Analysis: Developments in the French poultry feed industry

Realignment of the major poultry producers seeks to regain the losses of French feed producers in recent years.

Yanne Boloh | Gilles Huttepain, CEO of feed and international divisions of LDC, and Denis Lambert CEO of LDC group, proudly announce the company’s 2014-15 turnover of €3,027 billion (USD3,376 billion).
Yanne Boloh | Gilles Huttepain, CEO of feed and international divisions of LDC, and Denis Lambert CEO of LDC group, proudly announce the company’s 2014-15 turnover of €3,027 billion (USD3,376 billion).

The French feed industry remains a leader in European poultry feed production, producing 8.7 million metric tons in 2014. However, in the early years of 21st century, the country ran close to 10 million metric tons. This year its poultry companies have announced their goal to reclaim what had been lost. 

As the first results roll in, with a 1.4 percent increase in feed production over the last 12 months, the French poultry market is restructuring itself around two industry leaders: private firm LDC and cooperative Terrena

This analysis looks at the French poultry sector and the companies shaping its future.

European poultry feed leaders

In France, poultry feed accounts for around 41 percent of total French feed production: broiler feed ranking first (3.26 million metric tons); feed for laying hens coming second (2.4 million metric tons); and water fowl (duck and goose) in the third position (1.4 million metric tons), slightly before turkey (1.3 million metric tons). The trend is good with a 1.4 percent increase during the last 12 months (May 2014–April 2015 production compared with May 2013–April 2014 production).

The poultry sector has witnessed some major changes over the last 15 years. As feed production reflects poultry production, the highest volumes were reached between 1998 and 2002 when French poultry feed production topped 10 million metric tons. 

Despite the decline, France remains Europe’s poultry feed leader. More than 2 million metric tons behind France, the UK is the second largest manufacturer, producing 6.6 million metric tons. Germany comes in third at 6.2 million metric tons; and Italy fourth at 5.9 million metric tons. Poland’s production is increasing fast (5.75 million metric tons, up 9.3 percent), but is still 3 million metric tons behind being quite focused in chicken. 

The European Compound Feed Manufacturers Federation (FEFAC) foresees a slight increase in European poultry feed production in 2015, up 0.5 percent after growing only 0.3 percent in 2014.

Major developments with leading poultry companies

Chicken meat imports have also been increasing; one of the reasons being the wider segmentation of poultry range and that competitors have been gaining strength on the neighboring countries, like Belgium, Netherlands and Germany. France tends to import more and more chicken meat, which now counts for around 30 percent of French consumption — mainly for caterers and processed food. Nevertheless, in 2014, the sector breathed a sigh of relief as all the main poultry producers won back confidence to grow the French market. 

First, the chicken export sector, which accounts for more than 20 percent of French chicken production and experienced turbulence when the European Union stopped its export aid, regained its confidence as conditions improved for export leader, Doux. The company, which had been on the verge of bankruptcy, emerged from a court administration on November 29, 2013. During this time, it had been financially supported by two new stakeholders: one of its main clients, Almunajem, and D&P, a holding of the Calmels family. 

Doux, the third largest French poultry producer, generated €457 million (USD509.8 million) of revenue in 2014. The company operates in two major markets: the large scale export of poultry (principally in the Middle East) and Pere Dodu processed products. It has two feed plants and works with several western cooperatives to complete its needs. It is the top European poultry exporter, producing 1 million birds a day and accounting for 20 percent of total French poultry output. In 2015, revenues are forecast to be around €530 million (USD591.3 million) with volume growth of 8 to 10 percent. 

Second, in May 2014, Terrena, supported by the invest bank SofiprotĂ©ol as a minority shareholder, signed an exclusive agreement with D&P Participations to purchase its 52.5 percent controlling interest in Doux Group. Terrena is a very diversified French cooperative that is part of France’s western agricultural basin, one of the largest in Europe. 

Gastronome, a subsidiary of Terrena, is France’s second largest poultry producer, with revenues of €850 million (UDS948.3 million) and a 45 percent equity stake in cooperative Fermiers du Sud Ouest with its Saint Sever brand. Just before the announcement to purchase a majority share of Doux, the cooperative chose to sell one of its processing plants to French retailer Casino, which aims to return to food production as a mean to improve its purchasing expertise.

Sofiprotéol is an investment bank dedicated to agricultural projects, part of Group Avril. Other subsidiaries of this group include one of the largest French feed manufacturers, Glon Sanders; MiXscience; and Theseo.

LDC strongest leader with Sofiprotéol agreement

Groupe LDC is the French poultry leader, which also entered an agreement with SofiprotĂ©ol, after it was approved by the French administration in February 2014. As a leading European food company, LDC specializes in poultry and prepared dishes. With turnover worth more than €3 billion (USD3.4 billion) (€200 million (USD223 million) outside of France) and with investments of more than €740 million (USD825.5) in the last 10 years, LDC is pivotal to the health of the French poultry industry. 

LDC purchased the poultry slaughter and processed product activities of Sofiprotéol’s Animal Products Division, which include five production sites with a turnover of €310 million (USD345.8). The sites are combined with the six LDC sites in Brittany to form a new company: Société Bretonne de Volaille. LDC also bought the site in Blancafort (which achieves turnover of €20 million (USD22.3 million)), and its supply is being assured by the Clémont feed plant (Sanders Animal Nutrition).

According to Denis Lambert, chairman of Groupe LDC: “Our planned alliance constitutes a strong signal to the French poultry sector. It reflects the mobilization of two major actors in the food industry who wish to focus on a common goal, which is to ensure that long term, this sector can win back domestic markets and develop internationally.” 

The plan reinforces Group Avril’s position in the fields of animal nutrition and production. The alliance also involves a preferential partnership between Sanders and LDC concerning the supply of live poultry, as well as the transfer of one feed plant (not poultry) from LDC (Huttepain Bouix) to Sanders.

The arrangement also includes LDC’s poultry activities of innovative products from MiXscience and Theseo, which belong to Group Avril. Sanders is planning to make industrial investments worth €75 million (USD83.7 million) in its animal nutrition and production facilities during the next five years.

LDC had its own feed plants, which were bought when Huttepain Group merged in the early 2000s. There again, it also buys feed from several other private feed manufacturers and cooperatives (depending on the localization of the farms) and, thus, supports several other feed producers.

With these development, experts suggest a new “poultry pattern” — one focused on growth and sustainability — will emerge in France. 

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