June 26, 2011 Savoring Sweet Success

Volume 7 | Issue 1

More than 100 years old, the Germany-based company Zentis expanded from a grocery store into one of Europe’s largest jam and confectionary p

Zentis, an international enterprise that specializes in fruit preparations, essentially got its start from a business miscalculation.

The story begins in 1893 in Aachen, Germany with a grocery store opened by Franz Zentis. “One of the items he sold was fresh apricots and, at one point, he realized he had purchased too many,” relates Norbert Weichele, the chief executive officer of Zentis’ North American operations (Zentis Food Solutions North America LLC).

As the overstocked item was dying on the shelf, the grocer tried to figure out what he could do. Then he remembered that his grandmother had an old recipe for making apricot jam. He used that recipe to effectively deal with the excess. “He created a jam that he sold in his store,” continues Weichele.

The product’s subsequent popularity got the grocer out of a business “jam” that could have cost him a lot of money. Rather, his resourcefulness translated into a prosperous venture. “The apricot jam he produced became very popular – so popular, in fact, that people came from all over Germany to buy the product,” says Weichele.

The tasty jam recipe involved dried apricots and sugar. Indeed Zentis named the product “Famos” – an acronym for Feinste Aprikosen-Marmelade ohne Sirup (“finest apricot jam without syrup). The branded product provided the foundation for a large, successful company. “Eventually, Franz Zentis closed his grocery store and went into retail manufacturing of jams and jellies,” says Weichele. “The company, called Zentis, became to Germany what Smucker’s became to North America. We’re one of the leading jam and jelly producers in Germany. People know the name, and they connect it with our jams and jellies, as well as with the confectionary products we sell in retail markets.”

EXPANDING HORIZONS

As Weichele indicates, “Success led the company into confectionaries, including chocolates and marzipan.” That took place after World War II. The next major move occurred in the early 1960s, when Zentis began directing its fruit preparations toward the dairy industry. “At the time, the company’s then-CEO had a friend who owned a large German dairy,” says Weichele. “He believed that the mixing of our strawberry jam product with natural plain yogurt could create a new product.”

That’s exactly what happened. “The partnership brought the first industrially produced fruit yogurts to the German market,” says Weichele. The Zentis company made the jams, delivered the preparations to the dairy, and then the dairy added it to their own yogurt products. This arrangement led to other business collaborations with Europe’s best-known and largest dairies. “From that initial partnership, Zentis evolved into Europe’s largest business-to-business manufacturer of fruit preparations for the dairy industry,” adds Weichele.

Success provided stimulus for product expansion. Zentis began developing innovative offerings that included fruit preparations for cereals, UHT products for perishable desserts and stable chocolate chips and chocolate-coated cereals. By the 1970s, the company added even more new products to its portfolio including breakfast jam, Aachern plum butter and Nusspli hazelnut spread.

Today, both consumers and businesses are familiar with Zentis’ products. But it was the business partnerships that supplied the company its greatest growth. The consumer portion – those much beloved fruit jams and marzipans – comprise only 25 percent of the company’s business. Now, 75 percent of Zentis’ business relates to the production of business-to-business products utilized by the dairy and bakery industries, according to Weichele. This side of the business includes the fruit preparations that flavor yogurts, cottage cheese, ice cream and many other milk-based products.

BUSTING BORDERS

Still headquartered in Germany, Zentis supplies almost all major European dairies and boasts the largest market share for fruit preparations in yogurt and cottage cheese as well as other related desserts and bakery products.

Inevitably, company success led to operational expansion, which took Zentis across national borders. In the late 1990s, Zentis established a Polish subsidiary. In 2000, it moved into Hungary. Both operations manufacture fruit preparations for dairy and bakery industry partners. By 2003, Zentis formed Zentis Russia LLC, to reach new customers in Eastern Europe. “From Europe, we were selling to countries all over the world,” says Weichele.

But by 2006, Zentis felt compelled to enter North America. The strategic move was directly related to yogurt consumption. Weichele explains, “About a year earlier, we realized our European markets were slowing down in that they were no longer growing at the rate we, as a company, wanted to grow. Europeans consume a lot of yogurt – at a level four times higher than in the United States – so we realized European growth opportunities were becoming limited. Thus, we started looking to other countries and world regions. We realized the North American markets offered a lot of opportunity.”

NORTH AMERICAN SETTLEMENT

In 2007, to engage the North American market, Zentis purchased an existing building – the Ready Pac facility located in Plymouth, Ind. – to serve as the center of its North American business activities. “We invested a double-digit million-dollar amount into the facility’s remodeling,” recalls Weichele, who was appointed by the company as chief executive officer and general manager of Zentis Food Solutions North America LLC. Before he joined Zentis, Weichele worked for major international consulting companies, doing board-level consulting for Fortune 500 companies on corporate finance and strategy. His activities garnered him significant insights into the automotive, high-tech and food industries. Impressed by his experience and accomplishments, Zentis recruited Weichele to be part of the North American leadership team.

After the extensive facility remodeling, Zentis North America opened in 2008. The company’s perceptions about potential growth proved correct. “We began with 40 employees and now have more nearly 250 employees,” says Weichele, who has lived in South Bend, Ind. since 2007. “We make deliveries throughout the United States, serving almost all major brands in the nation. As we’re a business-to-business enterprise, we’re not involved in the retail market; rather, we deliver our products to our large customers’ manufacturing facilities.”

As such, the North American operation handles all supply chain matters – everything from fruit sourcing to finished product packaging and distribution. Similar to what its parent company accomplished in Europe, Zentis Food Solutions North America has become a successful and highly regarded processed fruit supplier for its industrial customers – a dependable and innovative partner-supplier, serving the U.S. dairy, bakery, ice cream and beverage industries. It managed to firmly attach itself to these key industries via product and market knowledge, expertise, innovative production technologies and adherence to the highest quality standards. The North American operation also focuses on research and development, helping partners meet their product requirements and objectives.

PHENOMENAL GROWTH

Since establishing its Indiana subsidiary, the North American operation has witnessed substantial growth. “We’ve been growing at a rate of more than 100 percent each year,” says Weichele.

That’s on average, as things slowed down a bit with recent economic circumstances. “But business has picked up in the last 12 months,” says Weichele. “One of the reasons is that our area in the food industry managed to remain, for the most part, unaffected by the recession.”

That area includes the yogurt industry, which takes in Zentis’ largest customers. “The U.S. yogurt industry continues witnessing increased per-capita consumption each year,” says Weichele. “In the United States, people are starting to eat more yogurts.”

Increased consumption relates to yogurt’s versatility. “We’re seeing new ways that consumers eat yogurt, such as dessert yogurt and Greek-style yogurt,” relates Weichele. “Also, yogurt fits into the trend toward better health and nutrition which we’re seeing among many U.S. consumers.”

Right now, Weichele says, yogurt represents a “sweet spot” in the food industry, and Zentis is savoring its global and U.S. market positions.

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