Background

Harry’s was a €70 million family-owned bakery business in France, in a then traditional low-margin, unbranded category.

Key Insights and Vision

• The traditional wholesale baking company model is driven by direct store door delivery with high costs and low margins with undifferentiated commodity products

• Opportunity to switch to warehouse distribution with longer shelf-life product technology and eliminate fixed costs associated with the direct store delivery model

• Reinvest cash from these cost savings into field sales force and advertising to grow the brand

• Focus on branded pre-packed bakery, with a core range of differentiated and advertised star products, under the Harry’s umbrella brand

• Target growth markets in Europe, where packaged bread consumption is under-developed

Company’s Strategic and Operational Achievements

• Partnered with management team led by Alain Strasser. Team included a good balance of experience in the traditional baking industry and in branded consumer products, which was crucial in the transformation. The team also had experience in Southern and Eastern Europe, where the company was expanding.
• Made build-up acquisitions in France, creating a leading player in industrial bakery against smaller size competitors solely trading in one segment.
• Acquisitions were progressively integrated into the group, which evolved from 7 dedicated plants to 4 competitive multi-products plants, generating significant economies of scale in manufacturing and logistics.
• Streamlining the product portfolio to a limited number of differentiated branded products reduced complexity and focused industrial, sales and marketing investments.
• Cost competitiveness enabled Harry’s to offer well positioned products and invest in media to support the brand across all product segments and drive penetration of the category.
• The group replicated its successful French model in other low penetration countries like Spain, Italy, Turkiye and Russia, through acquisitions and joint-ventures and transferred know how and select products from France.

Outcome

Harry’s transformed from a flat-line industrial company to a high-growth branded consumer product company

• Grew from €70 to €600 million in revenues
• Increased operating profit from 3% to over 12%

After consolidating the French market of industrial bakery and building leadership in selected value-added segments in Southern and Eastern Europe, Harry’s was acquired by the Italian group Barilla to form the European leader in industrial bakery.