Fleury Michon S.A. Business Information, Profile, and History

History of Fleury Michon S.A.

Located in the Vendée, in the northwestern region of France, Fleury Michon S.A. produces self-service delicatessen and other packaged meat products, such as patés, and ready-to-cook meals for the Fremch consumer supermarket and restaurant markets. With sales at EUR 365 million in sales, Fleury Michon is one of France's leaders in its industry and counts among the most well-known brand names. Not content to have found its way to the consumer's stomach at home, Fleury Michon has launched two other initiatives: the first is a vending machine, much like those that sell canned soft drinks, that provides ready-to-eat meals in only 60 seconds. Aimed at businesses with 50-100 employees, as well as at such locations as passenger trains, the vending machines were launched in 2000. Fleury Michon has also launched its own restaurant concept, Graine d'Apetit, where diners can choose among Fleury Michon's packaged meals--the same ones sold in supermarkets--that the buyer then heats and serves at home. The first Graine d'Apetit in Nantes has met with strong success, with per-day sales tripling those at a typical supermarket. Future Graine d'Appétit restaurants are being planned for Paris, London, and Frankfurt. The company also provides salads for the Quick fast-food restaurant chain. Fleury Michon went public at the beginning of 2000, listing on the Euronext Paris secondary market. The company is paying increasing attention to the international market. Fleury Michon is already present in Poland, the Czech Republic, and Hungary, where it operates a string of 50 'French-style' fast-food restaurants. While these restaurants bear little relation to the company's French products, Fleury Michon hopes to use its growing brand recognition to launch its lunch meats and packaged meals in these countries. Meanwhile, the company is entering partnership agreements in Italy and Spain to import its products to these countries. These activities should help boost the share of international sales in the company's revenues, which stood at just four percent in 1999. The primary revenue generator for the company remains its packaged meats, which account for 55 percent of sales, with prepared meals accounting for 40 percent of sales. Fleury Michon is led by Yves Gonnord; the company continues to be majority controlled by the founding families.

Butcher in the 1920s

Established in 1926 by brothers-in-law Pierre Fleury and Gustave Michon, the Fleury Michon company originally operated as a butcher in its Vendée region. In 1934, the pair extended their retail operations to include delicatessen meats, dried sausages, and other prepared meats. Fleury Michon saw an opportunity to expand its operations in the late 1940s, as it began to produce custom-cut delicatessen products. The company turned to new production methods, beginning its conversion from artisan to industrial food producer.

A boost to the company's growth came in the late 1950s. In 1957, Fleury Michon was the first in France to offer prepackaged cold cuts. The company's sausages and hams quickly found their way on a growing number of grocer's shelves. The development of France's supermarket--and then massive hypermarkets--in the 1960s helped spur demand for Fleury Michon's products. The company responded in 1964 with the launch of a new line of self-service packaged foods. By the end of the 1960s, the company built a new factory, in Chantonnay, to support its future expansion.

Fleury Michon was quick to recognize changing consumer food habits, even in France, where the three-hour lunch remained something of a tradition. As more and more women joined the workforce, families found themselves with less time to prepare meals. Fleury Michon anticipated this trend with the launch of a line of fresh, precooked, self-service meals, offering an attractive alternative to the frozen dinner. Launched in 1974, the company's packaged meals were to take the company into a new direction at the beginning of the next decade. Meanwhile, as it closed out the decade, Fleury Michon entered another promising market, that of providing fresh-cooked meals to the restaurant market.

Brand Name Specialist in the 1980s

At the beginning of the 1980s, Fleury Michon prepared to take its operation to a grander scale. The company defined an ambitious strategy of redefining its operations. Abandoning the last of its butchering operations, while also exiting a number of other sectors, including conserves and slaughtering, the company determined to place its future in its two fastest-growing segments, that of packaged delicatessen meats and prepackaged meals to the supermarket and restaurant markets, aiming to achieve leadership status in both product categories. Leading the company's charge into the future was Yves Bonnord, who had entered the company in 1961 after marrying the granddaughter of one of the company's founders. Bonnord took over the company's leadership from his father-in-law in 1981.

