SanLucar founder Stephan Rötzer: Chile and Peru should improve their logistics system for the European market
From the March edition of Visión Frutícola magazine
With humble beginnings in Europe three decades ago, SanLucar has combined traditional expertise with innovative techniques to become one of the biggest names in the global fruit and vegetable business.
Originally conceived by Stephan Rötzer as a way for Spanish growers to sell their fruit in Germany under a premium brand, the iconic company has undergone a significant transformation and now grows and markets produce from more than 30 different countries, generating annual turnover of hundreds of millions of euros. Rötzer speaks about how he established SanLucar, his vision for the future of the European market, and what Chile and Peru must do to remain competitive.
How did you get started in the fruit and vegetable industry?
I was deeply influenced by my father, who was a wholesaler at the Munich market. I recall that it was him who taught and introduced me to the love of fruit. He came from an older school of thought where working was everything and worked 18 hours a day, 7 days a week. He taught me to love and work hard on fruits and vegetables.
What motivated you to found SanLucar in the early '90s and how did the sales start?
To be honest, I never wanted to work in fruit and veg. I wanted to live in Spain, but the only opportunity to live in Spain was to work in the fruit and veg business because I didn’t know how to do anything else.
So, I became a supermarket buyer for the German supermarket called Edeka, but the work there became monotonous for me. Then I had the opportunity to work with the best premium fruit and vegetable trader in the wholesale market in Cologne.
He was extremely intelligent and taught me what is needed to get a product of premium quality. It t isn’t only the fruit itself, but also the entire value chain behind and above all people’s knowledge and experience. When I returned to Spain, I became the managing director of a citrus packhouse and I learned about that side of the business as well.
I realized that I was selling ordinary fruit to supermarkets at ordinary prices while other growers I knew were growing fantastic fruit for the wholesale market but made less money than the low-quality fruit in the supermarkets.
As I reflected on the situation, I realized that it is very difficult for a consumer to understand a top-quality product if they don’t have the possibility of recognizing it at the point of sale. Thus the idea of creating a premium brand was born. It was evident: when a consumer buys a product and likes it, it is much easier for them to buy that product again if they recognize it under a brand name. And if they know that they get good value for their money and the consumers are happy and satisfied. So, there were three very small growers, they gave me their trust and encouraged me to create the company SanLucar. I had no money, but they said: ‘You're the right man to do that’.
One year later an Italian grape company came on board, so we were four. We were selling year-round: it was grapes in the fall, mainly citrus in winter, strawberries in spring and stone fruit in summer.
First, we created a brand that at least B2B customers could recognize in the market all year-round, and then we took the next step and became a B2C brand.
I had no idea. I was doing strange things when I was young, so after working two years in the market driving a forklift, getting up at 1 or 2 o'clock in the morning, working 18 hours per day I decided to never work in fruit and veg. But in the end, it was the only thing I learned correctly, and that I am passionate about.
Why did SanLucar initially focus on grapes, citrus, strawberries and stone fruit?
Firstly, I knew the people and secondly, they were the most important products on the market that were also available in Europe. Obviously stepping into the pineapple or banana market is more difficult because you have to go overseas.
So first of all I knew the European markets, mainly the German market, and understood what they needed. They were the fruits I knew best, and from there we began to have a wider range.
How did you first go about creating a B2B brand, at a time when branding for fruit and vegetables was much less prevalent in the industry?
It was not fast, not at all. I was a good professional in fruit and veg, I knew what quality was because I worked in the market and as a grower and in the supermarket, and so I understood that we were doing a fantastic job. I thought it was a pity that consumers didn’t have the chance to recognize what we were doing, because I think we deserved to be proud of what we were doing. And I am convinced that if you're proud of what you do, then you should explain it somehow. That's why we decided to do marketing, so that people can understand that our work is different and our brand adds value.
We moved into this business like any other company, and we said if we do marketing, we must do marketing like Coca-Cola and Nestlé. We traveled around and we had conversations with all the important advertising companies to learn how to do it well.
In 2019 SanLucar announced changes to its organizational structure, under which you and fellow founder Jorge Peris took over the management again and focused more heavily on operations. What drove this decision?
In the end, we understand that we must be a modern company. Good leading of the company is extremely important, so that's one part of the game. The other part of the game is that our product has to be extremely good.
