October 29, 2020

Jordi Gallés: "If you want healthy food, do not trust all long-lasting products" :: KPMG

-In Spain, one hundred percent of what we could consider fresh bakery, that is, if we dispense with industrial molds or bagged, 30% is frozen. And, of that 30%, in broad strokes, a third is elaborated by us. That means that, more or less, we elaborate 10% of all the fresh bakery that is consumed. It is very likely that everyone has ever tried some of our products without knowing it, but at a professional level, almost everyone knows Europastry. We sell croissants in Paris and donuts in New York, we sell in sixty countries.

-It is not a competitor, it is an ally. Little or much, but, to this day, all bakers use frozen doughs, either they make them, or they buy from third parties, from the most premium to the most basic segments. Everyone relies on the cold to improve quality. At this moment, in a bakery there are about 150 products for sale. In the face of a consumer that is becoming more complex, more diverse, who wants more and more differentiated products, it is very difficult to make them all at night, every day, from Monday to Sunday. I remember that, at the beginning, when we were going to sell we had to run out of some bakeries. Before the eighties, they were regulated, they were like pharmacies or taxis. The law set the prices and the assortment of products and you could only open where other bakers gave you a license. The sector is liberalized in 81-82 and four or five years later we appear with our catalog. They told us that we were going to be his ruin. Now no longer, this has evolved.

Jordi Gallés, at the headquarters of Europastry in Rubí (Barcelona). | ÓSCAR BAYONA

-There is a lot of variety, the offer is more segmented. The baguette, which was our icon for many years, represented 80% of sales. Today is 3%. We have evolved to have a much more diversified product offer, with a lot of quality and added value. For example, every time we use more organic flours and we have entered very strong in the world of rustic breads, made with sourdough with more than 24 hours of fermentation and cooked in stone ovens. This has also experienced a very significant development. We have also diversified into different market segments. Today, we can be making breads for the restoration of three Michelin stars, in cutting-edge research in the gastronomic world and, at the same time, we have more basic products for the supermarket, supermarket retail channel. That's where most has changed. In addition, the world goes faster, before the products were maintained for longer and now consumption habits are more accelerated. Three years ago, fashion was gluten-free. Now, it's the organic. Although we must distinguish between fashions and trends and I think the latter is going to stay, because the consumer is concerned about sustainability.

-Yes, but it's not just that, there are many challenges. We have always believed that there are no shortcuts to products, we use traditional recipes, we do it as it was done before. If you add additives or preservatives you just fool yourself. For us, the cold is the main preservative, that's why we are leaders. The regulation sets a limit of sugar in the pastries for 2020 and right now we are already 30% below. The Ministry of Health gave us in 2013 a prize for the best health initiative in the food industry to reduce salt. We reached the conclusion that, by removing the sodium and raising the potassium, we lowered the salt in the bread maintaining its flavor: we could reduce the risk of vascular death in Spain significantly. We are very sensitive in terms of the ingredients, we are the only ones who can do the traceability from the wheat field to the loaf of bread. We work with cooperatives in Lérida, Huesca and Albacete and we select even the seeds that have to be planted so they adapt to the environment and are efficient and productive for the farmer, who guarantee prices, because they have to earn a living. At the same time, we avoid the speculative part of the business and control the quality standards we want.

"We make traditional recipes, if you use additives you cheat yourself, our main preservative is cold."

-For some time, we used segregated palm oil and in that we were also pioneers in Spain. We make sure that it does not come from the jungle, it is certified that it comes from specific agricultural plantations. In this debate, there is something that people do not know and is that the alternative to palm oil is far from sustainable. To make coconut or high-oleic oil, much more water and more earth is required. What is essential is that the little palm you use is used consciously and without harming the environment.

-There are no whites or blacks, there are grays. It is not about saying yes palm or palm, no. According to the uses, in many cases the palm is better than the coconut. When you go to the market and see "green label: without palm oil" and look at what the product has, sometimes you see that it is worse. That is also deceiving the consumer. The label contains the ingredients and the prices and we would have to start to indicate also the carbon footprint. That way, when we bought, we could meet her and play rationally with her. We measure the reduction we make every year. In transport, for example, we have been pioneers in the use of megatrucks and in our factories we use more and more green energy. But there is another important trend: when you go to the market, if you want healthy food, distrust everything that lasts.

"No, once you thaw it hard, it's the same as it was freshly made. If you buy products that last more than a week, even preserves, there will always be a component that is unbalanced. That is, there will be a lot of fat or a lot of salt or a lot of sugar. Why does industrial bread mold last a week and a loaf of bread last for hours? There are components that allow it to last longer. In this case, they usually carry milk, fats and sugars. That is, not only are the preservatives, but also other ingredients that are unbalanced in the recipe so you can increase its duration. It also happens with pastries. In a bag of muffins that last a month, the type of fat or the amount of sugar have nothing to do with ours, which, when thawed, after a few days are already dry. That reality is setting a trend when it comes to consuming. People are betting more and more on a healthy diet and that means betting on fresher products. It is also our bet: a fresher product with a suitable recipe. The plastic is another case. We practically do not use it. There are products in which each cupcake goes in a bag and then the dozen that is already pocketed gets into another bag and that is crazy. They do it to extend life, but it is not very sustainable to say.