The following year, the company launched an entirely new line of fresh, pre-cooked self-service meals in France's supermarkets and hypermarkets. Supporting the rollout of the 'new' Fleury Michon was a sponsorship contract with Philippe Poupon, one of France's champion sailboat racers. The Fleury Michon-Poupon partnership helped build Fleury Michon into one of the best-known brand names in the country. The company also continued to build its infrastructure to support its growing sales. In 1983, the company inaugurated a new state-of-the-art sausage production line in Chantonnay, giving its one of the most modern such facilities in Europe.

Fleury Michon struck a marketing coup in 1987 when it entered a collaboration agreement with renowned French chef Joel Robuchon (the only chef in the world to have patented a cooking process). Together with Robuchon, the company began creating a new series of recipes, finding immediate success with the French consumer. At the same time, the company was investigating a new market--that of surimi, a crab-flavored fish product made popular in Japan. In 1990, the company became one of the first in Europe to open its own surimi production facility. The following year, the company opened four new production facilities to support its growing sales, in Vernoux en Vivrarais, Boffres, Villefranche de Rouergue, and Auzances. Fleury Michon was also preparing to open a new 10,000-square-meter facility in Monifaut that was to give a huge boost to the company's production capacity.

International in the 21st Century

In 1991, the company took its first step outside of France, when it opened its first 'French-style' fast-food restaurant in Cracow, Poland. Although the restaurant had little direct relation to the company's main products, Fleury Michon hoped nonetheless to popularize its brand name in Eastern Europe. The success of the first restaurant led the company to expand the concept into a chain of more than 40 restaurants in Poland, before moving into the Czech Republic and then Hungary, later in the decade. These operations nevertheless remained a small part of the company's overall sales.

In 1992, Fleury Michon attempted to take itself to a new level when it acquired the Olida company, and its Cochonou brand, beating out a number of larger competitors, including Nestlé's Herta subsidiary. The acquisition doubled Fleury Michon's size overnight and gave it Olida's strong position in the market for dried sausages. Yet Olida, losing some one million francs per day, nearly sank Fleury Michon. After struggling to turn around Olida's troubled operations, Fleury Michon's losses mounted to nearly FFr 300 million less than a year after the acquisition. At last, Gonnord was forced to admit, to Capital: 'We didn't realize that was no possible synergy between our two companies.'

Loaded with debt, Gonnord began to consider opening the family-owned company to outside investors. At last, in 1993, the company sold off most of the Olida operations, including the Cochonou brand name, and reorganized its operations to focus almost exclusively on its delicatessen and packaged-meal products. The company also revised its marketing program, ending its long relation with Poupon (the company continued a limited sponsorship of Poupon, however) to focus its advertising efforts on the television and other media markets. Fleury Michon also continued its industrial investment program, spending some FFr 300 million to modernize its production, logistics, and distribution facilities.

The company's investments continued into the mid-decade, with the inauguration of a state-of-the-art computerized logistics system at Fleury Michon's Pouzauges site. The company also transferred its surimi production to a new facility in Mouilleron, while moving its de-boning facility to Montifaut. The company also began a series of small-scale acquisitions, including a bakery operation, specialized in pizzas and quiches for private label brands, renamed as Socété Albigeoise de Panification, and high-end delicatessen meats producer Henri Le Hir.

Joining the company in 1995 was Frédérick Bouisset, who had previously worked for Nestlé and Bongrain, two of Fleury Michon's top competitors. Bouisset was charged with leading the company into new markets. One such market was found through a 1996 agreement with Weight Watchers to make 'lite' salads for the diet-product specialist. The company entered a similar agreement in 1999 to provide salads for fast-food chain Quick, headquartered in Belgium and one of the leaders in the French fast-food market. In 1997, Fleury Michon also launched a new line of food products featuring the Joel Robuchon name. Within months after its launch, the first of the Robuchon-devised products, a duck paté, had captured one-third of its market.

