The success ofBahlsen in France

Best in France Case Study

December 2005

By: Ms. Gounou Ehssane & Ms. Grassl Stephanie

Executive Overview

I. History & Business

II. Products & Clients

III. Coming to France

IV. Company values & French culture

V. Constraints in France

VI. Adaptation to France

VII. Key success factors

VIII. RecommendationsRecommendations

I. History & Business

History

• 1889: Hermann Bahlsen starts his own ‘biscuiterie’ in Germany Creation of new products & umbrella brands

• 1960: First sales offices in France & Italy

• 1994: Merger with ‘biscuits St Michel’Bahlsen St Michel SAS

Two family companiesThrough this acquisition the mother company

Bahlsen extends its portfolio

Bahlsen St Michel 2005• Part of the group Bahlsen Germany

- 3700 employees- 542 million euros of sales- Exports to more than 80 countries- Presence in Europe, North America & Asia

• Bahlsen St Michel France:- 124 million euros of sales- 476 employees

France is an important location (second headquarter)

France• Headquarter: Rueil

Malmaison • St Michel: Production of St

Michel cookies

• Commercy: Production of patisserie

St.Michel58%

Rueil15%

Commercy20%

Sales7%

II. Products & Clients

ProductsDistinction between brand St Michel and Bahlsen

St Michel Produced in France

BahlsenProduced elsewhere

Products

• Product lines are hardly being discontinued innovated all the time in order to exploit the product

lines to maximum level.

• Innovation: - Remarkable- Variation of tastes and forms - Adapt to new tastes of the consumers

• Innovation product Bahlsen Done in Europe France has little influence on them

• Innovation of brand St Michel Done in France

Location choice

• Reason for location choice:- Resources - Capacity- Cost

• But for the Brand St Michel the location choice was different:

- More historical than strategically- St Michel is a ‘specialité Française’

• In France maximum production capacity has been reached!

Bahlsen in Europe

Clients• Distribution channels• There are two circuits:

– GMS (grandes et moyennes surfaces) 80%– CHD (consommation hors domicile) 20%

• Products sold in all big supermarkets good reference• French customers know

– 97% St Michel– 91% Bahlsen

• Brands are perceived independent• Big change to transform St Michel into Bahlsen

– But must that be the task?

Positioning

Publicity more for Bahlsen then for St Michel2 brands in one company 2 different marketing departments2 different directors 2 different teams

• Positioning of products is different, because :- Different segments- Different price & consummation pattern- Different image

DifferencesSt Michel• Traditional (100 years) • Already loyal

consumers • Family product• ‘Specialité Française’

Bahlsen • Modern • Innovative• Younger people

French presence is important in order to get

closer to the consumers !

III. Coming to France

Why coming to France• Bahlsen already exported to 74 countries in 1956

• They wanted to open up the French market

• 1960 Bahlsen in France

• No fast penetration of the market

• 1994 Acquisition of St Michel

• Complementarity: Products ‘sucrés et salés’ Direct contact with customer

With the sales realised in France, it is profitable to be in France

costs are relatively low

IV. Company values & French culture

Company values I

• No real problems when Bahlsen came to France concerning the cultural values

BUT• Problems occurred when buying St.Michel.

St.Michel had to change its point of view: - Former company with small structure- Family business - Reporting- Acceptance of being in a big company - Not only decision maker - Less autonomy

Company values II• The key values are:

- Quality- Informing the consumer- Health issues - Regular quality controls

• Bahlsen succeeded because:– Business structure & culture – “Informal behavior”– Exchanges in R&D

This lead to an approach of the companies but the transition took time

– New ways of communication with headquarter

V. Constraints in France

Not as many differences between Germany and France legal or fiscal EU

Production cost

Only RH costs which may concern in the future

• Differences concerning French labor law- 35 hour work

- long-term constraints of firing personnel

VI. Adaptations undertaken

• No dramatic changes undertaken • European ‘culture’• Having to report • French working culture

• International orientation:– No international recruiting (depends more on the

individual profile)– Bahlsen France is more « French »– Former international trainee programs but too costly

now there is only the reporting and the product exchange

Adaptations undertaken

• No much integration of French managers in the international organization.

• Not many exchanges in the management: it depends on the department, for ex. many engineers exchanges

Key constraint costs:

• Higher RH costs

• No real communication constraints

VII. Key Success Factors

• High quality of products due to many standards:– Strict selection of ingredients Instead: natural, healthy ingredients for products – Then there is the European regulations: certification IFS

(international food standard) and ISO• Innovation • Big stabile market with stable and high sales • Central location in France• The high quality of life • The “savoir-faire“ & the tradition • Qualified labor market• Political stability

VII. Key Success factors

• Informal culture ( Mr. Bahlsen)

• Reporting you feel protected because you belong to a big group

However:

• Future investments in Europe are not sure

but at least feeling that Bahlsen is

attached to its employees

VIII. RecommendationsBefore coming to France:

• Having right portfolio of products for that country• Being close to your customers• Good reference• EU• Motivation• Analyse before implementing

Adaptions while in France

• Keep the spirit of ‘family company’• Innovation of products• Quality ‘savoir-faire’

VIII. Recommendations • Choose right distribution channels negotiation

power• Acknowledge differences between certain brands and

position them differently• Do not want to copy Bahslen Germany in France• Keep your own identity• Do not impose too much from the headquarters• Look at the needs of local customers

Future Investments• Economies of scale• Exchange in skills• Be careful with employees when making tough

decisions

Do not be afraid of differences

We Thank• Valerie Sajot, Human Ressources Development 22-24, rue Victorien Sardou92563 Rueil-MalmaisonTelephone: 01 56 84 85 05Valerie.sajot@bahlsen.com

• Melanie AndreHuman Ressources 22-24, rue Victorien Sardou92563 Rueil-MalmaisonTelephone: 01 56 84 85 15Melanie.andre@bahlsen.com

Bibliography

• www.bahlsen.com

• www.bahlsen.fr

• Presentation Bahlsen France

• The Global Challenge; Evans, Pucik, Barsouk

• Questionnairy Best in France

Our Team• Gounou Ehssane

- Current address:

K038, 1, rue de la Libération

78351 Jouy-en-Josas, France

- Permanent address:

Verdistraat 256, 5343VM Oss, The Netherlands

• Grassl Stephanie

- Current address:

K040, 1, rue de la Libération

78351 Jouy-en-Josas, France

- Permanent address:

Esterbergstr.39, 81377 München, Germany