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“Autumn wave of price increases will be the first big shock”



The guest of the podcast Heart Beats for Business is Enzo Smrekar

The guest of the eleventh episode of the Heart Beats for Business podcast is Enzo Smrekar, CEO of Atlantic Droga Kolinska, Vice President for Delicatessen Spreads, Donat Mg and Internationalization at Atlantic Grupa.

Droga and Kolinska merged in 2005, five years later the company was taken over by the Croatian Atlantic Grupa, its largest shareholder and majority owner is Emil Tedeschi, one third of the group is owned by pension funds. Atlantic Droga Kolinska has many (Slovenian) traditional brands under its auspices, employs 500 people, and about 200 of them still work in distribution.

In the podcast, Enzo Smrekar answers questions about food and energy value, inflation, exports, added value, employees, sustainability, leadership and authenticity, some ideas from the coalition agreement and sports (he is also the president of the Ski Association). He describes himself as a morning man, four to five hours of sleep is enough for him, he is at work at seven, but he does not have a routine schedule. He is constantly in the rhythm of life and the flow of thought, which intertwines intense professional and active private life.

One of the most worrying trends, including in the food industry, is rising prices. Slovenia records 8.1% annual inflation. The reasons are well known: the war in Ukraine has joined the stalemate in product supplies. Compared to last year, coffee as a raw material is 90% more expensive this year, and vegetable oil by as much as 200%. If Atlantic Grupa were to transfer the prices of energy, food, transport and labor to the final prices of its products, it would raise them by 40%, which would be a huge pressure on inflation and purchasing power. As a result, the food industry, together with retailers, is self-limiting, and a large part of the increase is passed on to its own added value and profitability.

What are the predictions regarding the nutritional value by the end of the year and next year?

Prices are not slowing down, the bigger challenge is to provide raw materials, says Smrekar. By reducing the quantities of Russian and Ukrainian cereals and products, some other exporting countries also began to block exports and create domestic reserves. Quite a few industries have not yet completed contracts and resources for the last quarter of this year. It is not known whether there will be enough aluminum, plastic, glass. The main concern is to provide materials for fabrication. Market conditions are also likely to be exploited by speculators. “Forecasts for next year are not going down. I think next year will be extremely difficult. After all, we must be aware that quality, healthy, organically grown food will not be cheap in the future. And here in Slovenia we have to deal much more with We see that dependence on the outside world can quickly get complicated Believe me, when the shelves start to empty, consumer sentiment quickly changes. one bottle. For now, it’s at the “please” level… when the shelves start to empty, a serious problem arises. “

Atlantic Droga Kolinska imports more than 90% of its raw materials, including from Italy, Germany and Austria, as well as from global markets (coffee, tuna, aluminum). For the same categories, it has several suppliers to manage risks. However, the costs are rising: “If earlier the transport of one truck to Russia cost us around 1,500 euros, today it costs us from 8,000 to 9,000 euros.”

How does the CEO compare the situation with the challenges of previous periods? “I have been in the business world for 35 years. There has never been such a complete storm. There can always be a period of financial crisis, such as in 2008/10. There was a crisis of money, not raw materials. Of course, this was evident in the consumption crisis, but the prices of all raw materials have even been falling, and we have compensated for the drop in consumption. What is happening now is truly unique on a global scale. what is happening now, the crisis has affected virtually all segments, all variables: raw materials, materials, labor… all variables are growing, such a situation has never existed.This is no reason to panic.The message to our employees is: your jobs are safe We are doing what we set out to do, we are not reducing investments in employees and brands, but we need to change tactics and find solutions on a daily basis. there is no single answer here. It is fascinating that, if we look at the region (Serbia, Bosnia and Herzegovina, etc.), we reacted most economically in Slovenia. ”

How is this observed in Atlantic Droga Kolinska? The number of purchases remains the same, the value of purchases is lower, and the number of products in shopping baskets is steadily declining. People are watching every euro, which is usually in favor of cheaper products. On the other hand, consumers in crisis situations are looking for “normality”, an emotional connection with established brands. The market will be divided into cheap and quality products. “But a similar thing will happen to society. This is usually the moment when the middle layer is even more under attack. This is also the case with the mid-range product layer. “

