GoodMills builds one of the biggest mills in Europe, open to new acquisitions

DDr. Leonhard Gollegger, The GoodMills Group GmbH: “The GoodMills Group produces quality flour and other milling products, providing an essential base for valuable nourishment. We currently mill 2.9 million tons of grains across the seven European countries. At the moment we are in the middle of the construction of our biggest investment in the last years. We are building a 365.000 tons/year capacity mill on the Rhine in the city of Krefeld in Germany. This is a replacement investment for our old mill in Cologne which will be closed down once the new investment is ready in 2020. It is one of the biggest investments in the milling sector in Europe for a long time.”

Providing a valuable source of nutrition for the European market with the motto of “We unlock the power of grain”, The GoodMills Group is the largest milling company in the continent, with its 25 mills in seven countries. Processing 2.9 million tons of grain, it contributes to the nourishment of Central and Eastern Europe. As the largest European flour producer, GoodMills supplies to industrial, bakery and retail clients.

Leonhard Gollegger, Chairman of the Executive Board of The GoodMills Group, answered Miller Magazine’s questions on their role in European nutrition, innovations they presented to the sector, future investment plans and the state of European milling industry. Mr. Gollegger who has profound international experience and outstanding expertise in the food sector, emphasizes GoodMills’ position as one of the world’s leading innovators in grain-based ingredients. Noting that in all their milling plants state of the art technology is being used, Gollegger said the new mill construction on the Rhine in Krefeld is one of the biggest investments in the milling sector in Europe for a long time. CEO of the GoodMills also said they don’t seek for acquiring a new company in the industry but he didn’t rule out such a possibility when an advantageous opportunity presents itself.

Here are our questions and Mr. Leonhard Gollegger’s answers:
GoodMills is the leading milling company in Europe. It’s an important player in European nutrition. Could you please provide us with some brief background information on GoodMills and its activities?
We produce quality flour and other milling products, providing an essential base for valuable nourishment. We supply to industrial, bakery and retail clients and we are strongly rooted in the local markets using advantages of the international know-how, synergies and capabilities. Our company motto is “We unlock the power of grain”.

GoodMills operates in Central and East Europe. How many mills do you have all over Europe and where are they located? How many people do you employ?
The GoodMills Group GmbH is a holding company with twenty-five mills located in seven countries. The holding company is based in Vienna, Austria, as well as its local Austrian subsidiaries, and it has operations in Germany, Poland, Czech Republic, Hungary, Romania and Bulgaria.
In total the company employs around 1,600 people.

Can you give us some information about your milling capacity and technologies you use?
We currently mill 2.9 million tons of grains across the seven European countries. We closely cooperate with all leading milling technology companies and have a strong internal technical team that ensures that all our locations use state of the art technology and processes. In milling, it is about ensuring that feasible/affordable technology is used as efficiently as possible. Therefore we invest in cutting edge milling technology where appropriate but also focus on using existing technology as efficiently as possible.

Which kind of products do you produce? What are your best-known brands?
Our product range stretches from traditional flour to specialty flour, customer-specific mixtures, functional flour (with enhanced nutrient qualities) which is particularly beneficial to human health, and many more.

We offer flour from different grains, not just wheat but also rye, spelt, durum (for pasta) and corn. The variety of mill products, both conventional and organic, is orientated according to market requirements and fulfills the demands of all our different customer segments.

Our branded consumer products, or “Power-Brands” as we like to call them have all been established in their respective countries for many years. These range from “Finis Feinstes” in Austria, and it’s local translation in Czech Republic, Hungary & Romania to “Basia” in Poland and “Diamant”, “Rosenmehl” and “Aurora” in Germany. Therefore we have a large portfolio of 1 kg products across our markets.

Where do you export your products?
The vast majority of our products are sold for local domestic consumption, however, we do export some products to countries such as Italy, Greece, UK to name just a few.

WORLD’S LEADING INNOVATORS IN GRAIN-BASED INGREDIENT
GoodMills has introduced various healthy and innovative products to the European market. What can you say about the innovations and solutions that you have brought to the milling industry?
Here at the GoodMills group we are constantly asking and seeking from our customers what it is they want from their supplier. Our clients today expect and demand that as a grain processor we maintain a high moral obligation to impact positively on our environment. Our customers want to know that we are taking concrete measures that respect human beings and biodiversity.

In this respect, with our subsidiary, GoodMills Innovations, we are acknowledged as one of the worlds leading innovators in the area of grain-based ingredients that are both highly functional technologically or in terms of health.

As an example of this, GoodMills Innovation has developed RUTIN X Tartary buckwheat, a product that in a world where carbohydrates are regarded by many consumers as responsible for high insulin excretion, and thus for gaining weight, is very relevant.

Traditionally food products made from Tartary buckwheat were naturally bitter and consequently don’t taste good to many people. RUTIN X Tartary buckwheat, by contrast, has been developed via a special process that neutralizes the bitter taste of the past, while protecting its high level of rutin and thus retaining its natural positive properties.

