18 March 2021 - With a view to expand in the Central and Eastern European region, Barentz International last month said it was acquiring a majority stake in the Noack Group - a specialised distributor of ingredients for the animal nutrition industry, founded in 1980 and headquartered in Vienna.
With an annual turnover of €60 million and approximately 130 staff, Noack benefits from a presence in Austria, Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania, Russia, Serbia, Slovakia and Slovenia. In adjacent countries, such as Northern Macedonia, Bosnia & Herzegovina and Moldavia, Noack cooperates with local partners.
Noack will assist Barentz with the expansion into Central and Eastern Europe and the collaboration is expected to open many new territories for both parties.
Although the deal is still awaiting antitrust clearance, which is expected to take four to six weeks, Barentz and Noack will first identify areas of collaboration and share knowledge, before really pulling the trigger on synergy plans. Herbert Völkerer, Noack’s CEO, and Tim Lemeer, Vice President Animal Nutrition at Barentz, were happy to shed some light on the potential of the Central and Eastern European market and on the background of their partnership.
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Each country in the Central and Eastern European region of course has its specificities. There are high growth markets like Poland (11.5 million tonnes of compound feed production in 2019, according to FEFAC data), and there are also markets which are smaller in size, so the potential for growth may be more limited, especially in countries which are not EU Member States. Likewise, some of the countries have smaller livestock herds or are lagging in terms of economic growth for perhaps historical and political struggles. Industrial feed production levels can be low in some areas as there is still large numbers of backyard farmers and less modernised or professionalised outfits. And there are also differences within each country at regional. But Tim Lemeer commented: “Overall, the growth of the feed and animal production industries in the region is steady and progressive. Growth in some markets even outpaces Western Europe. Poland is now one of the largest feed producers in Europe and similar growth trajectories are being noticed in other countries. The Central and Eastern European region is more and more focused on balanced diets and high-quality ingredients. This bodes well.” |
Herbert Völkerer |
Tim Lemeer
Prior to the investment in Noack, Barentz benefitted from good experiences in Central and Eastern Europe and wanted to expand further in the region.
“We had offices in most of the countries but were mainly present in food and pharma and were not getting the desired traction with animal nutrition. We had connections with meat integrators in the region and our feed additives were already finding their way into these countries, but logistics were not as optimal as desired,” Lemeer said. “We were mainly selling our more commoditised products. It was harder to sell our specialties.”
“We identified the need for a partnership. So, Noack was a logical and natural move for us, and we began our collaboration discussions in early 2020,” he added.
The new collaboration with Noack is seen to be in line with Barentz’s “Business Plan towards 2025” strategy.
Touching base on the plan, Lemeer said: “The shift to animal nutrition specialties continues to be our focus as well as growing customer intimacy. We want to supply more than the commoditised ingredients and additives. Pet food is also a big growth area for us. And we will seek to unlock further opportunities from the crossovers of the Barentz Group. In line with the towards 2025 strategy, we could consider acquisitions in the feed specialties domain, or perhaps in pet food.”
From Noack’s perspective, the partnership with Barentz will help them solidify their market position in Central and Eastern Europe and open the doors to new markets.
Herbert Völkerer said: “Over the years, we have developed a good understanding of the Central and Eastern European region. For instance, in the past, this region was mainly known for its poultry and pig production. However, the dairy cattle market has become a growing factor as milk and dairy products consumption has increased in tandem with rises in average income. Since the start of our company, Noack has created long-lasting relationships with customers and suppliers, helping us to ensure a solid market presence.”
However, according to Völkerer, seeking the right partner with the right mindset was fundamental for further expansion.
“We didn’t have the right size yet to play the international role we wanted to play. Noack sought a partner with the same level of entrepreneurial thinking and understanding of local customer relationships and need for specialized products. The animal nutrition distribution business is quite complex and encompasses many products, and you need to be able to count on stable suppliers and relationships.”
“Now, we can really extend our business with new products. The partnership will enable Noack to further improve logistics and costs, which in turn could lead to efficiencies in distribution and extra financial advantages for customers,” he added.
Völkerer went on to say that Noack’s focus has primarily been on feed additives and veterinary diagnostics, and his firm was looking for opportunities in food additive distribution to increase its presence in the overall food chain.
“We had been approached by Brenntag in the past, however we realized that Barentz’s philosophy was a better fit,” he said. “Now that we are collaborating, and in addition to animal nutrition products, we have access to a food additive portfolio, while they have access to our veterinary diagnostics operations. We will enlarge our product ranges together in new markets.”
Völkerer and Lemeer view the Barentz and Noack animal nutrition product portfolios as complementary. Asked whether there may be overlap for some products and suppliers, they answered by saying that there is hardly any product overlap at all.
“Our suppliers, for instance, in vitamins and amino acids, but also several speciality principals have already responded well to the news,” said Lemeer.
“We will ensure that the framework and agreements we have with suppliers remain in place. And we are confident that all our suppliers will continue to be represented,” he also stressed.
Völkerer added: “Noack’s suppliers are pleased with the partnership and looking forward to opportunities in other countries. The Barentz-Noack combination may even open the door to new supplier/customer agreements. We will be larger and able to even better source products more competitively.”
And given the current distribution market climate, which is still faced with supply chain disruptions, notably from China with the resulting rise in ocean freight rates seen in recent months, Lemeer and Völkerer are adamant that companies with good relationships, supply chain capabilities, good planning and competitive prices have been more resilient.
For Lemeer, the current disruptions have even accentuated the differences between distribution companies.
“Barentz has not experienced a single delay since the start of the global pandemic in December 2019. We ship 1,500 containers containing animal nutrition products out of China each year. We have contracted good freight rates and we don’t buy containers on a spot basis,” he said.
“In Europe, Noack has a lot of experience shipping between countries by road. Most of our volumes are transported by trucks and we have also contracted good rates,” Völkerer also argued. “Now with Barentz, we will have an even more attractive proposition.”
