Vivartia S.A. - Company Profile, Information, Business Description, History, Background Information on Vivartia S.A.

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History of Vivartia S.A.

Vivartia S.A. is the new name for Greece's leading dairy and processed foods group, resulting from the merger of dairy products leader Delta Holdings, including subsidiaries Goody's and General Frozen Foods, with baked and snack food leader Chipita S.A. As such, Vivartia operates four primary divisions: Dairy & Drinks (43 percent of sales); Bakery & Confectionery (32 percent); Frozen Foods (9 percent); and Food Services & Entertainment (16 percent). Vivartia's brand family includes beverage brands Delta, Life, and Milko; baked goods and snack brands including 7 Days pastries and breads and the Extra brand of savory snacks; Chips Stars potato chips, as well as the Molto, Finetti, Bake Rolls, Spinspan, and Nova brands. The company's flagship frozen food brand is Uncle Stathis, and its restaurant operations include the Goody's fast-food restaurant chain and the Flocafe chain of coffee bars. Vivartia is not only a dominant food group in Greece, it is also one of the country's top ten industrial companies, and among the top 20 largest corporations in the country. Vivartia also ranks 35th among Europe's processed foods groups. In addition to its Greek operations, Vivartia is active throughout the Balkans region, with extensive operations in Eastern Europe as well. The company also operates joint ventures in Mexico, Egypt, Portugal, and Nigeria. The company's products reach more than 30 countries, including the United States and Canada. Dimitris Daskalopoulos, from Delta Holdings, has been named company chairman, and Spyros Theodoropoulos of Chipita is Vivartia's CEO. The company retains a listing on the Athens Stock Exchange. Combined sales for the company topped EUR 872 million ($1.1 billion) in 2005.

Founding Greece's Dairy Giant in 1952

Born in 1923, Aristides Daskalopoulos entered the dairy business in 1952. Initially, Daskalopoulos made yogurt and fresh milk available to his customers in the Athens area. The company's bid to expand was launched in 1962, when Daskalopoulos acquired land in Tavros, a small town in the suburbs of Athens. The company built a new headquarters, including a large-capacity milk processing facility, in Tavros, and moved its operations there in 1965. The new facility also allowed the company to begin the production of pasteurized milk and dairy products for the first time. In 1968, the company incorporated under a new name, Delta Dairy S.A.

Delta grew steadily through the 1970s, and by the end of the decade claimed the position as the leading dairy products group in the country. In 1979, Delta launched production of ice cream as well and rapidly built up market share; by 1980, the company had taken the leadership in the ice cream segment as well.

The Greek dairy industry nonetheless remained highly competitive. The high level of competition was due in large part to the country's geography and the need to ensure supply to the many Greek islands. At the same time, Greece's popularity as a tourist destination meant that the total population, especially in areas such as Crete, often swelled by several times during peak periods. Part of Delta's success was its ability to adapt to the specific factors of the market, putting into place a strong logistics and distribution platform that enabled the company to achieve standardized pricing on a national level. Delta's investment in new packaging technologies also played an important role in its continued success.

In 1987, for example, the company introduced a new generation of packaging for its milk products, enabling the company to expand its line of products as well. The new packaging struck a chord with Greek consumers and quickly resulted in a doubling in sales for the company. By 1989, Delta had begun to extend its range into new food and beverage categories, launching a line of Life-branded fruit juices that year.

Delta went public in 1990, listing its shares on the Athens Stock Exchange in an offering that raised some EUR 44 million. The public offering enabled Delta to develop its first international growth strategy, targeting the nearby Balkans region market, just then emerging from decades of Communist domination, before expanding sales to the greater Eastern European area, and to Western Europe as well. Delta's early investment in the Balkans, in particular, enabled it to grab a leading share of the milk and fruit juice markets in much of the region. The company also emerged as a strong player in the ice cream market in the region, backing up its presence with the construction of a factory in Bulgaria in 1992.

