Sligro’s sweet mayonnaise is not popular in Belgium

Despite its belief in Burgundian Belgium, the catering wholesaler Sligro has lost more than 100 million euros here in eight years. IT problems and a range that is too Dutch complicate matters. ‘Of course our customers have to get used to it.’

The story starts in 2015, when Koen Slippens (now 56) decided to move to Belgium with his catering wholesaler Sligro. The family business has reached its limits in the Netherlands. With an annual turnover of 2.8 billion euros, it is the market leader.

The business case is clear: Belgium is small, but exuberant. “The market has increased our fish pond by 50 percent,” Sligro notes in its annual report. Furthermore, the language and geographical proximity are an asset. ‘The distance from Veghel to Amsterdam or from Veghel to Antwerp does not differ much.’

However, Sligro will be far from home in Belgium. In 2022, seven years after the wholesaler crossed the border, the Belgian organization will come to a standstill. Customers are leaving and Belgian losses will double to 23 million euros in 2023. A major IT project turns into an expensive fiasco. The Dutch products that Sligro serves the Belgians are not popular. All in all, the Slippens family has already seen more than 100 million euros go up in smoke and the company has lost half its value on the stock exchange.

Things haven’t been going well from the start. Sligro tries in vain to buy Belgian wholesalers. When the Dutch make plans to build there themselves, including in Antwerp, no fewer than twenty competitors go to court to block the permits. Among them are the German group Metro and the Belgian supermarket chain Colruyt.

Slippens has long since adjusted his strategy. Sligro bought Java in 2016 and ISPC in 2017. In 2018, Sligro Belgium recorded 220 million euros and 3 million euros in operating profit before depreciation (EBITDA). It will be the first and, for the time being, last profit year.

Afterwards, Sligro failed to forge its operations into a robust whole. Sligro reports annually on the basis of estimates that it is growing faster than the market. Paradoxically, it also reports a market share that fluctuates between 3 and 3.9 percent. The auditor also notes year after year that growth lags behind expectations.

This will lead to a first impairment of 60 million euros in 2020, followed a year later by another 3 million euros. Conclusion: Sligro paid too much for ISPC and Java.

The company also does not understand the subtleties of the Belgian market. In its search for savings, Sligro is forcing an increasingly Dutch range on Belgians, say insiders. Products with monolingual Dutch labels end up with French-speaking customers.

There will be products in the range that Belgians are turned off by. Like sweet mayonnaise, while Belgians like sour mayonnaise. “All the sauces were so sweet,” says a retired employee of Sligro Belgium. ‘They came with peanut sauce. A Belgian doesn’t want to eat that. And the broth was overly salty.’ Another person involved states that ‘in the Netherlands they simply don’t know what a good ham is’.

According to the critics, Sligro is paying less and less attention to top quality. The retired employee remembers how before the takeover it took him ‘at least half an hour’ to guide customers through the extensive range of olive oil. ‘Afterwards almost all the oil came from the same barrel.’

Another insider calls this approach typically Dutch. ‘The Dutch catering industry mainly aims for mediocrity: the majority of restaurants offer a good steak for around 26 euros per kilo. Belgium is more of a country of extremes: dirt cheap on the one hand, top quality on the other. They need steaks for 18 euros and 45 euros.’

However, Sligro has acquired know-how in the high segment through the acquisition of ISPC. But the Dutch are currently completely converting ISPC to the Dutch Sligro concept. In Ghent, the restaurant where ISPC invited star chefs to taste the products will disappear.

Sligro qualifies the success of the old ISPC in a written response. ‘If you adopt a formula with a return that leaves much to be desired and which is active in a niche market, while our ambition is the much larger mid-plus market, then making no changes is not the wisest route.’

Sligro refutes that it pays too little attention to Belgian taste. ‘Sometimes it takes some time before products and the correct multilingual packaging are available.’

Yet it remains striking that after eight years, Sligro still cannot understand Belgian taste. This will become apparent when it buys the Metro wholesalers in early 2023. They achieve 40 percent of their turnover with their popular private label. After the restart, Sligro from Metro must replace these products with the name Sligro-M. Once again the replacement products do not work. “Of course, our customers had to get used to it and be well informed about it,” the annual report states.

In its first year, Sligro-M performed below expectations. Before the wholesalers entered a downturn under their previous ailing owner, they turned over 300 million euros. Barely 157 million euros will remain of this in 2023. At the end of the year, according to the company, they were at ‘approximately’ 65 percent of their historical turnover, while the company had expected 70 percent.

The delivery service – which used to be worth 40 million euros – has restarted later than planned, the company now says. Moreover, the wholesaler in Middelkerke is still in a temporary location due to a permit dispute.

Sligro Belgium is also losing customers due to IT problems that will get out of hand from 2022. It will then install a new ERP system in Antwerp, with which companies can arrange their accounting, stocks, orders and personnel policy. Customers receive defective or no deliveries at all. They don’t receive an invoice for months, only to have to pay a large amount all at once. Sligro is forced to offer financial compensation to customers who stay.

Sligro will take drastic action at the end of 2023. The project is partially stopped, leading to impairments totaling 25 million euros. The Belgian subsidiaries take over the IBM system from the Netherlands. After seven years, the situation in which Belgium works with four ERP systems, a legacy of the takeover process, will come to an end.

Despite the criticism, Sligro has chosen to manage Belgium even more from the Netherlands. Sligro just removed its Belgian management and 150 jobs will disappear in Belgium and the Netherlands. ‘We strive for a standardization of the processes, systems and ranges in all Belgian activities, with a central supply from the central distribution center in Veghel’, states the annual report for 2023.

The doubled loss means it’s all hands on deck to cut costs. Belgium is increasingly weighing on group profit, which is also under pressure from inflation. Last year there was 6 million euros in group profit, compared to 46 million euros five years earlier.

According to Sligro, the new approach is already paying off. “Some of the lost customers returned early this year. We estimate that this will lead to a good recovery in turnover growth in the second half of the year.’

So the Slippens will not be fooled. ‘The ambition to grow internationally in the long term remains as great as ever,’ Sligro writes in its annual report for 2022. ‘In the coming years, however, we will focus our attention on the Netherlands and Belgium. We do not aspire to take a step to the next country before 2026.’

The company repeated that message verbatim a year later. Although it deletes the last sentence. Instead it says: ‘First, let’s fully capitalize on all the potential in our current two market areas.’