare both systems very well. In North-Western Europe, the demand for chicken is increasing, while here we are increasingly working with slower-growing chicks in the concepts. As a result, the demand and price of live chicks are also quite high. If you have integrations, you know exactly what the cost price should be. This gives you insight into the differences and what you can respond to." This applies not only to the market, he continues, but also at corporate level. "An example: in Denmark we have now bought a slaughterhouse with a convenience factory, but we also have four copies of that throughout Europe. We have fourteen slaughterhouses. The comparison material is therefore enormous, and we learn a lot from it."
Focus on convenience and alternative proteins
The production and marketing of convenience products such as ready-to-eat and ready-to-heat is a growing division within Plukon. "Although we are growing even faster in poultry meat, it is not gaining any share in relative terms," laughs Kraijenoord. "But the trend is clear: convenience is growing. People have less and less time to cook and therefore choose convenience. We focus on healthy products, but it is important that you keep convenience affordable for the consumer. We look at that carefully, for example how much product you use in a dish."
Four years ago, Plukon bought the vegetable processing company Fresh Care Convenience in Dronten. Subsequently, major steps were taken in the growth of the convenience segment, says Kraijenoord. So much so that the location in Dronten is already quite full. "We now supply customers in Germany, Belgium, Denmark and Austria from Dronten. That is not really local-for-local and less sustainable. We are now looking into investing in a factory on location or collaborating with partners."
Plukon has also added alternative proteins to its portfolio. "We believe in that market. Not in vega as a derivative of meat, made from soybeans or other vegetable products. That market was booming, but has now collapsed. Ultimately, it does not fit in with the consumer's taste experience. We see many opportunities in mycoprotein and fermentation. For that, we are working with the company Enough, which is now starting up production. We now have a lot of product development on the shelf. If the raw material is there, it can start. Retailers are also waiting for such solutions, because it also improves the footprint. We hope to further market it this year."
Political challenges and future
The successful development of Plukon cannot be seen separately from the tailwind on the poultry meat market. It has made the broiler farmer self-aware, Kraijenoord signals. "The earnings in broiler farming are very good in this period, and we now have the advantage that the market also pays for it. It gives the farmer the space to invest, for example in a free-range concept. We are seeing that now too. That is fantastic for the Dutch broiler farming and for the concepts we have."
The question arises as to how sustainable the current boom is. "I wish it for everyone, but I wonder whether it is a healthy situation for the future." Kraijenoord has seen underlying ripples in the market for several years. "Regular broiler farming is decreasing in the Netherlands, which is why bulk slaughterhouses in our country are getting the chicks from Belgium. This puts a lot of pressure on Belgium, which is why they drive to France. Then you see enormous shifts in transport that are not exactly sustainable."
Scarcity with growing consumption
The CEO also points to the political risks, with the pressure being placed on Dutch livestock farming. "A lot depends on how tightly politics will pull the strings. Many poultry farmers are waiting for permits for a winter garden, a covered run. In Brabant alone, nothing is happening, everything is locked down there. It is difficult to estimate what will ultimately happen." Despite the political headwind, Plukon is still growing slightly in the Netherlands. "In the future, you can see that in particular holders of laying hens are being bought out. So there is a shortage coming our way, while consumption is growing."
Higher imports are not the right solution for this, Kraijenoord judges. "It can bring relief to the market in terms of supply, but whether it is sustainable and the meat meets our standards is very much the question." It is also not at all self-evident that chicken is in ample supply outside the European Union, he notes. "Worldwide, the consumption of chicken is growing. In countries like Brazil, for example, the prices are also high during this period."
Plukon aims to maintain its current market position in Northwestern Europe. "It is strong now, because customers can afford it." It will be exciting to see whether that will remain the case. "In the Netherlands, retail has embraced the slower-growing concepts. This trend is also now starting in Germany. While in Germany the self-sufficiency rate is already below 100%. It will be a challenge to keep chicken affordable in the coming years."
Eric the Thrush
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