Smrekar believes that the autumn wave of price increases due to heating and delays in price increases will be the first big shock

Announcing the regulation of oil traders’ margins, Prime Minister Golob announced measures in the food sector, but said that the government would do positive advertising for those who will have the lowest margins in the basic basket of goods. What does Enzo Smrekar say about this unusual attention that the government pays to companies? First of all, he reminds that the state has more possibilities of regulation in petroleum products than in other activities that are subject to the free market. “It is also ungrateful to estimate the amount of margins on the basis of profits in the Slovenian economy. If we know that more than 80% of Slovenia’s GDP consists of exports, one might conclude that most added value is generated in other markets and not in high margins. We all in the economy are well aware of the relationship between price and purchasing power. I think the only rational approach is to talk to all stakeholders in the chain, on which product categories, on which key products a basic basket of products, we can find a common solution. “ He does not envy the government, because in this situation the “squaring of the circle” will be sought for quite some time.

Atlantic Droga Kolinska is buying green energy in Slovenia, has several solar power plants and is considering increasing these capacities. According to Smrekar, the need for a sustainable economy due to global warming is not a fad, but it marks everything and requires changes on the personal level of each individual in mobility, nutrition, etc. Which logically raises the question of what a company that sells products in very small packaging and in single or disposable packaging is doing in the field of packaging. Research shows that more and more single-member families, or those who are unable to reconcile the total meals of all members at once, are looking for food products packaged per serving.

Providers merely follow the trend and demand. “At Atlantic Grupa, we are moving to sustainable packaging in all packaging, to recyclable and made from recycled materials. However, this can also be greenwashing if there is no well-established system of collection, separation and, after all, waste recovery. established in Slovenia on our initiative, Donat’s packaging, where we went from glass to recycled PET packaging, received many questions and complaints that we did something non-ecological, which is nonsense. in production, washing (a lot of detergents, water and everything else is used for this, then it has to be taken to the point of sale again) is extremely energy consuming. set up a collection loop and a circular economy to separate and process green packaging in particular. It takes a lot of effort and the involvement of many stakeholders to be successful. ” Although Atlantic Grupa has been reporting on its sustainable operations according to GRI standards since 2013, last year Argeta, and this year also Donat, started producing and publishing their own annual sustainability report.

Employees in the company receive salaries that are 40 percent above the industry average. Also in production? “Right there!” They achieve a high level of employee engagement and win awards for best employer. They still also offer a half-year sabatic for half a salary. How do they afford it and how do they achieve 110 thousand euros of added value per employee? “Atlantic Grupa sells only a tenth of its products in Slovenia. We are one of the largest exporters. We achieve good and high prices on international markets. Because purchasing power is also appropriate there… In short, there is no easy recipe to achieve this added value. , we adapt and improve the products, their recipe, taste, nutritional value, We make sure that they are “top of the class”. We are constantly raising the bar of quality. “

Enzo Smrekar is a certified coach with two international degrees and a mentor to young managers. What does he swear by when leading? On authenticity. He doesn’t like role-playing. “We humans are hungry for authenticity,” he says. About the leadership style: “Employees are the most important thing and they make a difference. It’s not a cliché. We all know what the right person means. People make a difference. If that’s the case, they need to be found, empowered and trusted. We have a whole range of specialized departments, services… To believe or think that a person at the top of the company will be the best in everything is narcissistic and unrealistic, to say the least. Understand well enough to know what we are talking about, but you definitely need to have significantly better and stronger colleagues in individual special areas, and if so, you need to respect and trust them. the way is not the one that delegates, commands or commands, but the one that asks, elicits the best answers, solutions, summarizes and says: well, we agreed, we do it, you have full authority. you and let’s move on. “

More in the podcast Heart beats for business.

Source: Rtvslo

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