Today, insects can be used in the production of fish feed and pet food within the European Union. Taking the rapidly rising world population into consideration, what do you foresee about this alternative source of protein? Do you have any relevant studies or plans addressing this matter?
This is an interesting topic and one that has many differing views. There have been many reports recently with eager predictions of a “second nutrition transition”, on how the world needs to reduce its dependency on meat based protein and turn to alternative sources of protein such as pulses and beans. The rationale behind many of these reports is environmentally linked to the demands on the Earth from producing livestock and grains.

We at GoodMills obviously follow these reports and listen to consumer demand, and as such our subsidiary in Germany, Mullers Muhle, with its quality branded rice and pulses production, is well positioned to meet the changing dietary requirements.

However, returning to the original question, if we take the EU situation, it is forecasted that “meat-eating” will only see a tiny decline, from 69.3kg per person to 68.7kg between 2018 and 2030.

It is also worth remembering that whilst GoodMills is a “wheat miller” from our 2.9mmt milling capacity we produce approx 600tmt of grain by-product, such as wheat bran, that is used extensively in the animal feed industry.

So ultimately whilst we monitor the situation with great interest, we will largely remain consumer-led, but feel well positioned no matter what direction the consumer trends

You have mills in seven countries and distribute your products in a large area. It needs integrated wheat buying, flour milling, and marketing. It needs a solid supply chain. How do you manage this?
As many an expert has concluded, a companies best asset is its employee’s, and this is no different at GoodMills. We employee people with a strong understanding of the milling industry, from master millers to quality managers, to grain purchasers through to the sales and marketing teams. Each one of them brings many years of experience, but also with the energy and drive to keep up with our ever-changing market.

We have over the years worked hard to standardize our internal processes to have as an efficient supply chain as possible, and to this extent, the company has recently started on a major investment to install a unified ERP system across all our locations to further support this integrated supply chain.

CONSOLIDATION TO TAKE PLACE WITHIN EUROPEAN MILLING INDUSTRY
The number of flour milling plants has been declining in Europe. What are the reasons for this decline? What are your future expectations for your industry?
There are many factors that have contributed to the declining number of flour milling plants, of which stagnant European demand, declining margins and lack of efficiency are the main drivers.
In spite of the number of flour mills falling by over 15% the past 10 years, there is probably still more mill closures and consolidation to take place within Europe, all be it at a slower pace.

Those facilities that have worked to reduce their cost structures below the market average, improve milling efficiencies and at the same time focused on the customer, product and geographic specialization will ultimately survive and maximize returns.

One of the challenges that European flour millers face today is concerns about gluten. Bread consumption has been declining in many European countries. What can you say about these concerns?
Concerns about gluten are existing, but in our view not that strong anymore – in fact, only 1-2% of the population have a real gluten intolerance. There is a general trend that consumers eat more ‘perceived’ healthy food – which is often linked to reducing carbohydrates. In our view, this is the general nutrition-related driver why bread consumption is declining. But overall, we think that higher incomes, more out-of-home eating and the usage of convenience food at home are the main sources for a bread consumption decline in Europe.

European consumers have high-quality taste standards. How do you satisfy the consumers’ needs?
By listening to what our customers tell us and what they want from our products, and we have done this by investing heavily in high-quality talent across the group in our sales and marketing teams.

The sales teams have built over the year’s strong relationships with our customers and/or channel partners to ensure their needs are filled in the here and now.

The marketing teams are focused on understanding the end-consumer needs, both current and future, to help direct the company toward the segments or customers where the GoodMills group is best placed to compete. This winning combination of sales and marketing, today and the future, in our opinion gives as the ammunition to fully satisfy our customers’ needs. The acquisition is a key factor in your growth. You have subsidiaries in different countries.

Is there any acquisition plan in the near future? Do you have any plan to expand your business into the other European regions or other continents?
Anyone who has followed the GoodMills story in the past decade would not fail to see the group went through a major growth period, via new acquisitions, turning minority stakes into majority or full ownership, renaming of old brands, purchasing of new brands to increase milling capacity.

A lot of focus over the recent years, as mentioned earlier, has been to create the most efficient, integrated and low-cost supply chain possible for the group, and this is currently ongoing.

However, GoodMills is no different from any other business and acknowledges in order to survive, it has to continuously grow and adapt to this ever-changing world we inhabit. Therefore, whilst we are not actively looking at any specific acquisition targets, whether that be within Europe or outside, if an interesting opportunity was to present itself to the board, and was felt to be strategically advantageous, new acquisitions can never be ruled out.

In Turkey, the world’s biggest flour exporter, many mills have been closed due to economic difficulties. While 475 plants with a capacity of 32 million tons are active, 240 plants with a capacity of 8 million tons became inactive. Some sector professionals claim that many local companies would think about a merger or having a foreign partner. Given that Turkey has geographical proximity to the world’s most flour importing countries like Iraq, Syria, and Afghanistan, do you have any investment plan in Turkey?
Currently, we are not actively looking for opportunities to invest in Turkey.

Is there anything else you’d like to add?
At the moment we are in the middle of the construction of our biggest investment in the last years. We are building a 365.000 tons/year capacity mill on the Rhine in the city of Krefeld in Germany. This is a replacement investment for our old mill in Cologne which will be closed down once the new investment is ready in 2020. It is one of the biggest investments in the milling sector in Europe for a long time.

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