Toupargel-Agrigel S.A.

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Toupargel-Agrigel S.A.

13 Chemin des Pres Secs, Zone Industrielle
Civrieux d'Azergues
France
Telephone: + 33 04 72 54 10 00
Fax: + 33 04 72 54 10 3033
Web site: http://www.toupargel.fr

Public Company
Incorporated: 1947 as Toupargel S.A.
Employees: 3,502
Sales: EUR 360 million ($490.10 million) (2004)
Stock Exchanges: Euronext Paris
Ticker Symbol: TPGEL.PA
NAIC: 454113 Mail-Order Houses; 311412 Frozen Specialty Food Manufacturing; 311411 Frozen Fruit, Juice, and Vegetable Processing; 311712 Fresh and Frozen Seafood Processing

Toupargel-Agrigel S.A. is the leading provider of home delivery grocery services in France. Originally specializing in the delivery of frozen foods, which continues to account for more than 90 percent of group sales, Toupargel-Agrigel has expanded to include the delivery of fresh food and groceries as well. The company's frozen food operations are carried out under the Toupargel and Agrigel brand names. The company expects to integrate its two brands (Agrigel was acquired in 2003) under a single brand by 2007. Together, the two brands control 34 percent of France's frozen foods home delivery market, and more than 6 percent of the total frozen foods market. Toupargel-Agrigel's fresh foods and groceries operations brand, Place du Marché, was created in 2000. Led by Roland Tchenio, Toupargel-Agrigel has developed a proactive sales system. The company places calls to each of its more than 1.4 million customers up to 14 times per year in order to take their order; the company also operates an e-commerce web site. Orders are then delivered to customers within 48 hours. Customer support is handled through 35 call centers around France, as well as its own freezing and cold storage facilities, logistics platforms, and fleet of refrigerated vehicles. Toupargel-Agrigel is listed on the Euronext Paris Stock Exchange's Secondary Market. Roland Tchenio, the driving force behind the group's growth since 1982, is also its majority shareholder, with 56 percent of company shares.

New Home Delivery Model in the 1980s

Roland Tchenio completed his studies at France's elite HEC business school before earning an MBA at Harvard. Returning to France at the beginning of the 1970s, Tchenio worked first for French conglomerate Schlumberger before joining rival group Chargeurs in 1977. Tchenio developed a specialty in turning around struggling companies, with an emphasis on the retail sector. As Tchenio told Tremplins: "I've always worked in the distribution sector. My strength? A developer's profile. I'm able to take a concept, an idea, and understand how a company will be able to evolve."

Yet, as part of these rapidly growing conglomerates, Tchenio barely had the opportunity to enjoy the fruits of his success before moving on to the next acquisition. In 1982, therefore, Tchenio decided to set out in business on his own. Instead of founding his own company, Tchenio decided to put his career expertise to work, and favor the developer's role over that of entrepreneur.

Tchenio's target fell on Toupargel, a small company based in Civrieux d'Azergues. Founded in 1947, Toupargel originally specialized in the production of frozen vegetables and other foods. In 1969, Toupargel decided to enter the retail market, and began selling its products directly to consumers. The company's model mirrored that of the home grocery delivery market in France, using a small fleet of trucks outfitted as small grocery stores. These trucks served primarily a rural population; indeed, into the 1970s, the presence of freezers in French households remained limited in large part to the country's agricultural population. The appearance of large-scale supermarkets, and later hypermarkets, launched a shift in consumer grocery shopping habits in much of France. Nonetheless, the country's growing retail giants focused especially on larger urban markets. France's rural region, while accounting for a significant proportion of the country's population, remained underserved by the retail sector.

When Tchenio purchased Toupargel in 1982, it was a small but profitable business, with 70 employees and six truck stores and annual sales of less than $10 million per year. Tchenio immediately set out to develop the business, using his experience in the integration of acquisitions to expand the company. As he told Tremplins: "When I bought this company more than 20 years ago, I recognized immediately how I was going to develop it, notably by focusing on external expansion with regional companies."

Tchenio launched Toupargel on a long series of acquisitions, buying up many of the company's smaller rivals in the surrounding region, before beginning to expand on a national scale. By the early 1990s, Toupargel had completed some 30 acquisitions. The company's external growth effort continued through the 1990s, adding another ten companies into the next century.

From the start, however, Tchenio recognized the inefficiency of Toupargel's original model. The company's truck stores were too small to carry the range of goods offered by the larger supermarkets, which had begun to dominate the French market in the 1980s. While the company's existing clientele remained relatively loyal, developing new clients became more and more difficult. At the same time, sending out the company's fleet of trucks with no firm orders had become an inefficient use of the group's resources, especially following the oil crises of the 1970s.

Tchenio sought a new way of doing business, telling Creascope: "We saw that the truck store market was in decline. We tried out a system where the salesmen made house calls in order to take customers' orders, which were delivered afterward. We recognized that that wasn't working."

The solution came through the company's acquisition drive, which, in addition to increasing the group's client base and fleet, also gave the company the opportunity to explore different ways of approaching the home delivery market. As Tchenio explained: "In 1983, I acquired a company in Annecy who only did business by mail order. In 1985, I acquired a company in Poitiers that had used traveling salesmen but had decided to switch to telephone sales."

