Leroux S.A.S.

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Leroux S.A.S.

84 rue François Herbo
BP 28
59310 Orchies Cedex
France
Telephone: 33 3 (20) 64 48 00
Fax: 33 3 (20) 64 48 01
Web site: http://www.leroux.fr

Private Company
Incorporated: 1858
Employees: 250
Sales: EUR 40 million (2002 est.)
NAIC: 311230 Breakfast Cereal Manufacturing; 311423 Dried and Dehydrated Food Manufacturing; 311920 Coffee and Tea Manufacturing; 311930 Flavoring Syrup and Concentrate Manufacturing; 311942 Spice and Extract Manufacturing

Leroux S.A.S. is the world's leading producer of chicory; its output is 125,000 metric tons of chicory a year, which it ships to 50 countries. Popularized by the French as a coffee substitute in the days of Napoleon, chicory was pitched for its health benefits after World War II. Later, Leroux promoted it as the all-natural, "green" drink of the third millennium. Leroux supplies 95 percent of the chicory consumed in the United States, where it is best known for the distinctive flavor it adds to New Orleans-style coffee.

Ancient Origins

Related to salad plants such as endives, various parts of the chicory plant have been used since 4000 B.C. The ancient Egyptians and Romans prized chicory as a digestive aid. In modern times, it is the root of the plant that is chopped and roasted before being brewed as a beverage or used as an ingredient in other beverages, cereals, cosmetics, and medicinal compounds.

While coffee and chocolate became products of mass consumption during the 18th century, chicory did not yet meet the same widespread demand. After Napoleon blocked British shipping companies from carrying their Caribbean produce to Continental Europe in 1806, French citizens turned to chicory as a coffee substitute, reports La saga Leroux, the definitive history of the company. The introduction of the railroad in the mid-1800s also helped spread chicory's success across France.

Acquiring Herbo in 1858

While on a business trip, on October 17, 1858, company founder Jean-Baptiste-Alphonse Leroux invested in Herbo Fils & Cie., a vendor of "colonial products"—chicory, chocolate, mustard, and tapioca. It had been founded in 1840 by François Herbo. Located near Orchies in the north of France, Herbo was conferred to the founder's son, Alphonse-Henri-François, and renamed Leroux. The company roasted its own "grains" from chopped chicory roots. At this time, the workshop had one foreman and six workers. Production was less than 100 metric tons a year.

In 1871, the company moved to be closer to the new Lille-Valenciennes railroad. The next year, Leroux abandoned its tapioca, mustard, and cacao business to focus exclusively on chicory. According to La saga Leroux, production more than tripled from 180 metric tons in 1872 to 750 tons in 1875. While Leroux shipped across France, it was as of yet virtually unknown in the industrial north, since each village in the region had its own chicory factory.

In 1876, Leroux began exporting, first to Spain. Via the port at Havre, Leroux was soon shipping its chicory across the seas; after 1881, Buenos Aires was an important early destination.

20th-Century Industrialization

After Alphonse-Henri-François Leroux died in 1895, his son Alphonse-Henri-Eugène Leroux took over the company he had begun working for 12 years earlier at the age of 17. While his father was known as having an inventor's soul, patenting machines for roasting chicory and other parts of the production process, Alphonse-Henri-Eugène was a driven industrialist. In fact, according to company literature, "Maison Leroux" was France's largest factory by 1914.

Leroux grew rapidly from 1900 to the beginning of World War I, becoming France's largest chicory producer. It had 160 employees by 1914, when it was making 7,000 metric tons of chicory a year—one-tenth the entire country's production. In this period, the company began advertising and promoting "Leroux" as a brand name. A broad array of sub-brands targeted to particular markets followed.

The Great War devastated the North. Leroux's home village of Orchies was burned in 1914. During the war, Alphonse-Henri-Eugène set up shop in Havre and other locations. The factory was rebuilt after the war. In 1927, the company became a SARL (société anonyme à responsabilité limitée), or limited liability company: SARL Leroux. This structure facilitated the shared leadership of Alain and Robert Leroux after World War II.

Co-Managers After World War II

Alain and Robert Leroux took over management of the company in 1947. Alain gravitated toward operations, while Robert immersed himself in marketing. During the four decades the company was under their direction, notes La Saga Leroux, distribution was expanded while processing methods were refined. (Control of another chicory producer, Duroyon et Ramette, passed to Alain and Robert through an uncle. Duroyon had been established in Cambrai in 1873 and was also known for its chocolates.)

Leroux was the focus of a period of consolidation in the 1950s and 1960s, acquiring nearly two dozen related businesses, including Vilain, Les Arlatte, Bonzel, Lervilles, Lestarquit, and Montagne. In the 1950s, Leroux began selling instant and liquid concentrate forms of chicory. After the war, the company promoted chicory's health benefits; it was virtually caffeine- and fat-free and was rich in minerals and fiber.

Alain and Robert Leroux retired in 1989. They were succeeded by Michel Leroux and Michel Hermand, who had shared the top office with Alain and Robert for the previous three years, giving the company four chief executives. Hermand had first joined Leroux in the late 1960s and rejoined the company in 1978 after a five-year hiatus. In 1994, Hermand became the sole leader.

