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28/03/2016

Reny Picot, diversification and internationalization

  • It's the only Spanish company that set its sights on foreign markets
  • As a result of the dairy sector crisis, the company has been buying up surplus supplies at powdered milk prices
  • With silos at maximum capacity, powdered milk is being sold at intervention prices of 0.17 euros per kilo

Vidal Maté. @trigolimpio_VM

In recent months, and next spring as well, the milk sector has experienced a surplus at origin in view of increased supply in EU countries, including Spain; lower demand domestically and in foreign markets; and companies that are incapable of absorbing that volume due to stagnant fresh milk consumption, which accounts for the bulk of companies' sales. In view of the oversupply, several companies have told cattle farmers in recent weeks that they cannot accept their milk, even at low prices, due to the lack of market and their inability to process that milk into other dairy products for sale in Spain and in other countries.

One exception to that policy (you could almost say the only exception), is Industrias Lácteas Asturianas, better known in the sector by its registered name and its most important brand, Reny Picot.

In contrast with other companies' decision not to take on more milk than agreed with their cattle farmers as a function of sales forecasts, the Asturian group acted almost like an intervention entity to regulate the market, collecting the milk that nobody wanted to process it mainly into powdered milk and butter at international market prices, providing stockbreeders with around 0.20 euros per liter. This hasn't made stockbreeders rich, but at least it means that the milk wasn't thrown out.

This purchasing policy has increased the company's milk sales by more than 5,000 tons per month, which has led to more than 10 million kilos of powdered milk in its silos at a time when it's impossible to buy more milk due to lack of storage space. The bulk of that powdered milk has been sold by the company outside Spain at international prices, in particular through its subsidiaries in Mexico and in other parts of the world. Another portion of around 500 tons will be delivered to the public intervention entity every week at 0.168 euros per kilo and 2.21 euros per kilo of butter, stagnant prices in the last few years and which are a drag when it comes to regulating the markets.

Neither ILAS - Reny Picot nor its chairman and owner Francisco Rodríguez has ever been or tried to be a sector leader in terms of the volume of milk collected or for fresh milk sales. On the contrary, since it was created in 1959, the group has always had two clear objectives: To operate in foreign countries while opening new markets and setting up industrial plants outside Spain, and to implement an industrial policy based on innovation, diversification and products that are different from fresh milk, such as special powdered milks for all age groups, from children to senior citizens, and the sale of butter.

This strategy has yielded sales of over 700 million euros for the group. The difference with respect to almost all Spanish companies in the sector is that, of that amount, more than half corresponds to sales outside Spain and just a small part of total sales corresponds to fresh milk.

Reny Picot was founded in 1959 by Pablo Mayoral and Francisco Rodríguez to produce cheese, one of its top products of which was camembert, which is quickly associated with France; as a result, they decided to call the company Reny Picot.

From the very beginning, Rodríguez wanted to expand beyond Spain, in terms of entering new markets as well as industrial production. Today it is still practically the only Spanish company in the milk sector to implement this strategy.

In line with this approach, the Asturian company opened up shop in the Mexican state of Chihuahua in the 1980s to produce powdered milk. The company also expanded in the European Union, acquiring a small French company in distress dedicated to the production of goat's milk cheese, La Chevefeuille. The group also headed to the US in the 1980s, acquiring Old Europe Cheese, based in Michigan, which made powdered milk and cheese. Since the end of the 1990s, Reny Picot has been operating in China, having founded the company Beijing Evergreen Dairy with cooperatives as its partners, of which it now owns a majority stake. The objective is to produce powdered milk and, according to the Chairman, the growth process in China is slow. In Europe, in has a factory in Poland, where milk prices were more competitive, and it has plans to expand into other Eastern European countries. It has another factory in Morocco to serve Africa, producing melted cheese.

In Spain, in addition to operating in Asturias, with Granja La Polesa and Aneo, the company has Lácteas Castellano Leonesas in Fresno de la Ribera, Zamora and Industrial Quesera del Guadarrama, in El Escorial, which produce all kinds of cheese.

Francisco Rodríguez is a firm believer that Spain has great potential for milk production and that the quota policy was the last blow for the sector. He also staunchly defends milk production based on the extensive livestock herd model in the north, on the Cantabrian Coast and in Galicia, but fears that this model could go pear-shaped due to the lack of interest by the Public Administrations and concerns that the fields might be abandoned.

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