May 26, 2012 Full Integration

Volume 15 | Issue 2

Nutriza may not be the biggest producer of poultry products in Brazil, but it’s recognized as one of the best – not to mention one of the mo

It’s common for poultry producers to boast vertically integrated operations consisting of hatcheries, breeding farms, abattoirs, and processing plants, not to mention feed mills and transportation fleets. Nutriza, however, can lay claim to being more vertically integrated than most of its competitors, not only in its home country of Brazil, but around the world as well.

“We’ve been in activity for 16 years now and during that time we’ve seen the Brazilian poultry market experience many highs and lows” says Giuliano Tomazini, managing director of Nutriza. “No matter what agricultural segment you’re involved in, you have to be efficient in order to navigate the crises. The more vertically integrated your operations, the easier it is to do this. Nutriza is involved in every step of the food production process, from the planting and storage of soy and corn used in our feed mills to the arrival of fresh or frozen chicken on consumers’ dinner tables. Such a degree of integration is rare in this industry, and it definitely gives us a competitive edge both in terms of quality control and costs. It’s also essential to our continued growth.”

CONSTANT INVESTMENT AND EXPANSION
In truth, growth has never been an issue for Nutriza. Founded by the Tomazini family in Pires do Rio, Goiás, a Central-West Brazilian state that is one of the driving motors of the country’s booming agri-business segment, Nutriza Agroindustrial de Alimentos S/A began life as a chicken slaughterhouse. When it first started out, in 1995, the fledging company was processing 30,000 chickens a day. Within a year, it had doubled its output and by 1998, production capacity had already surpassed 90,000 chickens a day.

That same year, the company branched out into the processing and packaging of its own poultry products with the launch of a new brand: Friato. To reinforce the quality of Friato in the marketplace, Nutriza invested in its own hatcheries, thus guaranteeing the provenance of its chickens. It subsequently acquired feed mills and breeding houses as well.

Today, Nutriza’s hatcheries boast a production capacity of 78 million chickens a year. In a month, it produces 30,000 tons of feed and 8 million fertile eggs. And in a day, it possesses the capacity to slaughter 210,000 chickens and produce 85 tons of processed poultry products. Friato’s innovative and extensive mix includes both fresh and frozen chickens, sold whole and in various parts and cuts (breasts, drumsticks, wings, hearts, filets), as well as an extensive line of industrialized products such as sausages, hams, cold cuts, and hot dogs.

Meanwhile, convinced that it still has plenty of room to grow, Nutriza is currently in the midst of carrying out a major expansion of its production facilities. It just inaugurated a state-of-the-art bromatology laboratory and is in the midst of constructing a microbiology lab scheduled to be finished by 2013. The sum total of all these investments exceeds R$75 million (US$44 million). When all projects are completed, in 2014, production capacity will surpass 300,000 slaughtered chickens and 200 tons of processed poultry a day.

INCREASING QUANTITY – AND QUALITY
“The world population is growing and so is purchasing power in many developing countries that, like Brazil, are now emerging economies,” points out Tomazini. “As a result, consumers are buying more food, including chicken. They’re also becoming more demanding regarding the types of food they purchase. The challenge for us is to develop high quality products, in increasingly large quantities, at costs that are compatible with those in the markets in which we operate.”

The majority of Friato products are commercialized domestically. Although the brand is present throughout most of Brazil, the company focuses most of its attentions on the growing markets of the Central-West, North-East, and North regions of the country whose proximity to Goiás facilitates logistics while giving Friato an extra edge against its many competitors based in the Brazilian South and South-East. Since 1999, when it first began exporting chicken to Hong Kong, the company has also cultivated a global presence as well. Today, around 18 percent of its revenues are derived from sales to countries in Africa, Asia, and the Middle East as well as Russia, despite the fact that protectionism and fluctuating exchange rates (specifically the highly valued Brazilian real) have made exports a challenge in recent times.

Fortunately, the domestic market is booming like never before due to the rising income levels of traditionally poorer Brazilians. This surge in consumption has triggered healthy growth rates for Nutriza, which has seen business increase by annual rates of 10 percent over the last several years. In 2011, the company earned R$450 million (roughly US$262 million) and Tomazini estimates that the company ranks around 18th in terms of market share in the poultry segment.

Friato ranks even higher in terms of quality as evidenced by the number of distinguished awards it has garnered in recent years. In 2011, Nutriza was honored as Best Company in the aviculture segment by Globo Rural magazine. It was also ranked as one of the top 14 aviculture companies in the annual ranking of the top 1,000 Brazilian businesses compiled by Valor Econômico, Brazil’s most important economic journal (the equivalent of The Financial Times).

Tomazini cites many reasons for the recognition the company has received, one of which is its strong commitment to its team of collaborators. “Qualified labor is becoming increasingly scarce, in all sectors of the Brazilian economy,” he confesses. “For this reason, we’re investing heavily in automated processes, but we also put a lot of effort into management, training, and human resources.” Such efforts range from rewarding employees for strong performances to offering benefits such as health plans and collective transport. The goal is to make sure that all Nutriza employees – which total 5,000 (2,500 of whom are employed directly) – are not only highly competent, but highly motivated by the work they do and the contribution they are making to the company’s success.

In the end, Nutriza’s focus on people is part and parcel of a larger, all-encompassing philosophy that prizes simplicity above all else. “We strive to keep our operations as simple as possible,” admits Tomazini. “This means not carrying any debt, simplifying our logistics by relying on agricultural suppliers located within a small radius around us, and focusing on the here and now. Ultimately, we’re a family company that prides itself on transparency and flexibility. No matter what day-to-day problem crops up, we have the agility to immediately fix them. Instead of making long-term plans for the next 10 or 15 years, we never look beyond the next five years. In this sense, we’re very realistic. Our goal is to work always in the present. By accomplishing things today, we can shine tomorrow.”

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