People expect the best product when they buy SanLucar. Previously, the company's focus had been on leading people, which is good, but it moved away from being the best professionals in fruits and vegetables. So, we have realized that the first thing we need is to be the best in fruits and vegetables, and then obviously we need to have good company management. I think now we have both.
The last 18 months have been extremely exciting. We learned about what we could improve, we brought in new people, we promoted people inside SanLucar, and we changed structure. I think what we have done is extremely successful, and we are now by far in the most exciting and successful year of our history.
If we want to lead the fruit and veg market, we must know our product and the market with all its potential very well. If we want to create the future, we should understand what can be done differently, and explain it correctly.
It is also important to have a long-term relationship with supermarkets in order to be able to create something special together. Today, supermarkets are the main drivers of the business - they have the main market in their hands.
We are currently the largest variety owners and the largest suppliers to the European market - maybe apart from bananas and pineapples. We have invested in a lot of different technologies, and we are investing in new startups.
What buyers expect from us is not only to buy what has been available in the past, we want to design the future together. SanLucar is an expert on the point of sales because we have 40 to 50 people running around visiting supermarkets. We study consumer behavior to continuously adapt the presence at the point of sale and thus encourage sales. Not only for our brand but for the entire fruit and vegetable department in general.
Do you see this future-looking strategy as an industry trend among other companies?
No, I don't see the trend. But I think that the fruit and veg sector has to progress. We start doing things in a different way to become more like Unilever or Nestlé. We have to give our consumers confidence in the product they buy. They should be able to recognize the product while we are the specialists in fruit. If we only do what supermarkets say, SanLucar could not survive. We want to show them what is possible. We are now in a different century, and consumer buying behavior is changing.
The only way that supermarkets still can attract customers to a physical store is by fresh products and special consumer attention. In many areas, it is already being done, for example with meat. In fish, I see the potential for improvement, but in fruit and veg there are a lot of things to do and there are very few specialists.
I think we have to change the way that fruit and veg is presented to the consumer and the way how we think about it. So I think it is a tremendous opportunity today for supermarkets to mold themselves in a different and more attractive consumer-oriented way.
What changes do you see happening in the EU market and how could this affect the market in the future?
We should change how we approach end consumers. If supermarkets still think that only private labels are the answer to make consumers happy, I think they are wrong. Consumers expect special attention, something the digital world cannot offer them.
I know it's a difficult thing, but from my point of view it’s important, also supermarkets should try to be more exclusive and offer more things with special attention to the consumer - especially in a time where digital buying is becoming very popular.
There is a lot of money coming into the fruit and veg sector at the moment, there are a lot of funds coming in and buying companies in the sector because they don't know what to do with the money. So there will be a big consolidation of people who want to earn money that are not specialists in fruit and veg.
For us, because we are still healthy and we are growing extremely fast for a real fruit specialist, I think we have a fantastic opportunity to bring value to the market.
There have been some oversupply issues in some fruit over recent years in the EU market. Do you think the market will be able to absorb the future increases in supply?
I think the market is reacting extremely fast, in terms of both growing and selling different products. It's good that there are new trends coming.
Now, a lot of people have realized the importance of being healthy and are eating more fruits and vegetables, which is great that there are new ready-to-eat fruits in the market that are convenient, easy to eat and attractive for consumers. Consumers always want something new.
Do you think the trend of people eating more fruit and vegetables during the pandemic is here to stay for the long term?
I think so. There is one very important thing, and that is people eat more at home so they spend more time on food and cooking now.
For us, it is very nice to see that people are taking care of themselves. Hopefully, the restaurants come back very soon, obviously, I don’t like what is happening for them. But I think that people have realized the importance and pleasure of eating well, so in my opinion, the increase in fruit and veg consumption is something that is here to stay. Not all of it, but I think that this will remain for the future as a habit for consumers.
Which South American countries did you first get involved with, and what advice would you give Peruvian and Chilean fruit exporters for the EU market?
Our first country in South America was Chile, the second one was Peru, and the third was Ecuador. We still import many things from Chile and Peru.
I think that they should continue to be very innovative. It is important to incorporate new techniques and technology, they have to be in new varieties, and need to improve their logistics system for the European market.
Air freight should be better and cheaper. Perhaps they could work as the Americans do, creating a large group where they all can organize cheaper air freight. It would also be nice to have faster ships that are more dedicated to fruit. In my opinion that is the key – innovation, improve logistics and incorporate new techniques.