Berentzen has a new corporate strategy with – according to Executive Board Spokesman Oliver Schwegmann – "very ambitious goals", which are to be achieved by 2028. The core of "Building Berentzen 2028" is the increased focus on the beverage company's key growth drivers: The three top brands Berentzen (wheat grain), Puschkin (vodka) and Mio Mio (caffeinated soft drink). The gross profit power of the three brands is well above the Group average, says Schwegmann talking to Börsen-Zeitung.

"Our goal is to increase sales with these three brands by 50 to 100% by 2028." Revenues from the core Berentzen brand are set to grow from 20 million euros to 35 million euros. Pushkin's revenues are to increase from 10 million euros to 15 million euros, and Mio Mio's from 20 million euros to 40 million euros.

Together, the Berentzen, Puschkin and Mio Mio brands are expected to generate sales of around 90 million euros in 2028. This would be just under 40% of the targeted Group revenue, as Berentzen has drawn up a medium-term forecast for the first time in addition to the new strategy – for 2028, according to which the management expects revenue of 235 million euros, earnings before interest, taxes, depreciation and amortisation (EBITDA) of 28 million euros and EBIT of 18 million euros.

According to preliminary figures, sales totalled 185.6 (previous year: 174.2) million euros last year, resulting in an EBITDA of 16.1 (16.7) million euros and an EBIT of 7.7 (8.3) million euros. The targets for 2028, therefore, imply sales growth totalling 27% and increases in EBITDA and EBIT of 74% and 134%, respectively, or around 5% (sales), 12% (EBITDA) and 19% (EBIT) in the five-year plan. This assumes an annual inflation rate of 1.5% to 2.0%. The planned growth is, therefore, "real".

In order to achieve this, expenditure on marketing and sales will be significantly increased step by step over the next few years, explains Schwegmann. In addition, product portfolios, structures and processes will be scrutinised, and synergy effects within the Group will be leveraged to an even greater extent. In response to the objection that these measures are part of the daily work of the Management Board, Schwegmann replies that the adjustments mentioned go far beyond what is usually part of the everyday work of company management. "It's about the sum total of the measures that have now been introduced. There will be radical steps, the likes of which we have never seen before."

The Group's classic brands include Strothmann (wheat grain), Doornkaat (grain brandy), Echt Stonsdorfer (herbal liqueur) and, of course, Bommerlunder; the "ice-cooled" aquavit has been virtually immortalised by the punk band "Die Toten Hosen". Once upon a time – when there were only three TV channels (ARD, ZDF and the regional programme) and you still had to get up from your armchair and go to the TV set to change the channel – commercials for these traditional brands were even broadcast at prime time. However, Schwegmann's comments make it clear that these labels are not growth brands or major profit generators – although they do have a right to exist. "They are in the portfolio, they deliver important contribution margins, but their volume is more likely to fall slightly than remain stable over the next few years." Another reason is that aquavit and brandies are no longer extended growth categories these days.

Schwegmann makes it clear that there will not be a linear increase in sales and earnings by 2028. There will need to be start-up investments, for example for marketing or to build up sales potential and optimise locations, which will have a negative impact at the beginning of the five-year period. On the one hand, he points out that the management has been setting the strategic course for years in order to be able to make the giant leap forward now, and on the other hand, it should be noted with regard to the targeted sales increase of 27% in five years that the Group will initially part with a significant revenue block due to the upcoming location and portfolio streamlining; this means that growth will be significantly higher than 27% after adjustment.

Schwegmann will not reveal which brands are about to be discontinued or whether and to what extent there will be site and job cuts or changes in production. But he is unequivocal: "We are not satisfied with the profitability of our Non-alcoholic Beverages division." The division was established 50 years ago as a contract bottling company with regional mineral waters. However, by focusing on the Mio Mio brand, the company had already begun to transform this business area from a regional mineral water bottler into a national soft drinks player in recent years. "What we still have in this area are not insignificant parts of the contract bottling business and some regional brands and products that are low-margin," the CEO clarifies. "You can be prepared for the fact that that changes are imminent here."

Schwegmann explains why the Haselünne (Emsland) based group wants to clear the air right now: "The world in which we live and do business is undergoing profound change. In recent years, the coronavirus pandemic, the war in Ukraine and cost explosions – for example in energy, which is a decisive factor in our important glass and aluminium production, as well as materials and personnel – have led us as company leaders to focus primarily on crisis management," he says and continues: "Today, we are confronted with a new reality that we must and will adapt to in the coming years." With the new group strategy, "we are switching from defensive mode to attack". What does that mean internally? "It will be a disruptive step."

Schwegmann also sees the new strategy as an "evident commitment to our private-label spirits business across all price categories". What's more: "We will implement substantial investment and efficiency programmes to not only maintain our cost and quality leadership in this area but to expand it further." The Group generates more than 50% of its turnover with its private label business – i.e. the production of spirits that are then sold exclusively by a retailer.

Food retailers are endeavouring to expand the range of their own brands and their share of sales in order to make themselves less dependent on the manufacturer brands of the industry – with some success, as the development of recent years shows. According to the latest figures, the share has risen to around 40% (2022). In order to do justice to the growing market share of private labels, Berentzen is therefore planning to expand this range.

The process of private label production is known as contract bottling, whereby a company – in this case, a food retailer – outsources the bottling, labelling and packaging of a product to another company, the contract bottler – in this case, Berentzen. However, Schwegmann admits that Berentzen has not always paid sufficient attention to profitability in contract bottling in the past. "Sometimes, we have exchanged more money than we earned." The obvious thing to do at this point would be to "radically reduce the portfolio". He adds: "That will initially cost us turnover."

Schwegmann emphasises that the medium-term revenue forecast shows the Group's organic potential, particularly with regard to contract bottling, which is about to end in some cases and will lead to a drop in sales.

In the shorter term, i.e. the current year, Schwegmann cites three reasons why there should be improvements in sales and earnings: Firstly, the effects of the substantial price increases agreed with retailers in the previous year as a result of the sharp rise in costs will be felt for the entire year and not just for around six months as in 2023. Secondly, according to the CEO, the peak of inflation is behind us. The resulting consumer restraint, which was particularly evident in the third quarter of 2023, is gradually fading. "We are out of the consumption cellar." Thirdly, in contrast to much of last year, we now know that the high wage settlements are cushioning the effects of high inflation for consumers. "Rising wages lead to a recovery in purchasing power. Of course, this also benefits us." The "good start to 2024" is initial proof that these assumptions are correct.