From machine guns to jams. Strnad’s CE Industries is also preparing a comeback of instant Melty

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When Jaroslav Strnad handed over his arms empire CSG to his son Michal six years ago, he set about building a new industrial holding. Today, his company CE Industries has sales of around 13 billion crowns. It manufactures freight wagons, operates railway transport, builds energy sources, but also produces food.

Strnad’s group has big plans for them. This year, it bought the marmalade, jam and baby food manufacturer Fruta Podivín, and the total sales of the fast-moving goods division thus approached two billion crowns. According to the director of the division, Peter Szuma, this year CE Industries wants to bring innovative editions of traditional cereal drinks to the Czech market and penetrate Czech households with its own line of washing gels.

The ÚOHS approved your acquisition of Fruta Podivín at the end of April. I guess you weren’t too tense about how it would turn out.

Not at all. It was a formal matter and we knew beforehand how it would turn out. The ÚOHS decided that the matter will be dealt with in a simplified procedure, because the companies are not so large that their merger would threaten economic competition.

So what share do you currently have in the Czech food market?

It depends on the category. In marmalades and jams, we have around 30 percent, in baby food about 10 percent, and in mustards we already have a market share of almost 40 percent. In cocoa we have between 22 and 24 percent and in the category of cereal drinks we have 15 percent.

Almost all the categories you mentioned are currently facing problems. The price of cocoa is rising dramatically, and this year’s fruit harvest has frozen in Bohemia and Moravia. What does that mean for you?

A lot of work. Right after we announced to Fruta employees that we were officially becoming the new owners on May 1st, we and the purchasing department started to discuss compensation for frozen fruit for the 2025 season. Today, coincidentally, we are finalizing agreements for the purchase of apple pulp for the stock from this year’s apples.

Apparently all the processors are buying the fruit now. How does the market look?

There is enough fruit for now. Fruit growers are now predicting that roughly half of the crop has frozen, but by only having half of the fruit on the trees, the yield will increase. The catastrophic scenario should not come true, because the fruit will be less, but of better quality. In addition, the frosts did not affect the whole of Europe, and through our subsidiary in Serbia, we have very good contacts with fruit growers in southern Europe, where our colleagues are already starting to ask for fruit that could be imported in the fall.

What will this mean for the price of your products?

It’s too early for that. Fruit makes up only 50 percent of the price of the product, then you have sugar, energy, packaging and the cost of labor, all of which affect the final price.

Except for sugar, everything you mentioned makes it more expensive.

It is true. If I said that the prices would not change, I would probably be speaking prematurely.

How much fruit do you process per year?

We produce about 11 thousand tons of products annually, so we process around six thousand tons of fruit.

Not thinking about your own sets?

Of course, the vertical is tempting, but I can’t imagine it at all now, because today we are integrating three companies into one entity and this project is completely occupying us. Sets would be an unknown discipline for us, we don’t control the subsidy system… I don’t think we will embark on such an adventure.

Chicory to order

Where do you buy, for example, chicory for the production of Melta and other coffee products?

We have a long-term supplier who grows it for us on a strictly turnkey basis. It has worked for more than ten years by telling him how much we need, guaranteeing him the purchase price and volume, and he will plant exactly the area we agree on. Now, due to increased production, we have arranged for one more farmer to try it with chicory.

How is the famous and traditional brand Melta doing?

Wait and see what happens this year. Three floors below us, colleagues are preparing a big concept campaign for cereal drinks, because we see a big future in them. We are preparing a really large number of novelties in this category.

What can be invented about cereal drinks?

You’d be surprised. You can make cereal drinks from chicory to make them as healthy as possible. You can also add minerals and vitamins to them and make them a truly functional drink. You can add vegetable or cow’s milk and you already have a melta with milk. A big trend is lower caffeine drinks, so we will probably launch a cereal drink with a coffee ingredient that will taste like coffee but you can have it in the evening.

Won’t you have your own cafe?

I hope not, although I cannot speak for all colleagues. We have two retail stores and it’s a concern. Rather, I can imagine an exclusive collaboration with one of the coffee chains.

How will you work with brands? Melta is pretty retro after all.

We’ll leave the melt to the older and adult population because it’s as you say. For the younger generation, we will use our other brandies. That’s why we bought some brands. A certain part of the portfolio will be sold under the Vitakáva brand, and we will also use Hamánka and most likely the 4Slim brand as well. We will probably leave behind the complete retro brands like Karo and use only four – Melta, Vitakáva, Hamánek and 4Slim.

Which of the companies in your division is the largest?

