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Frosta to burnish business with €45 million investment

Along with focusing on integrating the newly acquired Italian business, Frosta will also invest in increased capacity, efficiency and quality in 2018.

Bremerhaven-based frozen processor Frosta is looking to invest around €45 million ($55.6 million) into growing its business this year, after sales of branded frozen fish products increased more than 50 percent in 2017, the company’s head of operations Jürgen Marggraf told IntraFish.

Overall last year the company saw turnover climb 7.5 percent to reach €501 million ($618.8 million), while net income after taxes hit €23.4 million ($28.9 million), up from €21.6 million ($26.7 million) the previous year.

Frosta turns focus to growing its brand

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Frosta's own domestic brand grew 13 percent and was the main driver for the growth. It was also the fourth year in a row the brand saw double-digit growth.

During the year Frosta acquired Italian frozen food brands from Nestlé Italiana. The deal included the commercial business and trademark rights for the frozen brands 'La Valle degli Orti,' "Mare Fresco" and "Surgela" for the Italian market. It also included a multi-year license agreement for various Buitoni branded frozen ready meals in Italy.

According to the company’s latest results, the acquisition of the La Valle degli Orti brand boosted sales by €15 million ($18.5 million).

“The acquisition of the Italian frozen business from Nestle was a big step and now we have to integrate this,” said Marggraf.

The company took over all sales activities from Jan 1, 2018, following the end of a co-operation agreement with Nestle which ran out at the close of 2017.

“Now we take over and have to integrate, and this will be enough challenges for this year as it is a business of between €30 million ($37.1 million) and €40 million ($49.4 million),” he said.

“For this year, frankly speaking we have enough challenges and work. Nobody knows if there is another opportunity in the market, we will have to check.”

Frosta is planning to develop new products under the acquired brands, with a focus on vegetables and ready-meals, and later fish. The company already started building and marketing its Frosta brand in Italy, Marggraf said, where the main focus is on fish.

“Of course on the sales side we are merging the businesses. What we bought from Nestle is mainly vegetable brand - "La Valle degli Orti" – but we also have ready meals under the label Buitoni and we can use this brand for some years, which is still owned by Nestle.

“Then we are also starting to make a co-branding between Frosta and 'La Valle degli Orti and – if you think 10 years ahead – maybe we will be only under the label Frosta.”

Increasing capacity, efficiency and quality

Despite the hefty investment in 2017, the company is still also planning a “relatively high investment plan” for this year, of around €45 million ($55.6 million) with a focus on “increasing capacity, efficiency and quality,” said Marggraf.

“We will be investing further in production lines, which is also a little related to the purchase of the Italian business. Then we can produce more by ourselves in our plants.

"So we are investing in production plants for vegetables, ready meals, and we are also going to do a little bit of an extension on the fish line in Poland.”

Frosta’s current business is split roughly with around 50 percent in fish, 25 percent in ready meals and 25 percent vegetables and is involved with both private label and its own branded products.

The company also currently exports to -- and is growing in – Poland, Austria, Switzerland, Eastern Europe, the United Kingdom, Benelux countries and Spain.

“The Frosta brand we are aiming for the whole European market, step by step, but it’s in our strategy to be in more countries,” said Marggraf.

Frosta is coming from a background of private label but for the last 20 years has been developing its own brand. However, despite the strong growth in its frozen business, Frosta has no intention of losing its roots in the private label business.

Branded fish sales boost Frosta's results

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“We’ve been trying to grow it because the turnover is more constant if you have your own brand and if you have just private label business you can be substituted by your competition so not as stable,” said Marggraf.

“On the other hand we want to have both segments and make money in both segments. Currently we have more chances to grow in the branded business but that doesn’t mean we don’t want to do private label. We want to have both and grow in both segments – of course the focus is currently on the branded business.”

Frosta’s main competition in Germany is Iglo which is a much larger brand, but German shoppers like to have alternatives so Marggraf sees “lots of opportunities” to grow the branded range even further both in volume and assortment.

“We have to offer basic products such as fish fingers, schlemmerfilets, portion fillets and of course we are also testing new products and bringing new innovations to market – breaded shaped portions are really booming.”

Although in general in Germany the frozen fish market is on a downward trend, this is mainly for fillets and “very simple products without added value,” said Marggraf.

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