This article highlights how clever procurement can be an effective lever in helping to unite a company as well as deliver great EBITDA results. We would like to congratulate the whole team at Arvesta Group Procurement and are delighted with the clear appreciation of Arvesta CEO Eric Lauwers for the results of the journey we started together.

40 companies and 40 brands operating side by side. That was the Aveve group, recently renamed Arvesta. Arvesta is owned by the holding company of the Belgian Farmer’s Association (Boerenbond), the MRBB. It’s headquarters are in Leuven, where it has until recently lived a quiet life.

‘The reason for our existence is to improve the profitability of farmers and horticulturalists,’ says Eric Lauwers, who left AB InBev in May of 2016 to become CEO of Arvesta (then Aveve). ‘If we want to continue doing this, we must make better use of the expertise that is present in the group.’

Internal tangle

In the past, Arvesta was a fairly archaic group where every company did its own thing. ‘The group worked with 11 different accounting packages, 31 interim offices and 17 brands of commercial vehicles. Purchasing together was not a priority ‘, says Lauwers. Arvesta had achieved growth through acquisitions that were not very well integrated.

‘Do you know that we produced 100,000 internal invoices every year? I have calculated that this amounted to 52 full-time jobs. We should be spending that time on our customers. ‘

By negotiating as a united group, Arvesta has managed to save three million euros on indirect purchases in the last two years. But you need to spend money to make money; in the coming three years, Lauwers will invest 111 million euros in an IT platform, digital developments and renovations to existing production facilities. ‘The more efficiently we work, the more resources we can make available to invest’, says Lauwers.

And that should also lead to revenue growth, which was four percent last year. ‘The previous business model, where our companies made purchases and that was all, was at it’s end. Between 2012 and 2016 we bought eight companies, but still there was no growth.”

Increase scale

In the next ten to fifteen years, he expects consolidation in the sectors where Arvesta is active (animal feed, agricultural and horticultural equipment). ‘We want to actively participate in this consolidation, and that is why we have to do better.’

Aveve is known to most in Belgium for its stores, which carry an assortment of garden, animal and baking goods. But the retail stores account for only 15% of the group’s revenue, whereas 50% of revenue comes from animal feed and 35% from agricultural and horticultural equipment. The group was also recently in the news with the takeover of three garden centers from Eurotuin.

‘Our Aveve stores are growing at 3% per year—and that’s good in retail’, says Lauwers. Out of 250 stores, 200 are owned by franchisees. Especially in those stores, Lauwers wants to highlight the organization’s expertise in order to differentiate itself from DIY and other competitors.

“We are now selling John Deere lawnmowers, a brand of tractors and other agricultural equipment for which we have the rights.” Currently, Arvesta is behind one out of every five tractors sold in Belgium.

Click here to read the full article: DS News September 21, 2018