Toward the end of the decade, the company--which had been recognized as one of France's leading brand names--began to eye means for bringing its name and products to its European neighbors. In 1998, the company entered a production and distribution agreement for southern Europe with the companies Navidul in Spain and Beretta in Italy. The first of Fleury Michon's meals for the Italian market were launched in the year 2000. The company was meanwhile focusing on the quiche and pizza business, selling off its shares in Socété Albigeoise de Panification to the United Kingdom's Hazlewood Foods in 2000.

At the same time, Fleury Michon was entering another new promising market, catering, and particularly the fast-food and lunch segments, albeit taking a different approach to these growing segments&mdash average French lunch times had dropped from one hour in the mid-1980s to just 35 minutes in the 1990s. In 1998, the company began development of a vending machine capable of serving one of its meals in just 60 seconds. By 2000, the company was ready to launch its vending machine, targeted at companies with between 50 and 100 employees--larger companies tended to have their own cafeterias or other food-services, while smaller companies could not generate the volume sufficient to pay back the purchase cost of the machine. The company also hoped to place the machines in other high-traffic areas, such as passenger trains and food markets; the machine also seemed an ideal companion to the offices of the 'startup' sector, given the typical fast-pace and long working hours of these businesses.

Industry analysts greeted another Fleury Michon initiative with enthusiasm as well. At the beginning of 2000, the company opened its first fast-food restaurant, Graine d'Appétit, in the city of Nantes. Calling the concept 'assisted self-service,' the new restaurant featured the variety of Fleury Michon meals--the same found in supermarkets--which a diner could then purchase and have prepared and served at a table. The first Graine d'Appétit was an instant success, quickly tripling the daily volume of sales of a typical supermarket. Fleury Michon began plans to roll out the Graine d'Appétit concept in Paris, while also taking the restaurant outside of France, with initial plans to open restaurants in London and Frankfurt.

To support this new expansion, Fleury Michon finally went public in 2000, listing the company's stock on the Euronext Paris Secondary Market. Although the original founding families continued to control 68 percent of the company's stock, Fleury Michon was preparing nonetheless for a different kind of revolution. In 2000, Yves Bonnord, preparing for his retirement in 2001, announced his intention to name Frédérick Bouisset as his successor, marking the first time in the company's history that Fleury Michon will not be led by a member of the founding families. Yet as architect of much of Fleury Michon's expansion in the second half of the 1990s, Bouisset seemed certain to maintain the company's tradition of strong growth into the 21st century.

Principal Divisions: Fleury Michon Charcuterie; Fleury Michon Traiteur; Fleury Michon Logistique; Fleury Michon Poland; Fleury Michon Czech Republic; Fleury Michon Hungary.

Principal Competitors: Nestlé S.A.; Bongrain S.A., Madrange S.A.; Martinet S.A.; Bonoduelle S.A.

Chronology

• Key Dates:

• 1926: Fleury and Michon found butchery.
• 1934: The company begins delicatessen meats production.
• 1947: The company begins to industrialize production.
• 1957: Fleury and Michon launch sale of pre-packaged meats.
• 1964: The company rolls out a line of self-service foods.
• 1974: Fleury and Micnon launches packaged, fresh, pre-cooked meals.
• 1979: The company begins fresh food production for restaurant sector.
• 1982: The company launches a new line of pre-cooked meals and sponsors Philippe Poupon.
• 1991: The first restaurant in Poland is opened.
• 1995: The firm introduces a new computerized logistics system.
• 1996: A production agreement is reached with Weight Watchers.
• 2000: The concept of Graine d'Appétit restaurant and vending machine is launched.