Diversification Drive in the Late 20th Century

In the early 1990s, Delta began targeting more diversified food offerings. As part of this effort, the company sought out partnerships with other groups. The most notable of these came in 1993, when the company formed a partnership with European foods giant Danone, selling 20 percent of its stock to Danone in exchange for the larger company's technology and the right to produce and market a number of Danone brands to the Greek market.

The following year, Delta expanded into the frozen foods segment. As part of this effort, the company first took over the frozen foods group Froza. After revamping that company's production facilities, Delta bought a 51 percent stake in another major Greek frozen foods company, Uncle Stathis. Founded in 1969, that company launched the Uncle Stathis brand of frozen fruits and vegetables that same year. A pioneer in the Greek frozen foods sector, the Uncle Stathis brand remained a market leader into the 1990s. In 1991, the company went public, listing its shares on the Athens Stock Exchange. Following its acquisition by Delta, the company was merged into Froza, and the larger group took on a new name, General Frozen Foods. The Uncle Stathis brand remained the company's flagship brand.

Delta meanwhile invested heavily into the middle of the decade in order to boost its production and prepare itself for the next phase of its international growth. In 1994, the company spent nearly EUR 53 million to build a new automated yogurt production facility, including its own research and development laboratory. That investment was followed by the completion of an automated milk and fruit juice production facility, built at a cost of EUR 50 million. By then, Delta had announced an investment program of nearly EUR 300 million in order to position itself as one of Europe's most modern dairy producers.

Having achieved a strong sales position in the Balkans region, Delta's international strategy led the company to establish its own operations in much of this market. In 1996, the company began building a series of new production facilities, especially ice cream production units, in the Balkans, as well as elsewhere in the Eastern European market. The company built a plant in Romania in 1996, and added a new ice cream factory in Serbia in 1998. The company also added to its operations in Bulgaria, buying up a majority stake in that country's Vitalact in 1997.

Greek Foods Giant for the New Century

Delta's successful diversification and international expansion led the company to restructure its operations in 1999. In that year, the company transformed itself into a holding company, spinning off its two primary divisions as two separate companies, Delta Dairy and Delta Ice Cream. As part of the restructuring, Danone exchanged its 20 percent stake in Delta for a 30 percent stake in Delta Dairy. The newly restructured Delta targeted further diversification, targeting a vertical integration of its operations. In 1999, for example, the company set up its own state-of-the-art dairy farm, with 500 cows. The new facility enabled the company to produce milk with higher protein levels, with a lower risk of bacterial contamination.

Delta's vertical integration drive soon turned toward the opposite end of the supply chain, targeting an entry into retail sales. In 1999, the company joined a group of investors in the buyout of rival ice cream producer Dodoni Ice Creams S.A. Delta's initial stake of nearly 25 percent gave the company an interest in Dodoni's chain of gelataria "scoop shops" and cafes. The following year, Delta moved into restaurant operations proper, acquiring a 20 percent stake in the Goody's fast-food chain. Founded in 1975, Goody's had grown into Greece's leading fast-food restaurant and coffee bar operator. In 2000, Delta raised its stake in Goody's to more than 60 percent.

Aristides Daskalopolous died in 2000; the company remained controlled by the family, however, with son Dimitris taking over as company chairman and CEO. The young Daskopolous continued the company's rapid expansion into the mid-decade. In 2001, the company formed a partnership with Chipita S.A., Greece's major snack and baked goods group, as part of both companies' efforts to expand into the southern European market.

Delta itself entered a new market in 2002, buying up Cyprus's Charalambides Dairies. The acquisition gave the company control of the country's largest and oldest dairy producer. Also in that year, Delta placed Delta Ice Cream S.A. on the Athens Stock Exchange, in the first step of the later sale of that operation. In December 2005, Delta agreed to sell its stake in Delta Ice Cream to Nestlé S.A. By then, too, the company had ended its longstanding partnership with Danone, buying back the French group's shareholding.

