Reox goes Dutch as focus shifts from Britain
Reox owns the non-agri business assets of Dairygold Co-op and its consumer food division trades under the name of Breeo.
Currently, the consumer division of Reox consists of Breeo Foods Ireland and Breeo Foods Holland.
Breeo’s Irish operations consist of butter, spreads, cheese, yoghurts and meats.
Its Dairygold brand is market leader in the spreads market, while its Galtee rashers are also dominant in the meats sector.
With Ireland a fairly mature market — and highly competitive due to the dominance of the multiples and the symbol groups — Reox boss Jerry Henchy has signalled that mainland Europe will provide much of the growth.
In a briefing to the press recently, Mr Henchy made it clear the focus of the consumer operations has shifted to mainland Europe, a departure from the “twin-island” strategy he spoke about in 2004 when he saw Ireland and Britain providing the twin planks for growth in the consumer division.
Mr Henchy referred to the dominance of the big multiple chains in both the Irish and British markets, making it very difficult for relatively small players such as Reox and the other food processors in Ireland to resist the demand for cheaper product from the big retailers.
In the long term, it looks as if the Netherlands will initially provide Breeo with the greatest potential.
The Netherlands is not new to Reox. It has been selling meat to that market for many years from its former Charleville plant, sold to Dawn Meats in 2003.
But the group remains the second-largest supplier of beef to the Dutch market.
In 2005, it acquired a meats plant that sells cooked and raw meats to retail outlets such as Jumbo and Albert Heijn.
This year it bought Prime Meats for €10m. It supplies premium product to the hotel, restaurant and catering sectors that delivered a turnover of €14m in 2006.
Mr Henchy regards this business as having massive potential.
Again the cash-rich, time-poor profile of modern societies is the driving force in this market and the Dutch have traditionally been big meat eaters.
Meanwhile, the recently acquired operation is sophisticated in that it has the ability to deliver exactly what customers want in cooked or in pre-cut portions to restaurants and the rest of the catering sector.
There is a 20% chance at this stage that the steak served to you, even in fairly sophisticated restaurants, has already been pre-cooked by Breeo.
That’s how the market is going and Mr Henchy expects to see more of this as the world increasingly moves to dining out.
Also acquired this year in the Netherlands was Westland. It provides a range of snacks for the retail sector, including a line of salads that retail at between 59 cents and 69c.
Plans are in place to double the capacity of that business by which time Reox will have spent €50m gearing up its Dutch presence.
The company is hoping the Dutch businesses will provide a formula that can be rolled out in other European countries in time.
It expects to have total sales of more than €300m in 2007, with Ireland accounting for €240m and Holland €61m. The Dutch consumer business is expected to grow rapidly and further acquisitions are also a distinct possibility as the north Cork group continues to go Dutch.
With close to €50m committed to the Dutch market, Mr Henchy has made it clear that the overseas future of the consumer division is in the Netherlands and not in mainland Britain.
