14 May Interview with János Ruck, CEO of Gallicoop, Hungary
BF: Gallicoop was founded 33 years ago. Can you give us a quick overview of the company and its story: how has it grown and developed over the years and how does it stand out in the local/European poultry market today? Please provide some recent facts and data to illustrate the current importance of the company (production volume, processing, turnover, etc.).
János Ruck: Hungary has always been at the top of the list of turkey-consuming nations. The ever-increasing demand for turkey meat led to the creation of the legal predecessor of today’s Gallicoop Turkey Producing Plc. in the 80s. The Szarvas-based enterprise, which initially operated solely as a slaughterhouse, was founded in 1989 as an Anglo-Hungarian joint venture with HUF 40 million in share capital, and then became privately owned in 1995.
In the last 31 years, the company has gone through a huge change in terms of both its activities and structure. The slaughterhouse capacity increased year by year, so the yearly turkey slaughtering increased from the initial 1,700 tons to 39,000 tons per. The owners have also developed the core business.
As Hungary’s market-leading poultry industry company, the journey of Gallicoop’s own products is now “from the field to the table.” The company itself controls every work phase, from the rearing, processing, and packaging of the turkey until the final product is placed on the market. With four plants and seven subsidiaries, the currently $215 million company is the largest closed integration company in the country. The coordination of 3 million independently produced turkeys and their processing provides plenty of tasks but also a secure background for nearly 1,500 employees.
BF: What are Gallicoop’s main and most popular products at the moment? How diversified is your portfolio and how does it adapt to consumer needs and market trends? How are Gallicoop products developed?
János Ruck: Today, Gallicoop as a company and brand name stands for reliable, healthy, and quality products. In addition to fresh turkey meat, it’s offering a wide range of high-quality, modern products intended for direct consumption. The product range consists of sausages, hams, cold meats, and liver, cooked, smoked and dry goods, as well as breaded products. The new packaging center was completed in 2018. With the equipment and technology acquired under the project, the company became capable of manufacturing products with a high processing level, thus moving forward in the production value chain. Turkey consumption has increased in recent years, thanks to the widespread sharing of turkey-related benefits among consumers. This type of meat has a high protein content, easily digestible and hypoallergenic, making it suitable for a wide range of applications. The unique feature of turkey meat is that it can be used in recipes that require red or white meat. Its consumption can be beneficial for everyone as it has a most favorable protein-fat-carbohydrate-energy ratio, low calorie content, and high nutritional value. Evolving buying and cooking habits are being monitored through various research studies. In terms of consumption patterns, there is clear evidence that we are spending less time in the kitchen. On the weekend, the long hours cooking in the kitchen are replaced by more quality time spent with family. The demand for high-quality products that can be prepared quickly has increased, so our product developments are also aimed in this direction. In response to the large increase in prices, customers are also looking for more affordable products.
In recent years, at the owner’s request, Gallicoop created its own brand. When developing the Gallio product line, we prioritized healthier, more conscious nutrition, and this is the direction we will continue in our work. Our new products can be included in most diets without compromise, so they also meet the latest trends in all respects. The building of the brand ‘Gallio’ was completed in record time, as the product development work began at the beginning of 2021, and the design of the brand name, packaging, as well as the design of various advertising campaigns went on in parallel. On September 1, the varied, new products were already on the store shelves. The campaign was so successful that the Gallio product line received the Gold and Black Dolphin awards in Cannes with its ground-breaking commercials.
BF: How does Gallicoop ensure quality standards, from breeding to the production chain? How do you guarantee total food safety for consumers?
János Ruck: With the establishment of Gallicoop Turkey Processing Ltd., an effort was made to create a complete, closed integration. Keeping the integration in one hand made it possible to standardize the processes and monitor them, from livestock production to meat product manufacture. The integration includes activities related to hatching, rearing of parent pairs, pre-rearing, fattening, butchering of live animals, and the production of turkey meat and meat products.
The company has been operating quality management systems since 1996; firstly, a quality management system according to the ISO 9002 and then ISO 9001 standards, and then, keeping up with the needs of the market, it introduced and currently operates food safety systems according to the BRC and IFS standards. The company’s management could only imagine the production of quality and safe food in such a way that it would not burden the environment. Since 2003, it has been operating its environment-oriented management system according to the ISO 14001 standard and contributes to the conscious protection of the environment and to ensuring sustainability with continuous improvements.
The proper operation of the introduced standards is checked by an internationally recognized certification organization (SGS) with regular audits.
We ensure complete food safety for consumers through the continuous development of our systems and the high level of commitment of our managers and employees.
BF: Overview of Gallicoop’s exports: What is the share of exports in your total turnover, and which are the most important export markets at the moment? Moving forward, how are you working to expand your sales network and develop new partnerships?
János Ruck: Gallicoop previously sold most of the products to large corporate groups, to gastro and processing plants, and was not able to take full advantage of the opportunities arising from changing consumer habits. The first challenge of the new management and ownership group was to change this by restructuring the existing market. Work on exports has been expanded, with deliveries to more countries, and this time also to the retail sector.
39% of sales revenue comes from exports. We are proud that Gallicoop’s products have already reached Italy, England, Ireland, France, Germany, Portugal, Serbia, Japan, Hong Kong, and Singapore, but we also give priority to nearby markets, such as Austria, Croatia, and Romania. For Gallicoop, exports are of fundamental importance, since the 10,000 tons of turkey breast produced by the company can mainly be sold on the export side. We are planning market expansion in the direction of France and Indonesia, and we would like to open up in the South Korean market, which is currently difficult due to the near constant bird flu.
BF: Over the years, Gallicoop has made significant investments in its facilities. Could you provide a snapshot of the latest, current, and upcoming development projects in progress, your expansion plans, and the next planned investments? How modern and efficient are your facilities, and how integrated is your company today? How will the following investments help meet sector demand?
