Dutchman Setting Hungarian Food Company Right

In November 2008, Henk Slagt took up the formidable task of changing the fortune of a company being hit by the world economic crisis.

49-year-old Dutchman Henk Slagt likes challenges. Crisis for him is synonym with opportunity. The former Dutch Navy officer, and ex Sara Lee, took up the position of Chief Executive Officer (CEO) at the Hungarian food firm Saga Foods Co. Ltd. in November 2008 with the formidable task of changing the fortune of the company being hit by the world economic crisis. Saga Foods was acquired by the British Turkey company Bernard Matthews Ltd. in 1992 and had an important role in the British firm’s business model of optimizing the production process.

Nowadays, Saga Foods plays a more independent role, standing on its own feet. “There were so many good things about Saga. Everybody loves these products and Saga has 99% brand awareness. But on the other hand, Saga Foods was very much Hungary-oriented not expanding into other export markets and staff was not curtailed in accordance with the market requirements. Moreover, the number of successful innovations dropped over the last few years while the brand was not really standing out on the shelf,” the CEO describes the state of affairs end of 2008. What’s more, “when the world economic crisis hit in 2008, meat commodity prices fluctuated heavily and our business model could not flexibly respond to those changing prices.” Slagt told Diplomacy and Trade.

There was no immediate danger of bankruptcy as in many other agriculture-related companies but Slagt felt it was a big opportunity to move the company towards success. “We built a bigger export organization. As a result, we’re currently present in ten countries, and we have the number two position in Romania already. Export is a EUR 50 million operation, accounting for 50% of our business.” Through own farms, control quality throughout the whole supply chain from the stage when the turkey is still in the egg to the final turkey product in the fridge of the consumer. As we call it: quality control from farm to fork.” As for his job of setting the firm right, Slagt says “the company is now more lean and flexible and we created a platform for growth. I believe 2010 will be just as a crisis year as 2009 if not worse in Hungary. We plan for growth but macro economic conditions are not likely to facilitate these efforts. So, you have to prepare yourself to come out at the other end of the economic crisis as a better company that has beaten the rest. When the market is down its time to invest in your future, and that’s what we do.”

He explains that in 2010, they are looking to turn Saga to 5% ‘Return on Sales’ by turning commodity into branded added value products. “We start innovating much more than we have done over the past few years. We hit the shelves in 2010 with new innovations always related to what consumers want and wish to pay for. Then, there will be a big marketing and communication uplift. The company has been silent for over two years, as most other companies in this business. We have defined a clear marketing strategy to restore the image of the brand and start leading the category on the shelf."

The CEO strongly believes that “the survival of food companies lies in brandequity and innovation. That is our lifeline for the future. When you are a commodity-, or private label driven company, the retail is dictating your future based on always reducing prices. That may happen if you don’t have a brand to stand on or no innovation to lean on, then you’re forced into this dead-end street of private label production. Our goal is to attract the consumer who is willing to pay for the Saga brand. Especially in a crisis, brands have always proven to be stable because customers rely on brands. Even when there is a crisis, the brand remains to stand for value and quality. Of course, value propositions should accommodate the consumers’ reduced purchasing power, but even if not every day, he or she would still like quality.”

Henk Slagt is not satisfied with how meat shelves look like in Hungarian supermarkets (from the professional trade marketing point of view). “It is a mess on the meat shelf. With a few exceptions, products are not displayed attractively enough, they ‘don’t jump off the self into the customer’s basket’. I want to take the challenge of reinventing the category and we should be ‘The’ authority on the meat shelf helping retailers and Saga to make more money out of every shelf meter.”

Slagt does not regret taking the helm at Saga Foods. “I feel absolutely at the right place and time, not only to create a stable and better future for 1,350 families but also to rejuvenate the Saga brand and recreate the category. Saga has a renewed management team with over 70 years of international FMCG experience, dressed for tomorrow and an excellent and talented workforce. People, including new talent, are proud to work for Saga and be part of this journey. We are set up for success to take this good company to a great future. At the doorstep of 2010, my wish for the New Year (which for sure will come out) is that Saga’s rebirth will blow away competition and Saga will be imprinted in consumers’ minds and hearts as the best food brand in Hungary. That will be the base for a new future for Saga Foods.”