The largest is the Serbian Beohemija with sales of around 800 million crowns, the second is Fruta Podivín, which generates sales of about 500 million, the next is Kávoviny with about 400 million and the fourth is Kaumy and Heinz Food in Fulnek, where it is up to 200 million.

Smell is key

The Serbian factory of consumer chemicals Beohemija produces, among other things, washing gel Duel. Is it possible to fight against established brands other than price?

The price comes first, especially in the Czech Republic. The Czech market is very specific in this respect. Elsewhere, the brand has more weight in customers’ decisions. But in the Czech Republic, people tend to try other brands. That’s a big risk, but for us it’s a big advantage in this situation.

We rely on having something extra, something that characterizes us, and that is smell. This is such a specific benefit that we will try to let customers try it at home as much as possible. We will probably have a large number of individual doses and samples so that people can test it and then want to buy the product.

After all, all detergents have a scent.

Yes, but after a while these products will stop smelling. You just get used to them. This happens in regular cycles, and you have to be in the right place at that moment to have a chance of getting a customer who wants to try something new and has already tried your product.

Why should he want to buy your product?

I think we’ve got it pretty good thanks to our colleagues from southern Europe, where perfumes are more popular. This is the difference between drugstores sold in Central and Western Europe and those from Southern Europe.

So we will wash like in the Balkans?

Are you planning further expansion and acquisitions? What is the market situation?

Today we already said that we will no longer make acquisitions below a certain size. We will avoid small businesses, but I can confirm that the market is very lively. I get an offer about once a week. And I have a feeling that it will be even more dynamic.

So are you planning to expand?

I didn’t say that, but we’re not afraid of it. We’re evaluating offers, and I’d be lying if I said we didn’t have some offers on the table that we’re realistically considering, but we’re not planning anything anytime soon. Currently, we are mainly focused on taking over Fruta Podivín, after all, it is a company with half a billion in sales.

Are you also looking into other food industries?

Not that. If we are considering an acquisition, it will be based on natural products rather in concentrated or instant form, i.e. either in the form of a denser substance or powder. We’re watching the trends and we see that there’s going to be a big problem with warehouses, with labor and with transportation, and everything that’s concentrated is going to be more acceptable to the consumer. We think that in a decade or more, people won’t want to spend too much time in the kitchen.

Isn’t the current trend more towards fresh, locally produced food?

Some people prefer fresh local food, but others want speed, quality and minimum effort. Just pour hot water on it or heat it, but they will have a complete diet or its supplement. That’s why we went into baby food, it’s concentrated food in a package, it can be transported on one pallet in a large volume, and you can satisfy the daily need for food. This is where I think we will profile ourselves.

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Full menu at the pump

It sounds almost apocalyptic, that a person packs three portions of food in the morning, which he then covers with water.

But it will be tasty, healthy and functional. Today you can get a hot dog at the gas station. What if at that same gas station we offered you a pocket full of whole food that won’t get dirty in the car and gives you the calories and nutrients you need? It may sound unusual, but people travel a lot and spend a lot of time outdoors. Already today, people who walk in the mountains use such foods, but we want to make it a common thing.

If we look at the entire CE Industries group, how does one work in such a relatively disparate holding that deals with food, engineering and energy? What holds it together?

Jaroslav holds it together (Strnad, editor’s note.). That’s beyond debate. As a visionary, he sees a huge opportunity in food. I myself am surprised at his ability to think twice and sense which fields can help the group as a whole at a certain moment. We are all connected by potential.

How does it work within the group?

Interestingly. Most of our business is based on big, heavy objects, only our division makes fragrant and beautiful things that you can hold in your hand. But we work well with each other. In addition to joint purchases of energy and other things, for example, colleagues who manufacture wagons call us and ask us to make a bearing cleaner because the one they have does not suit them.

Where are you headed strategically as CE Industries? What should the resulting state be?

That’s a good question, but you’d have to ask Jaroslav or Adam (Šotka, director of CE Industries), how they want to consolidate it. But I don’t think that consolidation of divisions is on the agenda, because our broad reach has helped us in many ways.

What kind of boss is Jaroslav Strnad?

I am fascinated by his knowledge of details and his curiosity. He won’t tell you where to go, but he’s very interested in what you’re doing. He’s actually learning with us and then applying it to the other fields, so you have to keep on your toes and watch what other colleagues are doing, because eventually it will probably trickle down to you. Jaroslav is an intensive boss who works from six in the morning, usually calls you early in the morning, and works until the evening.

The article is in Czech

Tags: machine guns jams Strnads Industries preparing comeback instant Melty

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