Terrena L'Union CANA CAVAL

BP 199
Ancenis
F-44155 Cedex
France
Telephone: ( + 33) 2 40 98 91 11
Fax: ( + 33) 2 40 98 91 64
Web site: http://www.terrena.fr

Cooperative Company
Incorporated: 2004
Employees: 12,600
Sales: EUR 2.98 billion ($2.5 billion)
NAIC: 311511 Fluid Milk Manufacturing; 111332 Grape Vineyards; 112111 Beef Cattle Ranching and Farming; 112112 Cattle Feedlots; 112120 Dairy Cattle and Milk Production; 112210 Hog and Pig Farming; 112340 Poultry Hatcheries; 112390 Other Poultry Production; 311119 Other Animal Food Manufacturing; 311512 Creamery Butter Manufacturing; 311513 Cheese Manufacturing; 311514 Dry, Condensed, and Evaporated Dairy Product Manufacturing; 311611 Animal (except Poultry) Slaughtering; 312130 Wineries

Terrena L'Union CANA CAVAL is one of France's top three cooperatives and one of the country's leading agro-industrial groups. Through its Gastronome subsidiary, Terrena is also France's third-largest poultry products producer. Formed through the union of three cooperatives (CANA, CAVAL, and GCA) at the beginning of 2004, Terrena is backed by more than 35,000 farmer members, and, including its various subsidiaries, has more than 12,600 employees. Terrena operates in a number of major agricultural markets, including cereals, seeds, vineyards, milk and dairy products, eggs, beef, pork, poultry, rabbit, and animal feed. Together, agricultural production represents the majority of the cooperatives annual sales (19 percent crops and vineyards, 31 percent meats and poultry, and 13 percent milk and dairy products). Terrena supports these operations through a network of 350 agricultural supply stores and specialized distributors, providing fertilizers, seeds, and equipment to its members and others, representing 20 percent of the group's sales. Terrena also operates a number of consumer-oriented garden centers and food markets under the Gamm Vert and Espace Terrena names. Terrena's consumer brands include Paysan Breton (butter), Soviba (beef and pork); Valepi (cereals and flours); wine labels including Les Vignerons des Terroirs de la Noelle, Anjou Villages, Coteaux d'Ancenis, and Muscadet; and, through its Gastronome prepared foods subsidiary, Douce France and Fermier d'Ancenis. Groupe Terrena consists of the Terrena cooperatives (organized geographically into Terrena Loire, Terrena Atlantic, and Terrena Poitou) and its subsidiary operations. The cooperative part of the business contributed nearly EUR 1 billion to the group's total EUR 2.98 billion ($2.5 billion) in sales in 2003.

Beginnings in the late 19th Century

The grouping of cooperatives that resulted in the creation of Terrena at the beginning of 2004 covered the French agricultural heartland of the Loire Atlantic, Vienne, and Poitou regions in the west of France. Terrena's earliest component had originated in Anjou in the late 19th century. The cooperative movement, which had originated in England during the mid-19th century, had rapidly gained popularity throughout the European continent, spawning branches in the banking, grocery, and other industries. The cooperative movement proved an ideal solution for the agricultural sector as well, creating a structure for often highly independent farmers to join forces across the country.

Cooperatives remained highly local efforts throughout the 19th and into the 20th century, typically grouping farmers in a limited region. Such was the case with the creation of the Syndicate Agricole et Viticole d'Anjou, in the Loire Valley region, created in 1887. This cooperative grouped a number of the Anjou region's farmers and wine growers in the Anjou area. Over the next decades, the region saw the appearance of a number of new cooperatives, such as a seed cooperative founded in 1926. This cooperative also became a founding member of the later CAVAL (Cooperative Angevine du Val du Loire), created in 1967 through the merger of seven local cooperatives. The Syndicate Agricole joined the CAVAL cooperative in 1971.

By then, the cooperative movement in France had begun to consolidate into larger, more economically powerful groups. A major stimulus to this movement was the rise of the supermarket sector in the country. During the 1960s and 1970s, the retail food sector began its shift away from the small grocer model. In its place appeared a smaller number of large-scale, nationally operating supermarket groups. These companies actively encouraged the creation of large-scale agro-industrial operations, if only to simplify and ensure the consistency of their own supply needs, as well as to respond to consumer demand for lower food prices. Yet the rising purchasing clout of the supermarket groups and their constant pressure on farmers and food producers to lower their prices encouraged the food producers and the cooperatives behind them to build scale on their own in order to resist more effectively the pricing pressures from the retail groups.

Another fast-growing cooperative in the west of France was CANA. That cooperative had its origins in 1932, when Yves Le Gouais, a prominent local landowner and agronomist, brought together nine local farmers and vineyard owners to form the Saint-Mars-La-Jaille cooperative. The cooperative grew in its importance to the region and its farmers and in 1952 set up its own offices on a six hectare estate in the village of Ancenis, between Nantes and Angers. The move prompted a change in name to the Cooperative Agricole La Noëlle Ancenis, or CANA.

CANA quickly began to add its production systems. In 1955, for example, the cooperative installed a feed mill in order to produce its own animal feed. The cooperative also built a wine storage facility, supporting the casking and fermentation operations of its wine-growing members. CANA next branched out into poultry production, installing a slaughtering facility during the 1970s. A second slaughtering and boning facility, for beef, was opened in Le Lion d'Angers in 1981.

