EXCLUSIVE: Smithfield Ferme plan to keep domestic market as main outlet

Interview with Cristina Bodea, sustainability manager Smithfield Romania.

Smithfield has won in 10 years of activity in Romania a leading position in the field of pig breeding and pork industry, which contributes to improving the industry’s standards and provides its customers with the best quality products. Taking over a ‘heavy’ Romanian brand, Comtim, one of the biggest pork producers and processors in Europe before 1989, Smithfield continued Comtim 100% Romanian brand story, vowing that Romanian consumer and local market would remain their main concern.

Last year Smithfield Ferme group marked 10 years since the takeover of Comtim. How did the market evolved during all this time?

The consumer market acquires new values along with the change in behaviour of the final consumer which, besides the traditional consumption, shows an increasing interest in innovative products, fast and easy to cook, in weights tailored to the consumer’s needs.

In recent years, the producers of meat and semi-processed products, which include our company, have made major investments in the development of the production units of semi-processed products so that they can supply the domestic market, more and more receptive to these assortments of products. A few years ago the domestic consumer was familiar only with a restricted range of semi-processed products (sliced, fresh sausages, minced meat, etc), but gradually, once he has discovered the advantages of semi-processed products, one can notice his preference for such products, proved by an increase in the volumes sold in the segment of pickled products, by different types of recipes.

The development of modern retail, of the technologies in the semi-processed meat industry and the development of technologies used by suppliers of spices, with a wide range of options, encourage the development of local semi-processed meat market.

In our industry, innovation plays an essential role because it ensures the ultimate goal – the obtaining of quality products, according to the taste and the needs of each client. Innovation is put into practice through the technologies used on the production flow: from the quality control, to the ways of packing the products and, why not, by creating new products that draw the attention of the final consumer.

Through Comtim, Romania used to be one of the biggest pork producers and processors in Europe for a long time. What was Smithfield contribution to this inheritance? What is the investment value so far?

Smithfield Romania has developed in 10 years an integrated business model, a successful one, following investments exceeding USD 600 million so far.

Smithfield Ferme manages 52 operating farms for pig production in Timis and Arad counties, built largely in green-field regime, our own farms or in partnership with local farmers. Smithfield Ferme, which complies with all European requirements in this field, produces more than 1 million commercial pigs annually.

The company also owns two modern compound fodder factories, with a total storage capacity of up to 110,000 tons of cereals and a total production of 15,000 tons of fodder per week. Our company deals also with the purchase and storage of cereals in view of producing the necessary fodder for our animal stock, as well as for selling fodder. We take pride that over the time we have become a trusted partner for local producers, being currently the largest purchaser and consumer of cereals in Banat region, with up to 330,000 tons of grain purchased per year.

Smithfield owns a slaughterhouse in Timisoara, one of the largest and most modern slaughterhouses in Europe.

Safety and quality of products, as well as environment protection and employees safety and health are recognized by the management systems, implemented and certified both by the division of livestock breeding and by the one of meat processing: ISO 9001: 2008 for quality control, Environment ISO 14001: 2004; occupational health and safety OHSAS 18001: 2007; for food safety, ISO 22000, IFS Version 6, 2012 and BRC version 6, 2011.

How many farms are you managing in Romania and how many employees? What is the annual production pace and what is the slaughter capacity per hour?

Smithfield Ferme manages 52 operating farms for pig production in Timis and Arad counties, built largely in green-field regime, our own farms or in partnership with local farmers. Smithfield Farms, which complies with all European requirements in the field, produces about 1 million commercial pigs annually.

Smithfield owns a slaughterhouse in Timisoara, one of the largest and most modern slaughterhouses in Europe, which currently produces about 30% of the classified carcases in Romania, with a slaughter capacity of 600 animals per hour and trance of 300 heads per hour. Smithfield Prod operates in an integrated system, processing the entire stock from the Smithfield farms in the western part of the country.

The main outlet is the domestic market. Are you also exporting? If yes, which are the prevalent foreign markets?

Along with trade liberalization, in February 2012, we entered into direct competition with the EU meat producers, we started with deliveries of carcases, trance pieces and by-products to the EU member states.

