March 26, 2009 Chicken Tenders

Volume 5 | Issue 1

As the world’s largest exporter of chicken, Brazil produced 12.5 million tons of meat in 2008, and the figure is rising. Over the last 25 ye

Today, Gujão Alimentos, based in Brazil’s Northeastern state of Bahia, manufactures three brands of chicken: Gujão, Frango Bahano and Frango Gostoso. The company was created in 1984 when two partners began rearing and selling chickens for local stores. The name ‘Gujão’ is the fusion of the founders’ names: Guto (Carlos Augusto) and João.

Gujão grew successfully, averaging 30 percent growth from 2000, and concentrated on the vertical integration of its operational processes. The current Commercial Director Dario Mascarenhas Oliveira explains that now “the six areas of production: eggs, chicks, chickenfeed, rearing, slaughter and processing, are all carried out by Gujão.” The expansion of the company led to the creation of a group, dividing these stages between four companies. In 2008, Gujão also acquired a pork producer, adding a further product line, Saborito

EXPANDING INFRASTRUCTURE
The frozen chickens are all produced at the company’s premises in Conceição da Feira in Bahia, whose structure houses five million birds and is currently undergoing considerable expansion. The main building has the capacity for 90,000 birds (60,000 are used for laying) and produces 450,000 eggs a week. The hatchery can hatch up to 550,000 eggs a week, and according to Oliveira, this will rise to 625,000 by the end of the year. In the abattoir, present investments are estimated to increase the number of birds processed per day from 45,000 to 80,000 by the end of the second quarter, and to 150,000 by the end of 2010.

The reason for such impressive growth lies in the organizational structure of the group. The operational technology used by Gujão is standard to the industry, but a system of integrated suppliers boosts productivity. The Associação de Parceiros Integrados (an association of partners) rears chickens exclusively for Gujão, providing their own infrastructure and labor, but receiving chickenfeed and support. Financing for these 200 partners is provided through the company’s agreements with banks, allowing them to concentrate on effective production. “The partners are remunerated according to the results they achieve. This ensures that the birds meet our standards and acts as an incentive to maximize productivity,” explains Oliveira.

This system has not only been an important catalyst in the growth of the company, but also created even more jobs in the region.

At present, Gujão only supplies the state of Bahia. “In Bahia the demand for chicken greatly outweighs the supply. In 2008, the state only provided 70 percent of the total consumption – so we still have space to grow,” says Oliveira. Despite continued local opportunity, with significantly increased productivity, the company also plans to expand into other Brazilian states, as well as initiate exports by June 2009.

TRADITIONAL FAVORITE
Among the three product ranges, Gujão offers separate chicken pieces, including legs, wings and breasts as well as whole chickens. The most popular product is the whole seasoned chicken, which accounts for approximately 70 percent of total sales. “Cuisine in Bahia is not as developed as other states in Brazil. Consumers here prefer the whole chicken, not pieces, which are more popular in São Paulo and the south,” says Oliveira. When Gujão produced organic chicken, the increased production cost, which was reflected in the shelf price, meant that sales were disappointing. “Our traditional, ‘no frills’ chicken is our success,” confirms Oliveira.

In spite of the initial interest in providing an organic line, the commercial director dispels myths that mass-produced chickens are chemically treated. “The creation and evolution of our birds is completely natural,” he says. The taste and quality of the meat comes from the careful composition of the feed, which is made of corn and soy with added vitamins, soy bean oil and meat protein (a byproduct of the production process). Gujão produces all of its own feed, allowing it to adapt the ingredients. Temperatures inside the chicken houses can reach 45°C in summer, requiring adjustments in the birds’ nutritional balance.

Another advantage of supplying its own feed is that Gujão is not so vulnerable to the market. Despite fixed contracts with trusted suppliers, the costs of the commodities, corn and soy are subject to fluctuations, caused by changes in harvest and economic problems. The company’s facility produces 80 tons of feed per hour and has storage capacity of 10,000 tons, equivalent to a month’s supply, and a safety measure, should the market change

QUALITY CONTROL
The quality of Gujão’s products is also guaranteed by the application of rigorous safety and hygiene procedures as asserted by the Brazilian Ministry of Agriculture. Temperatures at the treatment plant and during transportation are carefully controlled. The company’s quality control department monitors the entire production from the egg to delivery, operating a registration tracking system, which even traces the origin of the chicken (whether from on-site production or an associate partner).

Gujão has its own fleet of 78 transport vehicles, comprising trucks for the transport of grain, corn and soy as well as refrigerated trailers, which maintain temperatures of -18°C for the delivery of the frozen chickens. As with production at the facility, all stages of transportation are operated by Gujão. “We guarantee consistent efficiency and quality, and don’t rely on third parties. It is a very competitive industry and we have to compete on all levels,” explains Oliveira.

The industry has suffered at the hands of some producers adding water to frozen products to increase weight, and apparently offering competitively priced goods. At Gujão water content is minimized, respecting the consumer and fair trading standards. The company’s research and development department works closely with quality control to understand current market demands and changes, so that sizes, cuts and portions always satisfy consumer needs.

FAITHFUL CUSTOMERS
“We value our customer loyalty very highly, and pride ourselves on lasting relationships,” says Oliveira. Recent increases in productivity are also good news for the consumer, as they will result in the same quality at lower prices. Together with effective logistics and the varied range, Gujão is stiff competition.

Customer loyalty is key to the company’s success. Although chicken consumption is rising in Brazil, so too is the number of producers. “Chicken has become a commodity,” confirms Oliveira. Competitors who export in large quantities have been affected by the crisis in the world’s economy and have had to try selling excess goods on the domestic market, due to decline in overseas sales. This causes market saturation in states like Bahia. Gujão’s aggressive expansion strategy, coupled with its strong position in the state, have prepared the company for these changes.

From humble beginnings, Gujão has achieved incredible growth. The company has implemented a highly efficient organizational structure and in 2009 will not only increase production, but expand into new markets both in Brazil and abroad. Despite glowing future prospects, the Gujão group continues to nurture its existing business, providing traditional quality to its valued customer.

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