Marc Smith is acting editor of Families in Business.
Groupe Bel has grown from a small curing firm to the largest pre-cut processed cheese provider in the world. Marc Smith talks to fifth-generation CEO Antoine Fievet about the company's history, its ground-breaking marketing campaigns and the world of cheese
It is said that the simplest ideas are the best, but sometimes a little bit of extravagance goes a long way. Who would have thought that dividing a humble piece of cheese into portions, dressing each one in silver foil and branding it with an earringed red cow named La Vache Qui Rit (or Laughing Cow in English) would be a surefire way to start a successful business?
Léon Bel did just that when he developed the idea of a processed cheese, invented by the Swiss in the early 1900s, and trademarked Laughing Cow as a brand. Groupe Bel was launched in 1865 by Léon's brother, Jules, as a cheese-curing company and Léon drove it forward with his stroke of genius in 1921. Today, there are 10 million portions of Laughing Cow sold every day in 120 countries, while Groupe Bel has a turnover of €1.8 billion and a stated ambition to become the number one cheese group in Europe, and the number two worldwide in turnover and profitability.
When Families in Business met up with fifth-generation Antoine Fievet, the CEO of the family-owned holding company Unibel, he was keen to highlight the firm's entrepreneurial origins. "From the beginning Bel has always focused on brands, innovation and specialisation," he said. "Our expertise is the miniaturisation of cheese, which allows us to distinguish ourselves from competitors."
Aside from Laughing Cow, Bel is perhaps best known for its Babybel brand with its characteristic red wax covering. "Technically, the Mini-Babybel is difficult to make," explains Fievet. "It's not the cheese that's difficult but the way we package it and everything related to that."
Other brands in the Bel fridge include Apericube, a foil-wrapped cheese intended as an accompaniment to an aperitif; Leerdammer, the Dutch hard cheese; and Kiri, a cheese which is made especially for children with all the ingredients essential for their growth. There are 23 brands in total, but the company also sells derivatives from the cheese-making process to a diverse range of firms including ice cream and animal food manufacturers, although this makes up less than 10% of company activity.
The group makes most of its sales outside of its French base, and has expanded aggressively into foreign markets. Indeed, the company made its first expansion as early as 1929 when Laughing Cow was sold in the UK. Currently, it is the Middle East and North Africa that are the drivers behind the group's success.
"The products seem to work in every corner of the world, but we always try to adapt, to see which cheese markets are experiencing growth," says Fievet, who describes the firm's approach as both global and local. "If Laughing Cow is well-known in a country, we'll launch it with a manufacturing plant, as was the case in Syria in 2004. In other countries we need to buy local brands first."
The company, which has adopted a strategy of "first one in", has been expanding into Eastern Europe of late and purchased a Ukrainian company in April this year. This represented a change of tactics, as Fievet explains. "We now try to make the products in the same place we sell them. Shostka [the acquired company] is a famous brand in Ukraine and from this platform we introduced our own brands."
But it's not just new markets that have enabled the company to grow. "The secret of Laughing Cow is that we don't directly use milk – we start from other cheeses, which we melt to make another cheese," explains Fievet. "This means we are not dependent on cold chain distribution once the cheese is made, which means we've had a phenomenal success in developing countries, and countries that are not very well-equipped in terms of distribution."
Practicality is a big advantage, but so is the cheese's adaptability. "In Africa, for example, Laughing Cow isn't sold by pack but in individual portions. We also enrich the cheese with extra calcium and vitamin D so that it strengthens bones, which means it has an important nutritional value too."
Fievet is keen to continue another of his ancestor's innovative initiatives. "My great-great-grandfather [Léon Bel] was a pioneer in terms of advertising and he really built the brand," he reflects. "He was one of the first people to use sponsoring, large-scale posters and television. It was he who told the artist to use earrings because otherwise people would think it was an ox, and coloured the cow red so the image would be stronger." In fact, the brand was the sponsor of a cycling event as early as 1925, while in 1926 a department whose brief it was to come up with advertising materials was created.
Although Bel may have remained small in terms of the number of brands it owns compared to its competitors, Fievet believes this gives the firm a distinct advantage. Critically, they are able to assign most of their marketing budgets to just a few select brands and avoid spreading themselves too thinly. "Big brands need to be looked after, and we have always tried to consolidate our own market positions," he says.
But can a brand that was invented nearly 80 years ago still be relevant to today's notoriously fickle consumers? "I think that it's a brand that has still got a lot to offer," responds Fievet. "In the end it's a fantastic product because it's accessible, particularly to populations with little buying power such as the billions of people living in remote areas who cannot buy typical cheeses. I would say that it's most definitely a 21st century product."
If any more evidence was needed as to its relevance in the modern world, we need to look no further than its role in dieting. "When the US had a craze for the South Beach diet [which emphasises the consumption of "good carbs" and "good fats"] we were overwhelmed," explains Fievet. Unknown to Bel, the diet's creator – cardiologist Arthur Agatston – wrote a book that recommended Laughing Cow and demand went through the roof. "It was an incredible story because we were unable to make enough to deliver it to the people who wanted it."
Other projects that Bel is working on to promote the brand include La Maison de La Vache Qui Rit – a sort of museum celebrating the history of the cheese – and sailing. Named Groupe Bel, the company has purchased a monohulled 18m racing vessel to compete in the world famous Vendée Globe race. "The aim of the boat is to bring people together," says Fievet. "We are trying to give more sense to the brand, both for our customers and for our staff. It aims to represent our spirit of adventure and the nomadic side of the brand."
Fievet only became a part of the family firm in 2001 when his uncle, Bertrand Dufort, invited him to join. Dufort had taken over the reins from his father-in-law in 1996 and spent five years presiding over a company that was stagnating in terms of growth and profitability.
Leaving his job as marketing manager at Emap France, Fievet helped to completely transform the company. "I came in and started work on establishing objectives to make the firm profitable by 2007," says Fievet. "We hired independent administrators, moved the family away from the operational side, and created audit and strategic committees – we completely reorganised the company and redefined our business model." In addition, the firm sold the parts of the business that were losing money and purchased the Dutch brand Leerdammer.
However, perhaps the biggest change was the introduction of a non-family general manager. "Previously, the same people who were working for the family holding company were also working for the operational company," explains Fievet. "Now we have an operational head, who deals with day-to-day operations, and me, who is more responsible for the strategy and the long-term values of what the company stands for.
"Some areas are managed more closely by Unibel, such as external development, corporate communication and internal audit, but generally all topics are dealt with alongside the operational side and it works very well."
While he admits that everyone has a personal vision of power, Fievet believes that Bel's success is founded on the way family and non-family share power in a complementary way. In the event, Bel returned to profitability a year earlier than planned in 2006, and Fievet can now reflect on the challenges that lie ahead, which include the noble aim of a solution to feed the world and preparing the next generation.
"I'm continuing my grandfather's work, but I'm more prone to question things and gamble on people and products," he says. "Whereas my grandfather had the decision-making power, I'm only one family shareholder among several others. Of course the problems are different and the next generation means we will need to prepare well to ensure the company can grow, but it is important if we want to remain independent."
As part of the family's fifth generation, which constitutes nine cousins, Fievet sees preparing future generations as an integral part of his work. "It's the goal of all family businesses," he maintains. "It's my objective to identify the young people who work well, train them up and find ways to make everybody feel comfortable." It is certainly a goal that should keep the infamous red cow in high spirits for the future.