International Focus in the 1990s

Leroux pursued a strategy of global expansion in the 1990s (exports accounted for 25 percent of sales in 1986). A branch office opened in Montreal in 1989 and two years later the company set up a subsidiary in Belgium, a large producer as well as consumer of chicory. Leroux exported 9,000 metric tons of chicory in 1991, when it had revenues of FRF 220 million. Later in the decade, the company opened a branch office on Africa's Ivory Coast.

Leroux acquired Chicobel in January 1992. Chicobel was Belgium's largest supplier of chicory, which it sold under the Pacha brand. Chicobel, which sold a variety of other food products as well, had been formed by the 1975 merger of Van Lier, established in 1825, with Beukelaar à Anvers. It had a turnover of BEF 460 million in 1991 and employed 50 people when it was bought out.

The Chicobel buy gave Leroux a 40 percent share of the world market, according to La saga Leroux. Chicobel ceased chicory production after it was acquired by Leroux. Chicobel's Pacha brand, popular in Belgium, remained active, and work soon began on a new distribution center for Chicobel-Pacha products. At the time, Leroux also was partnering with Sopad-Nestlé in 1992 on a coffee-chicory blend.

In 1994, the firm changed its name from Chicorée Leroux to Leroux S.A. as it became a limited liability company. The next year, it began a new effort to market to institutions and restaurants.

Breakfast and snack food maker Union Biscuits was acquired in 1994, opening a new market to Leroux. Union Biscuits had revenues of FRF 30 million a year and 40 employees. In 1996, Leroux acquired Molabe, which accounted for 70 percent of Spain's chicory market, and had revenues of FRF 15 million. Trahe, another Spanish company, was acquired the same year.

Forming a Holding Company in 1997

Leroux and its affiliated businesses were reorganized under a holding company, Finaler (short for Financière Leroux), in 1997. Its five subsidiaries were Leroux S.A., Chicobel S.A. Belgique, Molabe S.A. Espagne, Union Biscuits, and SFD (Société française de déshydratation), which processed dehydrated foodstuffs.

Company Perspectives:

Leroux has been evolving with an uninterrupted production of natural chicory-based products ever since its foundation in 1858. Over 140 years after our company's creation, the secret of the success that has made Leroux a major player in the chicory market lies in a subtle blend of dynamism, knowhow, experience and innovation.

Key Dates:

1840:: François Herbo launches the firm, selling chicory, chocolate, mustard, and tapioca.
1858:: Jean-Baptiste-Alphonse Leroux acquires Herbo Fils & Cie.
1871:: Sales of other products are dropped to concentrate on chicory.
1895:: Alphonse-Henri-Eugène Leroux takes over the company after the death of his father, Alphonse-Henri-François.
1927:: The company is reorganized as a limited liability company, SARL Leroux.
1947:: Alain and Robert Leroux become joint managing directors.
1992:: Belgium's Chicobel is acquired.
1994:: The company becomes Leroux S.A.; Michel Hermand is the sole chief executive.
1996:: Spain's Molabe is acquired.
1997:: Affiliated businesses are organized under the new Finaler holding company.
2003:: Leroux becomes a simplified joint stock company, Leroux S.A.S.

Turnover reached FRF 380 million during the year. Also in 1997, Leroux launched a new cereal product, Chicoréal. Its product lines had been reorganized into three groups: Les Authentiques, or pure chicory in grains, grounds, or liquid form; Les Instants, flavored instant chicory for the breakfast market; and Les Trésors, new natural food products such as the cereal. Leroux also began making artificial sweeteners and in 1998 launched its Médicaler unit specializing in pharmacological products, which were to be distributed in Europe and North America with the assistance of ANVAR (Agence nationale pour la valorisation de la recherche). Leroux also marketed botanical toothpaste and mouthwash under the Acorea brand name.

Les Echos reported Finaler, Leroux's parent, achieved revenues of FRF 420 million (EUR 64 million) in 1999. Two new subsidiaries, Confiserie et Tradition S.A. and Finaler Tradition SCA, were established as the group prepared to enter the market for local produce through acquisitions. These plans were put on hold, however, a year later.

The Drink of the Third Millennium

In 2001, Leroux had 330 employees, two-thirds of them in Orchies. Sales were EUR 53 million, 40 percent of it from outside France. A joint venture was formed with Tufia to market chicory-based drinks in Tunisia.

Leroux was investing EUR 1.5 million in a research and development facility at its Orchies complex. The site was dedicated to finding new uses for chicory. Leroux was pitching chicory as an environmentally sound drink for the third millennium.

Turnover was EUR 40 million in 2002. The firm's structure changed again effective January 1, 2003, when it became a simplified joint stock company, Leroux S.A.S.

Principal Subsidiaries

Chicobel S.A. Belgique; Confiserie et Tradition S.A.; Finaler Tradition SCA; Leroux S.A.; Medicaler; Molabe S.A. Espagne; SFD (Société française de déshydratation); Union Biscuits.