Tulip Ltd.

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Tulip Ltd.

Budbrooke Road
Warwick, CV34 5WE
United Kingdom
Telephone: (+44-1926) 475860
Fax: (+44-1926) 475688
Web site: http://www.danepak.co.uk

Wholly Owned Subsidiary of Danish Crown AmbA
Incorporated: 1990 as Tulip International
Employees: 7,000
Sales: EUR 1.4 billion (2006)
NAIC: 311611 Animal (Except Poultry) Slaughtering; 11612 Meat Processed from Carcasses

DANISH PORK SATISFYING BRITISH BACON LOVERS

DANEPAK BRAND IN 1960

NATIONAL PORK GIANT IN THE NEW CENTURY

PRINCIPAL SUBSIDIARIES

PRINCIPAL COMPETITORS

DANISH PORK SATISFYING BRITISH BACON LOVERS

The United Kingdom emerged as a major export market for Danish pig farmers in the mid-19th century. The boom in Britain’s urban population had left the country’s agricultural sector struggling to keep up with demand. At the same time, the rising wealth of the middle and upper middle class generated by the country’s industrial revolution led to a new demand for luxury foods, including meats. New shipping routes opened between the United Kingdom and Denmark provided the opportunity for Danish farmers to begin developing export operations there. British demand for bacon, at the time a luxury food, offered a major outlet for Denmark’s pig farmers, and led to the first exports of bacon to the United Kingdom. The first recorded shipment of just six sides of “green salted bacon” aboard the SS Rattler sailing from the port of Hjertting reached England in 1847.

Part of the impetus to develop an export relationship with the United Kingdom came after Germany closed its border to Danish live pigs imports. Instead, the Danish farmers began shipping pigs and cured pork products to the United Kingdom. This trade took off especially after inauguration of a paddle steamer line operating between the port of Ebjerg and the United Kingdom in 1875.

The increased supply of bacon helped bring down prices and further stimulate demand for what was shortly to become the largest-selling meat type in Britain. The booming export market, as well as a strong domestic market for pork meat in general, also helped stimulate the first signs of consolidation within the Danish pig farming sector. Cooperation among farmers had by then become a growing trend throughout Europe, and reached into other sectors, such as the banking and food distribution sectors. By grouping together, farmers were able to protect their interests, offer mutual assistance, and raise the necessary funding to invest in slaughtering and industrial-scale food processing facilities. These became all the more important as demand for Danish bacon swept throughout the United Kingdom. The first of the Danish pig farming cooperatives was founded in Horsens in 1887. The cooperative movement quickly came to dominate Danish pig farming to the extent that, into the 21st century, the company’s cooperative movement continued to account for more than 94 percent of the country’s total pig production. In the meantime, the United Kingdom had grown into one of the sector’s most important export market. By the 1890s, the United Kingdom was the destination for more than 90 percent of Denmark’s total bacon exports.

Despite the drop-off in trade during the two world wars, the relationship between Danish pigs and U.K. bacon demand remained a strong one throughout the 20th century. Part of this came from the creation of a dedicated distribution channel for the United Kingdom, which allowed Danish bacon producers to achieve national penetration. The fast growth of the pork products market had led to the development of a network of slaughterhouses operating throughout Denmark into the second half of the 20th century. Following the end of World War II and the end of rationing in the late 1940s, the United Kingdom entered a new period of economic growth. The Danish bacon industry’s strong industrial, logistics, and distribution infrastructure placed it in the position to become the primary supplier to the surging British bacon market.

DANEPAK BRAND IN 1960

The first of the Danish bacon brands had firmly established itself at home, especially in the United Kingdom, after the Tulip brand had been registered in 1912. That brand was also said to be the country’s first registered trademark.

