World

The plan of a large local company to double its international turnover in just four years | Economy

Approximately 25 years ago, Pascual, a family business built in Aranda de Duero (Burgos) in 1969, opened its doors to the international scene. Those first steps in the global market, which focused on exports —mainly long-life yoghurts— quickly became an activity that was as important as it was prolific for the company. Now, with a presence in 52 countries around the world, Pascual faces the challenge of becoming fully international with a goal set on the horizon: to double the turnover of its foreign activity, which today amounts to 34 million euros, in just four years.

“This step is really taking the leap,” says the company’s International Director, Tomás Meléndez. A stride that is supported by the implementation of a new model beyond product export, a strategy on which Pascual’s international presence has been based to date. The plan consists of combining current yogurt exports with local production and distribution, under models of joint venture in emerging economies of Central America, Africa and Southeast Asia. “We focus on these countries because the markets are growing, the population is young and there is a great need for basic products, like ours,” argues Meléndez.

Pascual leads the yogurt market in Angola.  His activity in that country accounts for around 15% of international business.
Pascual leads the yogurt market in Angola. His activity in that country accounts for around 15% of international business.

The selection of countries in which to disembark does not follow a random criterion, of course. In fact, the move towards local production and distribution will take place in regions where Pascual has been operating for years and where he has managed to position a product on the market. Initially, they arrived after identifying a need that they could cover with a value proposition. “In that area or region we already know that we have a demand, which allows us to adapt through specific products,” explains the company’s area director, who breaks down the action plan. “We segment the countries through three parameters: country opportunity, level of penetration that the product may have, and regional risk. Then, for the penetration of the product, we take into account three forceful and definitive legs: that it be affordable, accessible and rich. It has to be easy to get, consumers must be able to afford it and it has to be rich, of course. The taste in these areas is essential”.

From Africa to Central America and Southeast Asia

Thus, for example, they broke into several African countries more than two decades ago. “We came to Angola because we identified a need for cheap protein, such as yogurt or milk,” reveals Meléndez. They currently lead the market in yogurts, and their activity in that country accounts for around 15% of international business. “We did a market study: the interviewees even said that being a good mother meant taking the child to school in a clean uniform and giving him a Pascual yoghurt,” she recalls. The company will begin producing locally both yogurts and milk containers and powdered milk, starting next October.

He knows in depth all the sides of the coin.

subscribe

In Morocco, on the other hand, the company is a benchmark with another product, Bifrutas. Precisely this brand will be the focus of its production, in addition to milk, yogurt and cream. “We will have the advantage of being halal [los musulmanes utilizan esta palabra, que significa lícito, para identificar todo aquello no prohibido por la ley islámica]which will allow us to go to any country in that region and the free trade zone in the Maghreb and the French-speaking zone”, Meléndez points out.

We did a market study in Angola: mothers even said that being a good mother was taking the child to school in a clean uniform and giving him a Pascual yoghurt

Tomás Meléndez, director of Pascual International

Pascual’s internationalization plan also includes Southeast Asia, a subregion in which it already has a presence in six countries. In the Philippines, it leads the yogurt category and maintains a market share of over 40%. “We will also start the local production of products such as shakes, milk and liquid yogurts. And from there we will try to jump to other countries, such as Indonesia”, remarks the director of International, who also emphasizes the company’s presence in the Caribbean and Central America. “On the other side of the Atlantic we are leaders in 11 countries, such as Cuba, Guatemala, Honduras or Panama. Here we will focus especially on the production of Bifrutas and yoghurts”.

Find a referral partner to reach the ‘mass market’

To give consistency to this expansionist philosophy, Pascual has reached agreements with strategic partners in each of these countries, based on the creation of joint ventures joint capital, 50 percent. “That concept is fundamental, just what we were missing. We are talking about markets that we already knew, in which we have built a brand. We just had to find the right partner to start producing and distributing”, says Meléndez. “They will provide us with knowledge of the country, distribution, the commercial network and a manufacturing structure. We will put everything else: recipes, brands, technology, R & D… ”, he details.

These alliances will allow the Spanish company to reduce the costs of the product manufacturing process to reach what is known as the mass market (mass market), thanks to a competitive price. “It supposes an enormous advantage with respect to the export. It is not the same to be a product that you import, for which you have to pay fees, tariffs, taxes, transport… With this strategy you position yourself as a product premium”. According to Meléndez, local implantation only provides advantages. “By producing there we have an international quality product with local costs. We are talking about a difference in costs that reaches around 30%. This allows you to reach the entire mass of consumers.”

The first agreements represent only the beginning of a change of model that occupies a priority place within Pascual’s strategic plan. The short-term objective is to exceed 100 million euros with foreign activity, but they will not stop there. “Based on internationalization and local production, we will be able to reach other countries. We want to reach the entire African continent, in addition to establishing ourselves in more countries in Southeast Asia and Central America. We could then talk about multiplying the current billing by four, so that this item could represent 20% of the total billing”, advances Meléndez.

One milestone after another in 25 years

At the end of the last century, Pascual exported almost exclusively surpluses from the national market. But by moving entirely to a handful of countries around the world in 1995, even the company’s ambitions radically changed. The first stage at the end of the 1990s was followed by a period of segmentation and investment that timidly arrived in the early 2000s and accelerated as of 2010.

“It was then that we began to invest in advertising and to produce specific products for the different markets. To create value. Currently, 80% of the yogurts we sell are export-oriented to emerging countries. Let’s say that our line is more adapted to export”, reveals Tomás Meléndez.

After all these years of adapting to the different regions in which the company operates, obtaining all the certificates and knowing the different legislations, the jump to local production has arrived. Pascual is prepared to face this step, increasingly demanded by the market, without leaving aside its export activity, which will continue to be capital. “It is the change that is coming. More and more countries adopt protectionist and sustainable measures. With this new model we are going to generate local jobs and reduce our carbon footprint. We are and will be more competitive and efficient”, concludes the manager.

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button