János Ruck: Innovation in Gallicoop’s life has been mostly in the continuous improvement of its operations. From the beginning, the plans included the production of preparations; the necessary technology and machinery were set up in 1996. The next decisive development was the construction of the breading plant. The plant was first set up for the production of semi-finished products, but due to the new food safety aspects, it was also supplemented with two ready-to-eat baking lines. Expansion and innovation are taking place in several areas of our plant.
Among the developments currently in progress, I would like to highlight our investments resulting in a reduction in energy consumption, such as the purchase of waste heat recovery equipment, water-saving equipment, and high-efficiency cooling technology equipment. Our goal is to further increase our renewable energy production systems. In the case of our buildings, we plan to improve their thermal technical properties, and since a significant part of them were built at the time of establishment, investments in condition improvement are also necessary every year.
Our processing equipment is the most modern products of market-leading machine manufacturers. We follow the change in demand by acquiring special machines, such as the offal leveling machine line that was installed last year, as well as the ball forming machine line with which our new, premium Gallio breaded filled and unfilled meatballs are made.
BF: What was the impact of the company’s buyout in 2020? What has changed in Gallicoop?
János Ruck: In 2020, the shares of the former family business were purchased by three domestic private equity funds, thus opening a new chapter for developments and domestic and foreign market growth. Gallicoop continues to operate under the professional management of the Talentis Agro group, thus being integrated into one of Hungary’s largest 100% Hungarian-owned agricultural and food industry groups. Its portfolio includes a number of agricultural companies with a long history and historical traditions, as well as plants producing raw materials for the food industry and consumer goods. This change brought new momentum, placing Gallicoop’s activities in a completely different dimension. The primary plan was to deal with increasing the added value of the products in addition to increasing the volume, so we will continue this work, and, of course, further developments are expected.
BF: Environmental sustainability: how does Gallicoop take care of the environment? How important is green farming and animal protection?
János Ruck: In the spirit of responsible corporate operation, Gallicoop attaches great importance to the principle of sustainability. During the compilation of the production technology, the company made it a priority to collect by-products not suitable for human consumption, for instance the slaughtering and processing of the turkey in a closed system in a manner that excludes environmental pollution and hands them over to the protein processing plant. The transferred by-product is used to produce a valuable raw material for feeding pets.
The food industry, and poultry farming and processing within it, has a significant impact on the environment, which is why the company emphasizes the use of environmentally friendly solutions in all areas of its operations. We have our own biological sewage treatment plant, so the sewage does not leave the area of the site, and this reduced the load on the city’s sewage treatment plant by a third. The plant also has its own water base; seven deep wells operate at the central site.
Hungary’s largest and most modern biogas plant was handed over in 2011. Gallicoop Plc. also played an active role in the investment consortium. As a result of the investment, nearly 25% of the cold energy used at the company, and 100% of the steam and hot water for heating, are produced from renewable green energy. The solar park installed on the roof, completed in 2021, replaces 10% of the company’s current electricity consumption with renewable solar energy. In addition to the development of existing machines and technologies, the modernization of turkey farms has also begun.
BF: How does the Hungarian poultry industry stand out today? What are the main trends, challenges, perspectives, and opportunities in the Hungarian poultry industry at the moment? How has the war in Ukraine, bird flu, the energy crisis, the inflationary situation, and supply chain disruptions affected the sector? How is Gallicoop adapting?
János Ruck: Today, all operating businesses, especially those of the production type, are facing difficulties. The bird flu has been perhaps the most serious problem for European poultry farming and processing for years. In the case of the turkey stock kept at our own farms, greater control can be maintained, so there was no drop in the production volume. We are trying to reduce rising energy prices with renewable energy. The shutdown of factories based on Ukrainian crop production had a serious impact on the procurement of sunflower oil. For the thousands of tons of breaded products, we use 50,000 liters of sunflower oil per month, the price of which is constantly rising. During the examination of the substitute materials, none of them provided the previous quality that customers were accustomed to, not to mention that their prices had also increased in the meantime. This is how we stayed with the previously proven raw material; but acquiring the necessary quantity requires careful, long-term planning.
In recent years, poultry farming has benefited from the fact that larger company groups have joined the sector in terms of increasing competitiveness. Instead of the usually used quarterly financial reports, the monthly review of our controlling department provides an opportunity for an immediate reaction, so it can be said that the Gallicoop group is a reliable partner, providing a reliable background for all its employees and their family members. Flexibility is a competitive advantage, and the Gallicoop group has adapted well to the situation. Taking advantage of the opportunities arising from changing consumer habits, the market segment we have served up until now has been revised and reshaped. In the course of our significant exports, we reach not only large processors, but also retailers. The stability of our processes is made possible by mechanized and automated systems at several points, as well as by a reliable workforce. We help our employees with various non-salary benefits, incentives, partner discounts, contributions to hot meals, and, for families, school enrollment and extraordinary utility support. In general, it can be said that the year 2022 resulted in changes of such a magnitude that it perceptibly shook several companies in Hungary. The consumer market has changed, but the Gallicoop group responded to the changes in time and successfully maintained its position.
BF: Do you have a final and direct message for USA Today readers?
János Ruck: In our changing world, I consider human relationships and connections to be important: the short, but not at all superficial, conversations with colleagues every day, and the meaningful time together with friends and family at the end of the day. The family has a special role, as it passes down its values, norms and, last but not least, its eating habits through generations. As is typical for Hungarians, next to the table spread with delicious foods, a family story or a more special recipe will soon come up which is worth paying attention to. In the past, people used to sit around the fire, today this warmth is provided by the kitchen, whose power to hold families together is indisputable. Let’s cook and have good conversations to fill our days with content.