COMPANY PERSPECTIVES

It’s a brand of pork, bacon and sausages that comes from Danish pig farms. So if you buy Danepak, you’ll know it’s the real thing. Owned by a co-operative of Danish pig farmers and their abattoirs (which dates back to 1887), Danepak is an integral part of the Danish farming community. And with a range of universally popular pork products, Danepak brings the best of the UK’s most famous meat brand. What else can we tell you? We have an unrivaled food safety record. We make sure all Danepak pork products are fully traceable—from farm to fork. We sell around 185 million rashers of bacon a year—90% of which is in the UK. We have even established our own Danish pig breeds. Essentially, Danepak is a brand built on Danish heritage by Danish farmers, to bring you the best Denmark has. By that, of course, we mean succulent, delicious, great tasting pork, bacon and sausage.

The Tulip brand helped lead to the conquering of post–World War II Britain’s bacon market. By the end of the 1950s, Danish bacon had captured the leading share of the market, and through the end of the century was to remain a major player, with more than 30 percent of total U.K. bacon sales. The country’s position was boosted in the 1950s with the rollout of a television advertising campaign based on the slogan “Good Bacon

Has Danish Written All Over It.” This marked one of the first food products to be advertised on television.

The shift in the British retail sector during this time also played an important role in the development of the future Tulip Ltd. The emergence of a new self-service supermarket industry especially during the 1950s had a profound effect on British shopping and consumer habits. If consumers had traditionally made their bacon and other meat purchases from the traditional butcher shop, they increasingly turned to the new larger-scale supermarkets. These responded by increasing the range of meat products, especially prepackaged meat products. In turn, the Danish meat producers were forced to invest in new processing and packaging techniques and equipment.

In 1958, for example, Tulip became the first in Europe to install machinery to produce bacon slices at its Vejle, Denmark, headquarters. The Tulip brand had also developed dedicated processing facilities in the United Kingdom, at first on a small scale in the 1940s. By 1958, the Danish Bacon Company had constructed a new facility in order to produce Tulip-branded bacon in Selby. This facility was later supplemented by the construction of a new plant in Thetford in 1965.

By then, Tulip had been confronted by the fast rise of a new competitor, the Danepak brand. Danepak had been launched in 1961, following the merger of a number of Danish pig farmer cooperatives. Danepak quickly grew into a major rival for the Tulip brand in the U.K. market. The 1960s also marked a high point for the Danish bacon industry, at least in the United Kingdom, as the average annual per-capita consumption of bacon peaked at some 12 kilos per year.

NATIONAL PORK GIANT IN THE NEW CENTURY

The increasing awareness of health concerns surrounding fatty foods, and particularly animal fats, had begun to produce declines in the bacon market. With consumers increasingly turning to lower fat meat choices, such as poultry and fish, in the 1970s and 1980s, overall per-capita bacon consumption dropped. By 2000, that average had fallen to a still-respectable eight kilos per year. While the United Kingdom remained the world’s leading bacon market, the shrinking market led Denmark’s farmer cooperatives to adjust to the changing situation.

The market entered a new wave of consolidation at the beginning of the 1990s. Rivals Tulip and Danepak, together with Royal Dane Quality/Normeat and Jaka Foods, agreed to merge in 1990, forming Tulip International A/S. In the meantime, Denmark’s slaughterhouse cooperatives had also combined to create giant Danish Crown. Danish Crown then became the majority shareholder of Tulip International. Also in 1990, the Danish pig farming market was marked by another large-scale merger with the creation of a new company, Danish Prime, combining Meatcut A/S and Faaborg Middagsretter.

The process leading toward the future Tulip continued in the mid-1990s, with the merger of Danish Prime and MOU in 1995. That company then launched a revamp of its product line, which was regrouped under the MOU brand name. The expanded Danish Prime took a leading role in reducing the Danish pork sector’s reliance on its core bacon sales. In 1999, for example, Danish Prime acquired frozen sandwich maker Iwans Dybfrost.

During this period, Danish Crown revealed itself as a driving forced behind the consolidation of the Danish pig farming sector. The company acquired full control of Tulip International in 1998. Danish Crown had also been pursuing a merger between Tulip and chief rival Vestjyske Slagterier (VJS) since the early 1990s. By 1999 that merger was finally carried out after Danish Crown received approval from the European Union to complete a merger with VJS. The latter company’s processing operations were then transferred to Tulip International.