Dairy products represented another strongly growing activity for CANA. In 1977, the company built a butter production plant, which led to the launch of a nationally recognized brand, Paysan Breton. In 1980, the cooperative expanded its dairy production with the construction of a cheese factory as well, and CANA began producing its own branded line of cheeses. In this way, CANA established an early market for itself on the nation's supermarket shelves.

Mega-Cooperative for the New Century

During the 1980s, CANA developed several national brands, including Laiterie du Val d'Ancenis for its milk and dairy products and Gastronome. The company's beef, and later pork, production started marketing under the Soviba label and quickly rose to become one of France's leading meat brands.

CANA continued to expand during the 1980s. The group's beef and pork business grew strongly, and Soviba began exporting to other European countries in the middle years of the decade. By 1988, the cooperative had added slaughtering and cutting operations on an industrial scale, providing fresh and processed products such as hamburgers, sausages, and kebabs to its large-scale distribution group customers.

In the late 1980s, CANA expanded its Soviba subsidiary through a number of takeovers, including a slaughtering facility at Chemillé in the Maine et Loire department in 1989. In 1992, the company took over a beef slaughtering and processing facility in Saint Maixent L'Ecole, in the Deux Sevres, then expanded that business to include pork as well. CANA also diversified its operations in the 1990s, entering the food ingredients market with the launch of Epi Ingredients, a joint-venture with Coopagri Bretagne. CANA's Laïta joint venture with Coopagri Bretagne and the Even cooperative became major producer of dairy products, especially French cheeses, building up exports to some 70 countries and total sales of nearly EUR 300 million. In 1998, CANA created the ARCA partnership with another cooperative, ARCO.

Meanwhile, CAVAL had been growing as well, notably through its merger with another prominent regional cooperative, CVL, the Cooperative Vienne Loire, in 1993. In 1998, CAVAL expanded again, this time by forming an umbrella cooperative, the Union Poitou Anjou, with Groupe Centre Atlantique, or GCA. Covering farmers in the Poitou region, GCA had been founded in 1936 in the Vienne department.

The late 1990s saw a major shift in the French food sector. Competition among European markets had been steadily intensifying since the lowering of trade barriers in the early 1990s. The concentration of the supermarket sector into a handful of major players had drastically reduced the range of potential customers, while the French cooperatives had to face increasing price pressures, especially from their often lower-priced competitors in Spain, North Africa, Italy, and elsewhere. In response, the French cooperatives had no choice but to gain scale in order to compete and to achieve a profit from the razor-thin margins allowed them by the large supermarket chains.

The outbreak of Bovine Spongiform Encephalitis (BSE, also known as "mad cow disease") in France in the late 1990s sparked a new crisis in France's agricultural sector, particularly in the market for beef. The sudden drop in beef consumption forced beef producers such as Soviba to respond by expanding its exports. In order to do this, Soviba acquired a new slaughtering facility, in Villers Bocage, in 1997.

These factors combined to spark a wave of consolidation in the French cooperative movement as well as in the agricultural and food production sectors in general. CANA and CAVAL joined in this trend, forming a number of partnerships, notably in the beef sector (CANA with GIBEV and CAVAL with GERAP). In 2000, CANA and CAVAL announced their intention to form a new cooperative structure between them. That union, which did not for the time being include GCA, took on the name of Terrena in 2001.

CANA and CAVAL began moving closer together in the early years of the 2000s, and by the end of 2003 their members had voted to proceed with a full merger of the two cooperatives. Soon after, the members of GCA voted to join Terrena. CANA, CAVAL, and GCA became known, respectively, as Terrena Atlantic, Terrena Loire, and Terrena Poitou. A new umbrella entity, Groupe Terrena, acted as a holding company for the group's cooperatives, on the one hand, and its production, retail, and other subsidiaries on the other. Terrena voted to make the merge retroactive to the beginning of 2003, enabling it to post its first full year of combined sales at EUR 2.98 billion ($2.5 billion).

As it moved toward the mid-2000s, Terrena represented a new mega-cooperative in France, claiming the position of the country's third-largest agro-industrial group. Terrena's momentum appeared to attract additional consolidation in the industry. In January 2004, after merging the CANA and CAVAL beef production units, Terrena announced the formation of a new cooperative union, Ter'elevage, grouping Terrena's operations with its partners GIBEV and GERAP. Also during 2004, Terrena merged with two of its pork production partners, SEPMA and Teldis Porc, which were absorbed by Terrena Porc. As one of France's leading agro-industrial cooperative, Terrena had gained the scale it needed in order to remain a player in the highly competitive European agro-industrial industry.

Principal Subsidiaries

Epi Ingredients (50%); Espaces Gamm Vert; Gastronome; Laïta (33%); LVA; Soviba; Terrena Loire; Terrena Atlantique; Terrena Poitou; Terrena Viande.

Principal Competitors

Lactalis; Bongrain S.A.; Even; Coopagri Bretagne; Agrial; UNICOPA; Entremont S.A.; Yoplait S.A.S; CEDILAC S.A; Cooperative Laitiere Ploudaniel.

Further Reading

Coquin, Louis, "Terrena, mastodonte de la coopération," Nouvel Ouest , December 2003.

Favreau, Adrien, "La Cana étudie la création de 400 emplois en un an grâce à la loi Robien," Monde , March 2, 1997.

—M.L. Cohen