Tchenio decided to combine a catalog-based mail-order approach with use of telephone-driven sales. In 1986, the company began investing in its new model, converting its truck fleet and installing a computer-based ordering system. "Once we had found this solution, we needed to develop specific tools," Tchenio told Creascope. Toupargel quickly took the telephone sales model to a new level. Rather than send out its catalog and wait for customers to call, the company adopted a proactive approach. In support of this, Toupargel established its own network of call centers, responsible for contacting customers at regular, scheduled intervals—typically some 14 times per year—in order to take their orders. Customers were able to prepare their orders at their leisure, and know in advance when the Toupargel sales personnel were to call.

The conversion to this new sales model had the added benefit, for both Toupargel and its customers, of allowing the company to expand its range of products. "In the truck stores, we couldn't offer more than 200 items. Today, with the telephone, we have about 1,000," Tchenio told Creascope. Meanwhile, the company's delivery schedule was adapted to the new model, allowing the company to make more efficient use of its fleet.

Home Delivery Leader in the 2000s

Toupargel grew rapidly through the end of the 1980s and into the 1990s. By 1992, the company's sales had topped the equivalent of $50 million. By 1997, Toupargel's revenues had climbed past $85 million. In that year, the company went public, listing its stock on the Paris Stock Exchange's Secondary Market.

The public offering came in support of a change in the group's strategic direction. By the late 1990s, the French frozen foods home delivery market had more or less reached maturity, and future expansion of the market appeared less likely. A factor contributing to this was the consolidation of the supermarket sector in general. Limits imposed on the expansion of the hypermarket format—with new store openings becoming severely restricted in the 1990s—forced the larger distribution groups to seek other means to continue their own expansion by developing new store formats, including smaller shops targeting smaller and local population areas. A number of frozen food retail specialists had grown as well, including the nationally operating Picard and Thriet chains, providing more direct competition for Toupargel. Meanwhile, the promise of Internet shopping, although slow to develop, presented another threat to Toupargel's growth.

In response, Toupargel sought to expand its own base of operations away from its focus on frozen foods and to adapt its successful telephone-based sales system for the fresh foods and groceries market. Once again, Toupargel turned toward external growth to accomplish its strategy. In 1998, the company made two key acquisitions, buying Néodis and Selecta. Both companies operated home delivery services in the northeast of France. After their acquisition, the two companies were merged into a single operation in 1999. Renamed as Place du Marché ("Market Square"), the new operation was then converted to a telephone-based sales system. For this, Toupargel invested some EUR 16 million in the creation of a new, dedicated logistics center. Place du Marché also put into place its own call centers, based on the Toupargel model.

Company Perspectives:

Toupargel Agrigel is a specialist in the home delivery of quality food products to individuals, with two main businesses: Frozen Foods, which account for 96% of its sales, and Fresh Foods and Groceries. Our company business model distinguishes us from traditional distribution: telesales followed by delivery within 48 to 72 hours, after semi-automated preparation of sales orders at dedicated logistical platforms. This sales approach was created and perfected by the Group's Frozen Foods business, and now has been duplicated at the Group's Fresh Foods and Groceries business.

Place du Marché quickly added to its product offering, jumping from 500 items to more than 2,200 by the end of 2002. Yet converting the operation's existing client base proceeded less smoothly than expected. As a result, Toupargel was forced to backtrack a bit, returning to a truck-based store system for its existing clientele, while retaining the telephone-based system in order to convert these customers in the future, and attract a new generation of customers. By the beginning of 2003, Toupargel's sales had topped EUR 110 million.

While it continued to build up its fresh foods division, Toupargel soon found a new—and faster—approach to its expansion. In 2003, the company agreed to buy up Frigedoc, a subsidiary of Cigesal-Miko, a part of Unilever. Toupargel paid EUR 81 million for the acquisition, which gave it control of Frigedoc's Agrigel brand, the French frozen foods home delivery leader. The addition of Agrigel forced Toupargel into debt for the first time, yet the acquisition also tripled Toupargel in size, establishing it as the clear leader in its market.

The integration of Agrigel into Toupargel, which renamed itself as Agrigel-Toupargel, went smoothly. The company dedicated most of 2004 to converting Agrigel, previously a truck store-based operation, to Toupargel's telephone sales system. The convergence of the two operations, especially the generation of operational synergies, continued through 2005. By the end of that year fully 95 percent of Agrigel's sales were generated through the telephone.

The integration process was expected to continue through 2006, at which point Toupargel-Agrigel expected to convert its operations to a single brand name. With annual sales of nearly EUR 360 million ($400 million), Toupargel-Agrigel had built up a solid position in the French home delivery market. Under Roland Tchenio, named one of Ernst & Young's French Entrepreneurs of the Year for 2004, Toupargel-Agrigel appeared certain to maintain a prominent spot in the French retail market.

Principal Subsidiaries

Agrigel S.A.; Place du Marché S.A.

Principal Competitors

Carrefour S.A.; Casino S.A.; Etablissements E. LeClerc S.A.; Picard S.A.; Thriet S.A.

Key Dates:

1947:: Toupargel is founded as a frozen foods producer.
1969:: Toupargel begins home deliveries of frozen foods.
1982:: Roland Tchenio buys Toupargel and begins an expansion program, acquiring 40 companies over the next 20 years.
1986:: Toupargel adopts a telephone-based sales system.
1997:: Toupargel goes public on the Paris Stock Exchange's Secondary Market.
1998:: Toupargel acquires Néodis and Selecta, specialized in fresh foods and groceries home delivery.
2000:: After merging together, Néodis and Selecta adopt the Place du Marché brand name and begin a telephone sales system.
2003:: Toupargel acquires Agrigel, French leader in the frozen foods home delivery market, from Unilever for EUR 81 million.
2005:: Agrigel is converted to a telephone sales system and achieves 95 percent of its sales over the telephone.