KEY DATES

1847:: Danish bacon is first exported to the United Kingdom.
1887:: First Danish pig farmer’s cooperative is formed.
1912:: Tulip bacon brand debuts.
1958:: Tulip installs first bacon slicing machinery in Europe.
1961:: Danepak brand is introduced.
1990:: Tulip International is created from merger of >Tulip, Danepak, and two other Danish pork processing cooperatives, with Danish Crown as majority shareholder.
1998:: Danish Crown acquires 100 percent of Tulip, then acquires Vestjyske Slagterier, becoming Denmark’s dominant pig slaughtering group.
2002:: Tulip and Danish Prime merge.
2007:: Tulip launches £50 million investment program in order to expand U.K. facilities.

The consolidation of the Danish pork meat industry continued into the next century. A new phase in that development was accomplished in 2001, when Danish Crown reached an agreement to merge with rival cooperative Steff-Houlberg. The combined company, which continued under the Danish Crown name, then claimed a 10 percent share of the entire European pork market. The merger also expanded operations at Tulip, which took over Steff-Houlberg’s processing business. Just one year later, Danish Crown emerged as the dominant force in the Danish pigmeat industry, following its agreement to merge with its last large-scale domestic rival, Danish Prime.

With its position consolidated at home, Danish Crown and Tulip moved to solidify operations in its core export market. As a first step, the company restructured its U.K. processing operations into a new company, Tulip Ltd., which operated as a sister company to the Danish processing branch, Tulip Food Company. At the same time, Tulip merged its own foodservice industry operations with those of Danish Prime and VJS to form subsidiary Tulip Food Service Ltd.

Tulip then began taking steps to increase its market share, both in Denmark and in the United Kingdom. The company acquired Hygrade Foods Ltd. in 2003 in the United Kingdom. Tulip bought sausage manufacturer Pølsefabrikken Gøl, as part of a larger effort to expand its product range in order to reduce its reliance on bacon. The company also set out to revitalize its core bacon line, particularly by extending its Danepak brand into the premium quality segment. This effort included the launch of the “healthier” bacon, Lean and Low. In 2007, the company also launched a revamped line of high-end rashers, as well as a number of limited edition products, featuring different flavors and curing methods.

The acquisition of Flagship Foods in 2004 represented a major step toward Tulip’s goal of becoming a dominant player in the U.K. meats market. The addition of that company, which included subsidiaries Roach Foods, Dalehed Foods, BQP Pig Farming Enterprise and Flagship Fresh Meats, helped boost Tulip’s total revenues to nearly £1 billion. The acquisition also made Tulip Ltd. the largest part of the Danish Crown group.

Tulip turned its attention to new markets. In 2004, the company acquired operations in Germany, buying Oldenburger Fleischwarenfabrik there. That same year, the company expanded its production operations to include Poland, through the acquisition of a stake in that company’s Sokolow SA. Nonetheless, the United Kingdom remained Tulip’s core market. This was underscored in May 2007, when Tulip announced plans to spend as much as £50 million ($90 million) to upgrade its U.K. production facilities. Tulip Ltd. represented the continuation of more than 150 years of the United Kingdom’s romance with Denmark’s bacon.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Majesty Inc. (U.S.A.); Pølsemannen AB (Sweden); Tulip Food Company (Russia); Tulip Food Company AB (Sweden); Tulip Food Company GmbH (Germany); Tulip Food Company Italiana S.r.L.; Tulip Food Company Japan Ltd; Tulip Food Company OY (Finland); Tulip Food Service LTD.

PRINCIPAL COMPETITORS

VION N.V.; Orkla ASA; Kerry Group PLC; Royal Cebeco Group Cooperative U.A.; Groupe Terrena; Sadia S.A.; B and C Toennies Holding GmbH und Company KG; Brake Brothers Ltd; Floc’h et Marchand; SOCOPA S.A.; A Moksel AG; Glanbia PLC.