CEO La Lorraine: ‘We show that you can grow and create jobs in Belgium’

The Belgian bakery group La Lorraine has the ambition to grow its turnover by half to 2 billion euros by 2028. ‘If you want to play in the Champions League, you have to give everything.’

“We have gone from one crisis to another in recent years,” says Guido Vanherpe, CEO of La Lorraine, about the difficult course of recent years. ‘The pandemic, supply problems and then the war in Ukraine that has led to unprecedented price spikes for wheat, our most important commodity. There was little room to take it easy. We had to give everything. If you want to continue playing in the Champions League and be a winner, you have no choice. Despite everything, we have been able to continue our growth trajectory. We’re going to keep that engine running.’

Vanherpe throws the evidence on the table. Turnover increased by 16 percent last year to almost 1.4 billion euros. The recurring gross operating profit (rebitda) increased 38 percent to 189 million euros. Record figures, again.

The family business has grown into the largest industrial baker in Flanders and one of the largest in Europe. It fills the shelves of Delhaize and Carrefour, among others, with fresh bread, pastries and pastries. In the 1980s, La Lorraine pioneered frozen bakery products. This made it big in Eastern Europe, Turkey and the Middle East. Viennoiserie, breads, donuts or focaccia are exported half-baked and frozen, after which they are baked in supermarkets, restaurants or hotels just before consumption.

‘We have grown in all regions. We sell a basic food product and have not really suffered from inflation and lower purchasing power,” says Vanherpe, who has been at the helm for a quarter of a century. ‘We focus more on specialties, artisan breads, sourdough breads and… sweet on the go, such as fritters and donuts with all kinds of flavors. That pays off.’

Half of the turnover growth is due to higher sales volumes and half to price increases. The profit margin (rebitda) is again at the level Vanherpe wants it to be. After the sharp dip last year, it has recovered to just under 14 percent.

“We have entered calmer waters a bit,” says Vanherpe, without becoming too enthusiastic. ‘The wheat price started to fall after the summer, but you cannot say the same about wages. And the wheat price is certainly not yet at its previous level. Energy is also still expensive. No, there is little room to lower our sales prices. We must remain vigilant, because every year there is a surprise somewhere. Volatility is the word that applies more than ever. The price of butter doubled at some point. Cocoa has tripled in just a few months and has never been so expensive. This leads to tensions in the market, with speculators capitalizing on it and temporarily causing additional disruption.’

Vanherpe is again counting on ‘nice growth’ for this year. ‘We have grown by an average of 10 percent over the past 25 years, and that remains the target. Our ambition is to be half the size by 2028,” it said. That would mean that turnover would exceed 2 billion euros. To achieve this, La Lorraine is expanding its investment programme.

This year the company is investing 200 million euros. In Erpe-Mere, the upgrade of the frozen bakery factory continues, doubling production capacity. ‘We are starting here with a wage handicap compared to neighboring countries. Tackling this disability is a priority for the government. If you deny that, you are definitely not doing well. But we show that you can grow and create jobs in Belgium if you invest in the most modern technology and automation. But you have to go for it, on a large scale. There is no room in our country to do anything with half measures.’

In Belgium, La Lorraine is looking for 100 new employees this year, and another 300 elsewhere in the group. The company bought in from its distribution partner in Germany and Norway, and production lines are being added in Romania, the Czech Republic and Poland. ‘In Central and Eastern Europe, the use of frozen bakery products is relatively low compared to the West, but there are enormous growth opportunities. We still have a lot of work to do in Europe for at least another five to ten years.’

In the meantime, the company is already looking further with its branches in Abu Dhabi and Turkey. ‘The Turkish consumer eats twice as much bread as a Belgian. These are still mainly local products, but there is a demand for more varieties – baguettes, croissants, artisan bread – especially in the big cities and tourist centers.’

Compatriot and sector colleague Vandemoortele recently moved to the US with the takeover of Banneton, a producer of frozen croissants, among other things. For the time being, La Lorraine is limited to exporting donuts and fritters to the US. ‘But if an opportunity arises, we will look at it thoroughly. But now I have nothing to say about that,” says Vanherpe.

In the pursuit of a lower carbon footprint, La Lorraine has taken its first steps towards regenerative agriculture. This is a new method in which healthy soil can retain more CO2. In a pilot project, the company purchased the first 3,000 tons of wheat grown in this way by Belgian farmers. The intention is to scale this up to 50,000 tons within a few years. ‘Calculations show that such grain cultivation generates 30 percent less CO2. It is even more expensive, but that is the path that agriculture must follow. This will be a difficult transition that requires investments and time. The hardest part is getting that snowball going.”