-Borges launched a new strategic plan to 2027 with Africa in mind. How did this initiative come about?
– In the management bodies of the group, the transition from the third generation to the fourth generation was completed and this transition was completed with a new strategic plan. We couldn’t explain it because it coincided with the pandemic when it was stolen, which is the 125th anniversary of the company. We had to wait, and now with the opening of Mas de Colom as corporate headquarters, we had to wait. As a matter of fact, development in Africa is part of our strategic plan for the coming years. We’ve already done this with India and China in the past. We have been very successful in India, where we have a related subsidiary and one of the main business lines of the group. And conversely, it didn’t go so well in China.
– Would you like to repeat India’s experience in Africa?
-We now believe that Africa is a great challenge and a great opportunity for us. The per capita consumption of our product types there is currently very low, but that’s a long-term bet. In fact, olive oil is currently used for religious purposes. We approach this market with some ignorance. We work to identify, define and limit our opportunities. The first decision is easy. Now comes a complex question: where do we put the operational base? Africa is huge and everything has its pros and cons. We are at a very early stage of the landing and reinforced concrete works that we will announce in the coming years. We are a company founded in 1896 and we believe in doing something right rather than fast.
-But at least there will be an intuition of where it’s going, right?
If we’ve identified it as an opportunity, it’s because we think our product catalog has potential to evolve in the future to the extent that there is consumer education and the middle class grows and has liquidity. There is a great sensitivity to health problems both among the public and the administrations. A lot of investment is being made. We landed at the time of the start but it will mature quickly.
“We are confident that we will be able to announce an acquisition operation in the coming months”
-This strategic plan mainly covers purchases in Spain, Italy and France. Is there any action regarding the issue?
-Not yet. We have several open fronts that we are working hard on. We hope to implement some of these in about three months. In June 2022, we have already made the acquisition of the Eagle brand in a niche that is very dear to us. And this is our inorganic growth horizon: Local acquisitions that we can manage from our headquarters and create synergies with complementary channels and products within a very broad Mediterranean cuisine concept. We have always been associated with oil and nuts, but in India we saw pasta as an opportunity and we are the leader in this product.
-So they are after buying products that complement each other and competitors that add dimension…
-Literally and indeed, we have both types of companies on the list of possibilities. It’s also true that when you apply either one, you have to forget the other option. You cannot do everything at the same time. But you work on several lines in parallel and therefore we are confident that we can announce an operation in the coming months.
Is there a budget for these purchases?
-Yes, we have a budget, but it is bifurcated and has a lot of flexibility. Our shareholders are open-minded and work on business approaches that add value to the group. In any operation under €200 million, or above this figure, or in multiple simultaneous operations, we will seek appropriate corporate approaches for these and do not reject by definition.
– An IPO?
-There is no concrete plan. We have always made it very clear that there is no need or approach that forces the institutional structure to change for the time being. If the change occurs, it is because it is a business opportunity that adds value to the existing shareholder. If presented, we will consider the pros and cons without closing ourselves on anything. We have experience in all formulas: one of our units is listed on the stock exchange, we have companies that we share with third parties, some in the majority and some in the minority, and we even have joint ventures with third parties through alliances. parties In other words, we are open to any business opportunity that arises.
-Will there be a change in the shareholding with the entry of the fourth generation?
-The holding company of the group is Pont Family Holding, headquartered in Tàrrega, with four shareholders from four family branches. They each have 25%, it’s fair. This takes the form of a board of directors consisting of five directors, two external consultants, and a non-director secretary. Four of the five directors are representatives of the shareholder branches, namely the civil directors, the fifth is executive and falls to me. Changes are not considered.
“If we have to stop making more money to be sustainable, we will”
-Borges has an investment plan of 108 million euros. What will they be used for?
-There are two big sections. The first is investment in physical assets, which does not include purchases that can be made and will consume almost 60% of the total. It is an investment in machinery, to improve industrial or energy efficiency and/or increase productive capacity. In this item, an important share will be allocated to increase energy efficiency. Second, we will invest in marketing to continue growing the brand image. It is an intangible asset that must be permanently irrigated.
– An investment in energy efficiency because the costs have increased so much lately? Is it part of a sustainability plan?
Our belief in sustainability is not new. Naturally, we always have, but today we have more tools to put it into practice. We do not want to generate an extra euro if it does not meet the sustainability criteria. If we have to stop making more money to be sustainable, we will.
-Have you transferred the effect of inflation on production to the price paid by the consumer?
-We could not transfer even 50% of the cost increase we had in this fiscal year. We are experiencing cross-sectional inflation, affecting all segments: materials, transportation, raw materials, energy… It depends on the variable, but for example, the cost of producing olive oil has more than tripled in less than a year. It has not been transferred to supermarket shelves, although it has become much more expensive for the consumer. We try to be socially responsible and not get abrupt reactions, but a balance must be found for everyone. That being said, that’s not our top concern right now. We are a 125-year-old company that wants to continue for another 100 years. To date, we have the resources to withstand current conditions.
Do you think it’s temporary? Will prices go down?
They usually don’t go down. As a result, if you have increased your salaries at a certain rate, you will not reduce your salaries in the next year. Another thing is that they are in balance.
-But salaries did not rise like basket prices…
No, but they didn’t fall. When it is said that inflation will decrease, it does not mean that it will be negative. So if you have 10% inflation and 6% inflation the following year, you now add a 6% increase to the 10% increase in prices. Less than the previous one, but whatever the starting point is. Therefore, sooner or later the increase in costs will be passed on to others because otherwise it will not be sustainable and impoverish the entire society, which is something nobody wants.
-This means that the prices of olive oil and nuts will continue to rise…
-To reach the level where it would cost to produce them, yes. They will continue to be expensive. This does not mean that prices can go down in these years, depending on the raw material price, which is dependent on a thousand variables. However, there are structural costs that will not decrease and will have to be transferred somehow. Every moment has its own complexities and we must adapt to them, this is Charles Darwin’s law.
-Of all the new challenges, which one do you most want to accomplish?
– Keep moving forward in terms of sustainability that’s good for all: shareholder, employee and consumer. Lay the groundwork for this to be a plan that will take a hundred more years, not a few years.
“We innovate in products whose essence is one of the products we already sell”
-Business volume in the last financial year was 700 million. It’s estimated to reach 1,000 million in five years. How is this calculation made?
-It is a combination of elements, and the first is innovation. We have products in our portfolio and we hope to be successful in some of them. In second place comes the development of new channels and new geographic locations. We’re also present in over 100 countries, but not all the same. And a third element may be acquisitions, but they are not commonly considered in this estimate as it is an uncertain variable.
-Where is Borges’ innovation headed?
-One out of every 10 ideas hits the market. It basically goes towards what we call Borges next doormeans creating products that incorporate any product or raw material we already sell as a basic or complementary element. It is incompatible with being destructive. For example, nuts are the main basis of many products in the vegan segment. We have a new platform that aims to help the industry find healthy substitutes for ingredients that are not environmentally or health sustainable. A clear example is pastries. We have created a healthy fat like palm oil.