Instead, Delta continued to explore new markets. The company entered the production of cheese, and especially feta cheese, with the purchase of Vigla S.A. in 2003. That acquisition gave Delta the position of market leader in the packaged Greek cheese sector, with a 20 percent market share.

As it prepared for the next phase in its growth, Delta adopted a new management structure in 2004, splitting its chairman and CEO functions. Dimitris Daskalopolous remained as chairman, and the CEO spot was taken over by Justin Jenk. The new management structure proved short-lived, however.

By the end of 2005, Delta had strengthened its relationship with Chipita. This led the two companies to announce their intention to merge their operations to form a new company, Vivartia, by July 2006. Chipita had been founded in 1973 as a producer of corn chips and other savory snacks, and grew into a market leader by the mid-1980s. In 1986, the company's leadership was taken over by Spiros Theodoropoulos, who took full control of the company by the end of the decade. Theodoropolous then led Chipita on a diversification drive, launching production of a new product line of mini-croissants. In 1993, Chipita bought a leading competitor, Konstantinos Arabatzis S.A. Bakery and Confectionery, which was renamed for its popular brand name, Snacky.

Chipita went public in 1994, listing on the Athens Stock Exchange. The company built new production facilities for the production of potato chips, as well as expanding its production of savory snacks. The company also added chocolate-covered snacks in 1995, under the Choco brand name. In another highly successful launch, the company introduced its Bake Rolls line of packaged pastries.

Chipita began an international expansion effort in the mid-1990s, building production facilities in Bulgaria and Portugal in 1996, while also forming a number of production and distribution joint ventures, such as in Egypt that year. By the beginning of the next decade, Chipita had added facilities in Mexico, in partnership with PepsiCo, and had acquired a presence in Russia through the purchase of Saint Petersburg-based Eldi and Krasnoselskaya. Further expansion came in 2002, when the company added operations in Italy. The company then expanded its effort to break into the Western European markets with the purchase of a 51 percent stake in Germany's Food & Snack.

The merger of Chipita and Delta was completed in large part by July 2006. The combined company adopted its new name, Vivartia. Dimitris Daskalopolous became the new company's chairman, and Spiros Theodoropoulos became the company's CEO. With combined sales of EUR 872 million ($1.1 billion), Vivartia had emerged as Greece's leading food, beverage, and restaurant group, as well as one of the country's ten largest industrial corporations, and had positioned itself as the leading player in much of the southern European market. Ranked 35th among Europe's leading food groups, Vivartia had established a firm basis for its future in the ever-growing European Union.

Principal Subsidiaries

Balkan Restaurants S.A. (Bulgaria); Chipita Belgrade S.A. (Serbia 92.75%); Chipita Bulgaria S.A.; Chipita Czech Ltd.; Chipita Foods Bulgaria EAD; Chipita Germany GmbH; Chipita Hungary Kft.; Chipita International AE; Chipita Italia S.p.A.; Chipita Participations Ltd. (Cyprus); Chipita Poland Sp. z.o.o.; Chipita Romania S.R.L.; Chipita Slovakia Ltd.; Chipita St. Petersburg ZAO (Russia); Delta Dairy S.A.; Delta Food Holdings Ltd. (Cyprus); Delta Food Participation & Investments Ltd. (Cyprus); Endeka S.A.; Eurofoods Hellas S.A.; General Frozen Foods S.A.; Goody's S.A. (71.05%); Hellenic Food Service S.A. (87.06%); Pagrati Restaurants S.A.; Paralias Café-Patisseries S.A. (82.59%); Saranda S.A. (95.26%); Vigla S.A.

Principal Competitors

FAGE S.A.; Prehrambena Industrija Vindija dd Varazdin; Mevgal Dairy Product Industry; Union of Agricultural Cooperatives of Larissa-Tirnavos-Agia Larissa; Pinar Sut Mamulleri Sanayii A.S.; Tyras S.A.; Dodoni S.A.; Kolios S.A.; Agno S.A.; Imlek AD.


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