Jais Valeur, CEO, Danish Crown, will speak at the 2018 Annual Danish Top Executive Summit in a plenary session entitled “Innovation in Europe” along with David Lloyd of Alibaba and other participants.
Europe has golden opportunities but must actively pursue them
“In Europe and Denmark, we have unique opportunities to manufacture unique, differentiated products. Europe comprises a diversity of cultures, specialities and cuisines not found anywhere else in the world. We must be even better at exploiting this. It is notably Europe’s diversity that could give us a competitive advantage,” says Jais Valeur, CEO, Danish Crown.
Danish Crown’s sales and marketing are not besieged in Europe. The company sources its own raw materials and manages a complex value chain. Its biggest strategic risk is being deadlocked as a supplier of raw materials to others and not managing the further processing of these raw materials. Earning money in the retail trade is difficult if everything is solely focused on price – at the expense of everything else. On the other hand, the company sees immense potential in the area of food service, where growth is rocketing.
Danish Crown just entered into cooperation with Alibaba, which could be instrumental in changing its relationship with consumers. There was a long run-up, assisted by the CEO’s personal experience with China.
“I lived in China from 2006 to 2007, when I was working for Arla. This gave me first-hand experience of cooperating with the Chinese. Also, my wife is Chinese. Right now, we’re annually exporting products to the Chinese market for DKK 4 billion. Danish Crown has four sales offices in this enormous country, and we account for 21% of Denmark’s total exports to China. Therefore, partnering with Alibaba did not arise by chance. It naturally evolved along this long journey. In fact, China is now one of Danish Crown’s five biggest markets,” says Jais Valeur before further explaining the opportunities in the Chinese market.
Bonding the Danish pig to Chinese consumers
Europe’s commodities market is under pressure, where prices have plummeted over the past six months. The future market comprises all Southeast Asia. For instance, Danish Crown accounts for one-third of Denmark’s total exports to Japan.
“Our primary task is to forge a strong bond between the Danish pig and the Chinese market. Danish Crown has four domestic markets: Denmark, Sweden, Poland and the UK. China is well on its way to becoming the fifth. Therefore, we’re currently building a processing plant outside Shanghai.
“We must climb further up the value chain and sell not only raw materials, but fresh frozen meat to Chinese consumers. The target group comprises the 25 million inhabitants of Shanghai. It was during the project that we encountered Alibaba. They want to consolidate their position in the food sector and we’ve had a series of discussions with them. I think it will ultimately enable us to shake up the food-product market around Shanghai by infusing it with meat from Danish Crown, purchased online and delivered directly to consumers,” Jais Valeur says.
From China to Europe
In terms of e-commerce, Alibaba and China are in decisive positions, and we can benefit from transferring the lessons they are learning to Europe.
“China has deep-pocketed consumers, a demand for European products and rapidly growing e-commerce – all of which open up new opportunities. That’s why we want to check out the new commercial opportunities, and eventually transfer them to Europe and the rest of the world. We assess that the market in our part of the world is not as mature yet. Amazon is in the process of entering the daily commodities market in the UK and Germany. But they’re still not quite there. In this respect, Alibaba’s presence on the Chinese market is far more advanced. Danish Crown’s point of departure is to start out in Shanghai and, if all goes well, take a closer look at other major Chinese cities. There are valuable lessons to be learned in all of this which we can use to develop our strategy.”
Abattoirs at the cutting edge
Danish Crown expends many resources on automation. There is a long-standing tradition for this in the meat-packing industry. Henry Ford did not invent the assembly line in 1905. He merely applied the techniques developed by a Cincinnati meat-packing plant back in the 1870s. Abattoirs have always been at the forefront of trailblazing technology.
“Robots are also coming to our industry, but our heavy reliance on manual labour means we are still very labour-intensive. This explains why we are investing heavily in robotics technology. The entire agricultural sector has been very advanced by putting digitisation to use. Blockchain technology has exciting potential for us by making it possible to link the individual animal to the consumer. Also, we’re currently using ‘big data’ and we’ll be intensifying our use of it from now on.
“The meat-packer of tomorrow will be a robot someday. This will strengthen our competitiveness, which has been challenged by the high level of wages in Denmark. We have the raw materials to make premium products, but high wages stop us from making them. Still, I believe there are golden opportunities ahead.”
Despite these golden opportunities, Jais Valeur still wags his finger at our part of the world:
“Europe isn’t hungry enough. We’re too complacent. Our stomachs are full. We don’t have any reason to go out and hunt.”