According to the volumes of pork meat directed to the foreign markets, our main customers are the neighbouring countries (Hungary, all the countries of former Yugoslavia, Bulgaria, Greece and Republic of Moldova), but also countries such as Spain and the UK, from which we have specific requests for niche products, such as Serrano ham and spare ribs.

The first delivery from Timisoara to China took place in early September 2015. The products are transported by road from Timisoara to Constanta, where our frozen products are subsequently loaded on ship in the port of Constanta Sud Agigea, and thus transported in optimal storage conditions to the ports of Shanghai and Tianjin.

On long term, the presence of our company on the foreign market, the European but also the Asian market, will lead to the recognition of the value of the Romanian export products on European markets, but also on the Asian ones and set up the right framework to continue the sustainable development of agriculture, of the livestock sector and of the food industry in Romania.

Currently the domestic market remains our main outlet. Today, more than 20% of our sales are exports.

How was Smithfield Romania’s evolution in terms of sales, turnover last year and what are the estimates for this year-end?

Cumulated, the average turnover of the companies in the group significantly increases every year. This is mainly due to the increased production capacity and to the diversification of our farms’ range of products – which currently include trace, sliced pieces and semi-processed pieces.

The sales volume, in certain varieties, grows considerably in December each year – the end of 2015 is in the same situation, for which we were ready – our products, branded Comtim, 100% Romanian, were in high demand – products branded ‘Good cooking’, but also the specific products for the winter season, were the stars of the season. Our quality products are prepared with the utmost attention to quality by a team of professionals in the field.

2015 was a year of challenges that have resulted in a number of projects initiated in order to achieve the assumed objective, i.e. to remain the most efficient producer of meat in an integrated system, supplying the consumer the quality guarantee!

How is the profile of the Romanian pork consumer? Did your social media campaigns meet the consumers’ demands better than a traditional marketing campaign?

Our company produces and sells fresh pork meat branded Comtim, a very appreciated and known brand in Romania, a benchmark for responsible pork production.

In recent years, a general trend of growing access to the means of mass information is noticed globally, which allows the consumer to become increasingly aware and to accordingly make buying choices increasingly correct. The consumer today is currently looking not only for the quality of the product in itself – essential to be purchased on a very competitive market – but also for a whole new dimension, very important, challenging and hard to maintain: the sustainable approach of the production process throughout the entire ‘from farm to fork’ flow.

The ‘sustainability’ of the producing organization, as value-added to the product, is beginning to increasingly make the difference and will become, in the coming years, a factor gradually more important in the products’ selection, by winning the advised customer’s confidence, which prefer the products made in a responsible manner. The success of a product is not currently related only by good quality, by a competitive price or by a relevant packaging, but also by the way the product is made, throughout its entire life cycle. On long term, the responsible products will be preferred, those which throughout the production flow have included in the organizational culture the ethical issues as well. In our industry, we mainly refer to animal welfare, to the environment care from the manufacturing company, to the care for employees, to active involvement with the communities, to ethical business practices, to civic responsibility in its broad meaning.

Are you considering further investments in 2016? What marketing strategies do you have in mind for the upcoming period?

Smithfield has won in 10 years of operations in Romania a leading position in the field of pig breeding and in the pork industry, through constant observance of the basic principles of our business. This year, we will remain consistent in keeping the basic values underpinning our operations:

• to produce safe, nutritious and best quality products;
• to create added value for all our partners;
• to be a preferred employer;
• to be leaders in animal welfare;
• to protect and revive the environment;
• to positively influence the communities where we operate.

Our undertaken objective is to remain the most efficient producer of meat in an integrated system, which offers the final consumer the quality guarantee of Romanian meat products!

We want to consolidate the results and continue the same trend of performance. We want to remain a respected leader in the swine breeding industry and in the food industry, which contributes to setting the industry’s standards, supplying our customers with safe and quality food produced in a sustainable manner.

Smithfield’s team priority, both this year and on long term, is to maintain the achieved efficiency level, the self-imposed quality standards and the effective results of the operations in an integrated system.

The plans to strengthen the segment of semi-processed products and the implementation in production of all our customers’ requirements will continue during 2016, a year in which we will continue to focus on growth and development.