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Ebro CEO: Strong euro is 'major concern' for business
February 28, 2013 -- Updated 1717 GMT (0117 HKT)
- Ebro is a global producer of rice, pasta and sauces with a large international footprint
- Ebro has offset sluggish demand in Europe by expanding into higher growth markets
- Most recently Ebro acquired a 25% stake in Riso Scotti for $23.6 million
(CNN) -- The strong euro is a "major concern" for European businesses trying to export their goods, according to the chief executive of Spanish food group Ebro.
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Ebro is a global producer of rice, pasta and sauces with a large international footprint -- its home Spanish market accounts for just 7% of its turnover.
"The war between the different currencies is an alarming situation," said CEO Antonio Hernández, "we are still in a weak recovery; we need to export goods outside."
"We cannot afford to have a higher euro, in fact it's quite the opposite," he added.
The company has offset sluggish demand in Europe by expanding into higher growth markets that include Morocco, Egypt and Thailand. This year it will venture into India.
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Acquisitions of rice and pasta businesses have increased Ebro's market share but has also given it access to established distribution networks.
Most recently Ebro acquired a 25% stake in Riso Scotti for $23.6 million -- it's the leading risotto rice brand in Italy.
"We have a kind of matrix in which we try to grow," said Hernández. "The first idea is go where we are not yet, and the second is to enlarge the activities that we do."
To that end Ebro is branching out from its main dried foods business to frozen foods, particularly popular in North America, and fresh foods which is growing fast in France.
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Targeting different markets with different products is important to boost sales and profits. Hernández ensures managers are hired locally when they enter new territories to utilise their understanding of the market demands.
Back home in Spain labour market reforms are being implemented; businesses have more flexibility hiring temporary staff and salaries for new-hires can be lower, but they are having little impact on established Spanish businesses like Ebro.
"It could even be a problem for competition," said Hernández, "a newcomer into the industry can now hire staff at lower levels."
Despite this, Ebro's sales increased in Spain in 2012, suggesting that the domestic appetite for branded food is finally returning.
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