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Interviews
13/09/2013

"Price is the most powerful driver of purchase decisions"

Juan Miguel Martínez Gabaldón, General Manager of Galletas Gullón, shares with Wiki Spanish Food the secret to the company's success in times of crisis and its recognition by the international press.

Verónica Martos. Journalist. @martosveronica

Wiki Spanish Food- Gullón, which has been operating for over a century, is the largest biscuit factory in Europe. What's the key to your success?

Juan Miguel Martínez Gabaldón.- Essentially, our operations are based on three strategic vectors which ensure growth: innovation, internationalization, and reinvestment of profit.

As things stand, traditional products do not have a guaranteed spot on supermarket shelves. It's necessary to innovate to stand out from the competition. In our case, we are innovating by improving consumers’ well-being with healthier biscuits. Nowadays, people want to live longer and improve their quality of life; to that end, we must protect ourselves from today's “enemies” of society: non-transmissible diet-related chronic illnesses (obesity, diabetes, cardiovascular diseases, hypertension, etc.).

Having achieved this distinction and ensured competitiveness in the local market, we are able to focus on internationalization and on replicating that success in other countries. That is precisely what Galletas Gullón is doing through its subsidiaries in Portugal, Bolachas Gullón, and in Italy, Biscotti Gullón. Moreover, we export to over 100 countries and we always have a study under way with a small group of at most five, so that, when they fulfill certain requirements, we can use additional resources to establish ourselves in those markets.

Naturally, this growth policy requires funding which, in our case, is ensured through the continuous reinvestment of profits. This puts us in an enviable economic situation in times like these, with the crisis and credit crunch.

WSF.- The Economist magazine praised Gullón, describing it as a Spanish company that has successfully weathered the crisis. What strategy have you employed in recent years?

JMMG.- The Economist, which closely tracks the performance of companies around the world, highlighted our business policies and strategies which are proving successful in times of stress. We are extremely proud to be recognized by the magazine.

Our strategy of innovation, internationalization and reinvestment of profits seemed especially interesting to them because it is simple and very “by the book”, yet it is yielding positive results.

WSF.- The magazine highlights Gullón's reinvestment policy. What projects will you be implementing this year?

JMMG.- We have concentrated capital expenditure on the new VIDA factory, which currently represents a cash outlay of 50 million euros. There is currently an operational manufacturing line and an assembly line. The third line is slated for delivery in January 2014.

Development and ancillary work in the zone is coming to an end and the factory is in the final stages, with a view to completion by the end of 2013.

WSF.- Gullón increased sales by 10% in 2012, to over 200 million euros. What strategies did you implement to maintain growth during the recession?

JMMG.- Record unemployment, tax hikes, loss of purchasing power by many citizens, considerable emigration, and the general understanding that we are in a deep crisis with no clear exit has led the Spanish economy, which shrank by more than 2% in 2012, to sink into lethargy. This adverse situation has boosted consumption of store brands, with price as the most powerful factor driving consumers’ purchase decisions. As a result, we manufacturers have to reposition our prices and use ongoing product promotions to optimize them.

At Gullón, we believe this response is incomplete and that innovation must be used as a distinguishing factor for maintaining a space on store shelves. Moreover, we add value to our offer by using innovation to provide more balanced products, as we believe that health will be the focus of the 21st century and that, when we gain a new consumer, he or she will become "addicted" to our product, or at least more loyal. Once a consumer decides to take better care of himself, he doesn’t usually give up that habit.

In short, our objective is to produce healthier biscuits so as to attract consumers who are more loyal and less price sensitive—an issue which currently impacts traditional consumption.

WSF.- According to The Economist, more than one-third of Gullón biscuits are sold outside Spain. What's the secret to your international success?

JMMG.- In our export experience, we have come to realize that it's difficult to compete with biscuit manufacturers at local level with the same products and from the same points of sale. Consequently, we are trying to boost sales of healthier products.

We have also seen that concern for health and the growing incidence of non-transmissible diet-related chronic illnesses is a global phenomenon and, if anything, the 21st century will be characterized by a general focus on healthcare worldwide.

Gullón is a prestigious, renowned brand in Spain because of its leadership in producing health-conscious products. Our R&D and innovation has led to regular collaborations in the last decade with government organizations in connection with R&D, technological centres, universities, and other innovative companies. As a result, we have led several research consortia and executed many projects under the European Commission’s Seventh Framework Programme.

Our healthy biscuit lines, such as sugar-free Diet-Nature, Light, Diet-Fiber, Fiber-Active, gluten-free, allergen-free, and Bio, and our extensive range of Digestives are examples of innovative, healthy and nutritionally-balanced products that have made us leaders in this segment.

We are working to replicate this success in the countries where we export, which helps set us apart from local companies and allows us to be competitive and innovative in those markets. That is our focus.

WSF.- This year, the new VIDA factory will add two production lines for products for export. What other actions do you have planned for 2013?

JMMG.- In addition to completing the factory, we are working hard to ensure that the launch our new Italian subsidiary, Biscotti Gullón, is a success. We have a lot riding on this project, and we believe that a quality lifestyle is very important for Italian consumers.

This year we also launched several new products, whose performance we are watching closely.

WSF.- Approximately how many jobs do you expect the new plant to create?

JMMG.- Fifty people currently work at the VIDA factory, and we expect around 200 people to be working there by the end of 2014, depending on production.

WSF.- An increasing number of companies are using R&D and innovation to distinguish themselves from their rivals. Gullón is a leader in this area. Have you increased R&D spending? What percentage do you currently allocate to this item?

JMMG.- Close to 2% of sales goes towards R&D; this is quite high considering that revenues totaled 216.8 million euros in 2012. We completed several research projects this year, including SARA, which focuses on products for women during various phases in their lives, such as pregnancy, breastfeeding and menopause; and INNPRONTA, the goal of which is create a guide for the substantiation of health claims in food.

WSF.- Again, in connection with innovation, Gullón is strongly committed to healthy products. Are you planning to launch any new products this year as part of that line?

JMMG.- We just launched two new products for children, Tuestis and Dibus Mini Cereales, under the AngryBirds license. These products are high in fiber, contain high oleic oil, and are fortified with minerals and vitamins. The latest studies on child obesity are alarming, so the industry must be aware of the importance of developing products which are appealing to children but which are more balanced and healthy. In the coming days we are planning to present several products with added value, the result of one of our recent research projects and which we hope will be received favorably by our consumers.

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