Nestlé manager Luis Cantarell talks food
Luis Cantarell: "Let's make the cake bigger!"
This follows a long management career that has included stints at the Swiss food giant's Nutrition and Health Science as well as Coffee & Beverages units.
Men are always the sum of the things they have met, but Cantarell would probably be the first to agree that his three years as head of Nestlé's "Zone Americas" from 2008 to 2011 were particularly formative.
The polyglot executive has now returned to Old Europe, but remains impressed by the optimistic "can-do" attitude he encountered in American business circles. And a man who can make informed comparisons on a global scale is inevitably a man with attitude.
Cantarell also has something to say about saturated markets, international retailer alliances, and Wagner pizza at Aldi.
"There is no such thing as a saturated market"
There is no such thing as a saturated market. If a market is saturated, then it is no longer a real market! If you do a good job, there are still great opportunities to grow in every European country, including Germany and France.
Innovation is always the key driver of growth, and this is something which the European Union should look into further.
Could you give some examples?
The best one would be Nespresso, which was developed and launched in Europe. Nescafé Dolce Gusto went from nothing to nearly €1bn in annual sales in only eight or nine years and created more than 5,000 jobs in Slovenia, Germany, Spain, and the UK. This proves that we can still develop initiatives from scratch.
Nescafé Dolce Gusto helped strengthen the future prosperity of our main factory in France, in Challerange, which was only making coffee powder before we produced Nescafé Dolce Gusto capsules.
In what other product categories does Nestlé still see future growth in Europe?
You can grow in any area where you can show innovation.
Pizza is also doing quite well as are some new confectionery products. As regards culinary products, you have to look more on a market by market basis.
Obviously, however, there are categories that are easier to innovate than other ones.
That is putting it mildly. It took you decades to achieve a breakthrough with pet food in Europe. Nestlé also threw in the towel when it came to Alete. Why was that?
Purina pet food is obviously a great growth engine with a lot of innovation and new products. Infant nutrition is also an area of growth.
However, we also have categories in regions, which have not been as successful as we would have supposed. One area was our inability to grow a brand like Alete in Germany, which is why we have now found a buyer.
How about frozen food? You were very interested in Coppenrath & Wiese, but you didn't buy it...
I think frozen food is generally a difficult market, but there are areas such as frozen pizza, for example, which represent very good markets.
A propos frozen pizza, Aldi is now marketing your big "Wagner" brand at a trial price of €1.69 instead of the standard €2.69. Doesn't that worry you?
Of course I am aware of this, but I am not directly involved.
Dealing with hard discounters in Germany and elsewhere is part of life, and we do the best way we can. German discounters have been a real wake-up call for the trade because they are so efficient, and with efficiency you are able to command good prices.
We like to work with everybody, provided we never jeopardize the quality of our brands.
Would you say that it is a triumph for manufacturers that even Aldi, after 40 years without almost any brands, has now concluded that they need them after all?
I think brands have been successful in demonstrating that, at the end of the day, choice is important. We have no problems with private label, but as a consumer I would prefer to have some choice.
Is there anything on the horizon that would have the potential to be as big a game changer as Nespresso?
It would certainly be very difficult to replicate the Nespresso success story, as much as we should like to. Even when we started with Nespresso, we never believed that it would rocket in the way it has.
Our objective is to constantly strive to find big innovations that will delight consumers. Let us start, work, test, experiment and invest in order to create a good product.
This requires absolute assurance on quality, a clear technological advantage, and a mind-set which is determined to go beyond where you are at present. Even then, some markets will only rise gradually and others more steeply.
It is striking how many big western European retailers have formed new international buying groups recently. Does Nestlé feel threatened?
We don't have any issue with retailers who form groups to work together. That's fine by us as long as they deliver good value.
To be honest, we at Nestlé are not going to be the ones that suffer the most from this. I think that the authorities in Brussels need to be more mindful of the threat to SMEs.
I am in favour of competition, but it must be fair and it must create value-added. Above all, demands for better terms & conditions must have a logical justification in terms of benefits and not simply be another means of exerting pressure.
But as far as we understand, retailers are not always fair when they negotiate...
We should far prefer to collaborate with retailers than be in confrontation with them, because it gives both parties more.
I am always surprised about Europe in comparison with the job I had in the Americas, where the general motto was: "Let's make the cake bigger!" Here many people seem to start with the idea that the cake will be smaller. Even when the cake is not yet out of the oven, one is already discussing its being smaller and what piece one would like to have!
Why don't we sit down instead and try to make a bigger cake? Then the discussion about the piece one gets is less relevant. Surely European retailers and suppliers can work together in a collaborative way in order to create more value for both parties?
You are also responsible for the Middle East and North Africa. What developments in these regions could make a positive difference to your core business in Europe?
Our businesses there have always been successful, but I believe that in future there will be an even greater interchange between North and South as regards products, ideas, innovations, and people.
There are many reasons for this. Just think of the 20m people in the first and second generation in the EU whose families originally had roots in North Africa.
As people travel more and become increasingly open culturally, Lebanese, Moroccan or Turkish cuisine etc. is becoming increasingly popular. You can see this with couscous, for instance, in France where there is a big Moroccan community.
Are you strong enough in those southern regions to really benefit from these trends?
We already have an excellent infrastructure with around 20 manufacturing plants, and annual capex in building and renovation exceeds €100m.
For instance, we have a coffee roasting plant in Morocco, a Nesquik filling line in Algeria, and a big ice cream factory in Egypt, as well as a water and food plant in Iran.
Does your presence in the South provide you with ideas to develop ethnic foods for European markets?
To an extent, but don't forget that we already have a significant business in ethnic foods from south-east Asia, Africa etc. Some of them are even produced in Europe to local recipes, and we plan to significantly accelerate their manufacture.
Last but not least, do you have a personal business philosophy?
My personal motto when it comes to my new zone at Nestlé is: "Any change is a value-creation opportunity."
Related article in German: Interview by Christoph Murmann in Lebensmittel Zeitung, no. 35, 28.08.2015