Pick Szeged plans to re-open the Japanese market
Affected by the ASF virus, the Hungarian pork industry have lost access to important markets such as Japan. Still, the exports to the EU member countries and several other markets are performing very well for the most famous salami producers in the country: Pick Szeged. Hoping for a comeback in the Asian markets, Pick Szeged is preparing a series of investments that will increase production and secure the company’s status as one of the biggest manufacturers of meat products in Central and Eastern Europe, declared Mr. Laszlo Sutka, acting CEO of Pick Szeged Zrt, in an interview for EuroMeat News.
After 150 years of existence, where does Pick Szeged position itself in the European food industry?
Pick is one of the biggest manufacturers of meat products in Central and Eastern Europe. The company has a leading position in the traditional salami market segment. The flagship product of the company is the winter salami which possibly is the most well known Hungarian food product in the World.
What are the novelties that helped your company to regain its position in the XXI century's market and where do you stand from the perspective of the sales channels? Have you implemented modern technologies to increase your sales?
Tradition, high quality, and continuous innovation plays an important role in strengthening our position in the market. We produce salamis based on 150 years old recipe, but we continuously develop the technology, and we also come to the market with new products every year.
We plan a new greenfield investment in Szeged. We would like to start the construction of a new salami factory in the next year. With that investment, we will increase our salami production capacity by 30%.
The domestic market is still our most important market, but around a third of our sales come from export. Our most important export market is Germany, but you can find our products in most of the Central and East European countries.
During the last 10 years, your company has opened important markets around the globe such as Japan or the US market. To what extent the ASF situation in Europe has disrupted trade with partners from third countries?
The ASF caused serious problems for our company, as we lost the Far-Eastern market. The most painful loss is that we can not sell our products to Japan. We have spent a big amount of financial and human resources introducing our products to that very demanding market and our efforts started to bring the fruits of our market building activity when the ASF appeared in Hungary. We hope that our products are only temporarily out of the Far-Eastern market as the Hungarian diplomacy is working very hard on the so-called "regionalization" solution.
Your company has an integrated system of production. Does it cover the supply for your facilities or are you sourcing commodities from other partners as well? Can you give us some details regarding the production capacities of crop units, farms, slaughterhouses and processing units?
Pick Szeged Zrt. is a member of Bonafarm Group which is one of the major corporations in the Hungarian food industry. The Group consists of five agricultural and three food processing companies and we work closely together with MCS. Vágóhíd Zrt. – a slaughterhouse - and Hungerit Zrt. as strategic partners.
The Group is a vertically integrated system where agricultural companies provide the high quality raw material for the food processors. Our farms cultivate 34 000 hectares and they produce the crops for the feed for the Group's animals. Bonafarm together with integrated partners produces close to 600 000 thousand pigs in a year. The pigs are slaughtered by our strategic partner MCS Vágóhíd Zrt., and the meat coming from the slaughterhouse is the most important raw material for Pick's products. Given the size of our production and the special raw material need of salami production we also buy meat from other sources.
What is the current output for Pick Szeged's production lines and what type of products do you deliver in the market? What are your best selling products right now?
Pick Szeged's 4 factories produce 40,000 tons of meat products yearly. We produce a wide range of processed meat products like hot dog sausages, hams, cold cuts, pates, etc., but the most important products are the different types of salamis. We sell 10000 tons of salamis with noble mold on the market every year. Our most famous product is Pick winter salami, but we have very successful and popular new products as Pickolino hot-dog sausage and Pickstick snack, too.
Analysts are predicting a consumer's switch from pork to poultry in the following years. How do you respond to these challenges?
Pick Szeged Zrt. is traditionally pork products producer company and we don't want to change our focus. On the other hand, we follow the new demands of consumers and we want to fulfill those demands. For example, together with Bonafarm Agriculture, we developed new products where the raw material is coming from pigs which only eat GMO-free feed and don't receive any unnecessary treatment with antibiotics.
Companies all over Europe are complaining about the lack of skilled personnel. To what extent this is becoming a problem for the Hungarian food industry and for your company in particular?
Nowadays it is one of the biggest problems for most of the Hungarian companies, too. It is not easy to find skilled workers, but sometimes even unskilled workers are rare in the labour market. In the last years, the wages have been significantly increased in Hungary and we have to be prepared for the "wage pressure" in the next year, too. In 2017 we received the award for "The most attractive employer" in the FMCG sector, so we have enough applicants, but our labour cost is increasing continuously, so we have to develop our production efficiency to be competitive.
How do you support the Mangalica breeders in your country and what are the characteristics that make this pig breed so special? How does it help to promote these products to external markets?
We as Pick Szeged Zrt. are directly not in business relation with the mangalica farmers today, as we finished pig slaughtering more than 2 years ago. On the other hand, we buy mangalica meat from our strategic partner MCS Vágóhíd Zrt. what we use in our special mangalica products. Mangalica is a special, traditional, extensive breed. The distinguishing feature of mangalica is its fat. Its carcass has half the meat and twice as much fat as a white pig, which causes the meat and sausages produced with this race to retain their properties longer and their flavor to concentrate more as it can mature for a long time. The mangalica meat and the products are quite popular in the Far-Eastern market, but given the trade restictions because of ASF the mangalica products today are sold mainly in Hungary and in the EU countries.
What are the investments that you completed in the last couple of years and what do you plan for 2020?
In the last years, we have developed all of our factories with high care zones. We have bought several modern slicing machines. The latest just arrived in September.
As I mentioned earlier, next year we want to start a very important project. We will build a new salami factory that will increase our production capacity by 30%.
How is the Hungarian market at this time? Do you foresee growth in sales for the next months? How about the Central and East European (CEE) market?
Traditionally the last 3 months of the year are the strongest for us so we hope that we can increase our sales in the next months, as usual. We expect the same increase in the domestic and in the export market, too. Certainly, we are afraid that the high pig meat prices will have a negative effect on our sales as our cost increases significantly and we have to build that into our selling prices.
Pick Szeged owns a large variety of brands. How many of those are created to respond to consumer's preferences in the Hungarian market and how many are addressing the foreign consumer?
Pick and Herz are our traditional and most important brands you can find in Hungary and also in our export markets. Familia, Délhús and Ringa and some other brands are used for the domestic market.
What are the differences that you are seeing in the domestic market compared to export markets from the perspective of the healthiness of the product, traceability, and sustainability in meat production?
There are no big differences between the domestic and export markets. Healthiness, traceability, sustainability are global trends that influence every firm in this industry. We think we are well prepared for these challenges, thanks for the Bonafarm Group. You can find our products in around 35 countries so we have to correspond to many of the industry standards such as ISO, IFS, BRC, etc.
How important are the GMO-free production and the reduction of antibiotics use in livestock in promoting your products abroad?
It was a great effort to establish a GMO-free supply chain at Bonafarm Group, but we considered it to be a very important step ahead. Our strategic partner, MCS Vágóhíd Zrt. - a slaughterhouse - produces the raw materials for these products from pigs raised by Bonafarm Agriculture. GMO-free and antibiotics-free goods are relatively new among our products, but we plan to increase our production of these types of products as we think that more and more customers will look for them in Hungary and also in our export markets.
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