-As in all regulations, there are very good and regular things. In general, I think it's good, I think that you try to bet on products of value and quality. In the matter of the masses mother, for example, we have been pioneers, we have impelled it in the elaboration of rustic breads. But not throwing a powder of dehydrated dough to the bread, but using the traditional recipe, leaving it at rest. There is a library of mother masses in St. Vith, in Belgium, similar to the seed bank of Finland, which preserves the best. There are bakers like Eric Kayser of Paris, the masses of Italian pizza from Caserta, in Naples and the first Spanish mother dough that has entered is that of Europastry. It is the result of betting on a quality product. Regarding the issue of the regulation of integrals in that decree, it is something that the consumer does not quite understand. In whole grain bread bars, in Spain, there has always been a percentage of white flour. And now it is said that the new regulation suppresses it and that is why it will avoid fraud. No, the consumer likes that since I remember. Bread without white flour has also been sold, but for Spanish it is a heavier product, which can cost more. You can put a regulation on this, but he will decide if he wants one or the other, you can not force him what he will prefer by law.

"In Spain, politicians are blamed for everything, but they are neither so good nor so bad, they try to do what they can or leave them"

-The rustic bread, a bar we call Alma Saint Honoré.

-Innovation is very important and has changed a lot to the industry. Around 5% of the annual sale is for new products. If we look with a little more perspective, those who have three years of life represent around 20%. We have four innovation centers. Two in Spain, in San Juan de Espí and in Lugo, another in the Netherlands and another in the United States. They allow us to develop products adapted to the needs of each market or each client. And we have 22 production plants around the world. But, more than size, the important thing is speed. The company must adapt quickly to market trends.

-It is a subject that is under study, but we do not propose it as an end, but as a tool to finance the growth of the business. The family today has around 80% of the capital. We had our first venture capital investor in 1995 and without it, today Europastry would not be what it is. I remember my father wondering what to do. The business grew like foam, they called us customers from Seville, from Lugo, from Madrid, from all of Spain. It was a small company in rapid development. He did not give us the money and we wanted to take the opportunity. At that time, I was studying Economics at the University and I saw that we did not fulfill everything that in class they told us was orthodox. In class they told me that we had to separate the family assets from the business and our house was the guarantee to buy machinery for Europastry. Finding a solution to this problem was not easy. There are two great profiles: the industrial partner who wants to enter the company looking for synergies -and that's not worth it- and the financial partner, which is what we are betting on at that moment. In the year 1995, there was no intermediate point: either we put on the brakes and we tried to consolidate in Barcelona, ​​turning it into our fort or opening the capital. We bet to open the capital to financial partners, professionals, who, in addition, in the history of the company have helped us a lot, we have learned from them new skills and also to be more ambitious. Without them, Europastry would not be what it is today.

-Our ambition is to continue being the most dynamic company of frozen masses at an international level. Right now we are in four geographies: southern Europe (Spain, Portugal, Italy), Central Europe (the Dutch factory), the United States and Latin America. We have a lot of ground to travel in these four areas with more products and that is our ambition, if we look at the next five years. Beyond? When you read books of successful business stories, they tell you that a man already knew, when he was in the garage, that his company was going to succeed. It never ceases to amaze me. If we are told fifteen years ago what is now Europastry we do not believe it. We are more of looking at things step by step, then we will see what comes, we are more about making plans to five years than to fifteen.

Jordi Gallés, in a production line of the Can San Joan plant, in Rubí (Barcelona). | ÓSCAR BAYONA

-I started working outside. When you are forming is good, because it gives you distance and allows you to develop your skills in a more natural way than in an environment in which everyone is watching you. Then, what the family has to give is long-term stability. We bring the vision, the way we want to go. If I were a financial partner, I would look more for the short term. We are not afraid that the short result is not the right one, but we look a little further and I think that helps Europastry. This duality of roles, on the one hand the family, which gives stability, plus a third party that brings new skills is very important. We have always believed in the professionalization of the business, I am the only person in the family who is in the day to day of the company. We try to distinguish well what is the corporate governance, the strategy, where the business is going, where it is invested, from day to day management. This must be handled by professionals who are the best in each of their areas and do not have to be family.

-In the year 1996, I was working in Paris, I lived in an apartment with some friends, I was delighted with life and my father called me and he says: Hey, Jordi, there is a post in Europastry, do you come? At first, I had to think about it, but I do not regret at all how it went. From him I have learned from the most technical part of the product, the baker's production philosophy, to the human treatment, to generate a certain culture within the company. Logically, the most personal father-son relationship teaches you a lot. In the day to day you do not see it, you realize later, with the distance, especially when you have children.

-Our business is not a regulated business. There are many businesses in Spain that live on the BOE, we live on the consumer, with which we have the luck or not luck to live very far from that world. Politicians also do not come very close here, I see them in the newspaper, with which I have an opinion, but personal, as anyone can have it. Another factor is that we are in different geographies and that allows you to compare and see what happens in other countries. Reality? In the Netherlands, for example, the administration – not the politicians, who are going in another direction – is much more effective. That is, if you want to build a factory there, you have a permit in a week and here, in Spain, it can take two years. On the other hand, Spain also has good things. If you compare it with the United States, for example, which many people say is better, I prefer the Spanish regulatory framework to the American one, which is too deregulated a scenario. In conclusion: we must demystify. I have the feeling that the politicians are blamed for everything and here, in Spain, they are neither so good nor so bad, they try to do what they can or what they leave behind. You can do things better, of course, as the administration works more efficiently, but that is not something that concerns us especially in the evolution of our business.

The company data
  • 729 millions of euros
  • EBITDA: 110 millions of euros
  • PLANTS: 22
  • TONS MARKED: 364,000

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