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VION Case Presentation

Presentation about the company VION foodgroup for a management class
by

Alex Busch

on 25 June 2014

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Transcript of VION Case Presentation

Industry
and
Market

Company History
Ownership
and
Governance

Divisions
VION Today
VION and its Competitors
Company Background
One of the biggest meat processing companies in Europe
- Leader in fresh beef
- Second in fresh pork

Vision
- healthy meat processing industry
- long-term survival of the livestock farmers
- linking primary production system and industry for food distribution and retail
Private company owned by a single shareholder

- ZLTO (Dutch Organization for Agriculture and Horticulture, Southern Region)

- 18,000 members; 30-40% consist of livestock farmers


Company structure is management concentrated
Multi-layered governance structure put in place to keep interests separate
- Trust office
- Supervisory Board (consists of four members from the outside and four members from the ZLTO)

Ownership
July 1, 2006 became 7.1 Billion Euro Meat Company
- Focus is on beef, lamb, and pork markets
Expanded through takeovers throughout 1980s
Created in 1930s as animal by-products processor
Moved into Meat Industry in 2004
2008 Moved into convenience food business
Each sector responsible to govern themselves
- ensures high responsiveness
3 different departments and one separate business unit
VION Fresh Meat


Meat Producing facilities mainly in NL and GER
- Boxtel plant processes over 90,000 pigs per week
Most profitable sector
- revenue € 5.4 bln
VION Ingredients
3 Subdivisions

Sobel
: mostly dealing with animal by products
Rousselot
: the second largest gelatin producer in the world with a 19% market stake
Sobel 5Q
: responsible for organizing the sales of the various products from Vion’s overall operations

VION Convenience
Activity include development and marketing of meat based products
Main goal to create innovative product
Trying to optimize VION brand name
5 Industry Wisdoms
1) Bargaining power of retailers increased

2) Bigger is better

3) Competitive pressure driving margins down

4) Differentiation is escape route

5) Farmers skeptical to form long-term partnerships

EU Meat Industry
Different ownership structures
EU companies focus on slaughtering and processing
International competitors integrate downstream activities
Pork
- competitive pressure in Europe increasing
- consolidation likely to progress
Lamb
- Smaller market but less crowded.
- Geographical regions established. Entry barriers through land control.
Beef
- VION is leader in production
Foreign Competitive Threats
Smithfield Foods

Competing on cost in pork processing
Supply chain, EOS & focus
Public firm -> cheap capital
May begin in western Europe

Brazilians & Sadia

Biggest poultry producer in the world
Low costs, huge EOS & capital
UK and Italy based firms as entry

European Competitive Threats
Danish crown

- Mutual purchasing arrangements
- Low solvency level because limited market conformity at price

Tonnies

- Competes for same suppliers

VION
ZLTO ownership as advantage
- Capabilities and attitude of free market setting
- Cross business synergies

No synergies developed to outperform competitors
Advantages not VRIO

Benefits from convenience segment not utilized
Sold German Convenience Retail Sparte
Scandal at Bad Bramstedt slaughter house in Febuary 2014
Had to close several slaughter houses, but stayed financially healthy in 2013/2014
Announcement to focus on animal friendly meat in April 2014
Accusation of relabeling food in 2012
Impacted by European horse meat scandal in 2013
Sold Ingredients division in 2013
Full transcript