Jago is not afraid of Iglokrak’s acquisition by Penta. An interview with Krzysztof Niebrzydowski, marketing director of Jago

2010-03-15

Retail Update Poland talks to Krzysztof Niebrzydowski, marketing director of Jago, about the threats related to potential consolidation on the Polish frozen foods market.

Paulina Burzawa, Retail Update Poland: Are you not afraid of competition, when the acquisition of Iglokrak’s subsidiaries by Penta Investments is finalised?

Krzysztof Niebrzydowski, Jago: We have been aware for a considerable time that Penta and Iglokrak are in talks about a takeover. But it is hard to tell whether, and when, these negotiations will lead to a deal. The market speculated about the acquisition being finalised several times already. So we are watching the situation with calm. Iglokrak is our major competitor in the distribution of frozen food in Southern Poland, but the company is also active in the production of frozen food (through its subsidiary Fritar). By contrast, Jago is focused exclusively on distribution and logistics. Until we find out which arm of Iglokrak’s business the new owner will be developing, it is difficult to determine whether and to what extent the transaction might pose a competitive threat to our firm.

P.B.: Who then should be afraid of consolidation in the Polish frozen food sector?

K.N.: Consolidating moves in the distribution of frozen food are nothing surprising. In Poland the sector remains strongly fragmented and there are too many players. This fuels increasing competition by forcing companies to pursue very aggressive pricing strategies, which erodes margins. So the entry of investment funds into this sector is entirely natural and is in a sense in the interests of the bigger players. But it will doubtless pose a competitive threat to smaller companies with regional reach (such firms still represent the clear majority of all distribution companies in Poland).

P.B.: What is the position of Jago relative to other players?

K.N.: At the moment Jago largely calls the shots in the distribution of frozen food in Poland, as illustrated e.g. by the acquisitions we completed in 2009, which allowed us to nearly double our revenues last year. Besides, we are the only company with the ability to offer distribution and logistics services on a nationwide scale.

P.B.: What are Jago’s plans for 2010?

K.N.: We are in the process of building an efficient distribution network spanning the entire country, which allows us to spread geographical risk. With an in-house logistics and warehousing infrastructure we will gain complete independence from third parties.
In 2010 we aim to focus on streamlining the group. But were also watching closely numerous companies on the market. Further acquisitions are of course possible.