Picard Surgeles

37b rue Royale
Fontainebleau
France
Telephone: +33 01 64 45 14 00
Fax: +33 01 64 69 80 65
Web site: http://www.picard.fr

Private Company
Incorporated: 1920 as Les Glacières de Fointainebleau-Etablissements Picard
Employees: 3,000
Sales: EUR 785 million ($920 million)
NAIC: 445110 Supermarkets and Other Grocery (Except Convenience) Stores; 445210 Meat Markets; 445299 All Other Specialty Food Stores; 311412 Frozen Specialty Food Manufacturing; 311411 Frozen Fruit, Juice, and Vegetable Processing; 311712 Fresh and Frozen Seafood Processing

Picard Surgeles is France's leading frozen foods specialist. The Fontainebleau-based company operates as both a manufacturer and a distributor, with a network of more than 500 retail stores throughout most of France. The company also operates an e-commerce capable web site and offers home delivery services. Picard's revenues of more than EUR 785 million ($890 million) gives it a market share of more than 12 percent of the total French frozen food market, as well as approximately one-third share among the country's frozen food specialists retailers. Picard has distinguished itself through a commitment to high quality and innovation. Some 95 percent of the more than 1,000 products on offer at the company's stores are either produced by Picard or produced exclusively for the company, and sold under the company's own brands, especially the Picard name. Other brands include a line of prepared exotic meals under the Cuisine Evasion brand; ice cream, sorbets, and other frozen desserts under the François Théron name; Formule Express, for microwaveable meals; and Le Soleil, for Mediterranean dishes. Originally focused on the Parisian region, Picard has been steadily completing its national coverage, backed by a strong logistics support system. The company also has begun a foray into the international market, operating 45 stores in Italy, and offering delivery services to Belgium. Picard is led by Chairman and CEO Xavier Decelle. In 2005, the company was acquired by investment group BC Partners.

Retail Frozen Foods Pioneer in the 1970s

Picard's growth into France's leading frozen foods specialist began only in the 1970s, when the company was acquired by Armand Decelle. Nonetheless the Picard name had already been associated with the frozen products market since as early as 1906, when Raymond Picard began producing ice blocks and delivering them to local restaurants, cafes, and homeowners in Fontainebleau. By 1920, Picard's business had become known as Les Glacières de Fontainebleau—Etablissements Picard. Other sources, however, date the establishment of the Picard family business to the 1940s.

That year marked a revolution in the international grocery industry. Clarence Birdseye had recognized the potential for flash-freezing foods while on a trip to the Arctic. Returning to the United States, Birdseye developed a method for flash-freezing foods on an industrial scale, and the frozen foods industry was born. The frozen food revolution—which allowed the nutrients and flavors in foods to be preserved far longer than was the case with fresh foods—was slow in reaching France, however, where freezers, and even refrigerators, remained rarities through the first half of the century.

This situation changed in the years following the post-World War II period. France entered a period of extended economic boom. At the same time, as disposable income levels grew, the country embraced home appliances on a large scale. The growth of a leisure industry also encouraged the growth of a convenience foods industry, enabling consumers to spend less time in the kitchen. Refrigerators grew in size and added freezer compartments. Meanwhile, restaurants and cafes installed dedicated refrigeration and freezer capacity.

By the early 1960s, the Picard family had recognized that its traditional business of providing ice was doomed; instead the company converted itself to a wholesale supplier of freezers and frozen foods to the commercial sector. In 1962, the company changed its name to Etablissements Picard. The company's earliest products included chopped meat, breaded fish, spinach, and other vegetables. Over the next decade, the company continued to add to its catalog, and by the beginning of the 1970s, the company handled more than 300 frozen food items.

By then, a new consumer market for frozen food products had begun to develop in France. At first confined in large part to the rural and agricultural sector, where large-sized freezers were more practical, the market began to expand to include urban markets as well. The relatively young supermarket industry responded to demand by broadening their frozen food offerings. At the same time, the country saw a boom in catalog-based home delivery services. Picard itself decided to enter this category, launching its catalog in 1971, backed by a small fleet of trucks. The family-owned company's operations remained decidedly local. With just 10 employees, the company posted sales of only $750,000 into the early years of the 1970s.

The Picard name's fortune changed dramatically in 1973, when Armand Decelle bought the company from the Picard family. Decelle had already had a successful career as CEO of Compagnie Générale de Conserve, a canned good business later known as Secab-Daussy. Decelle had recognized the huge potential of the frozen foods business—in large part because of the superior quality, and convenience, of frozen foods over fresh and canned goods.

Decelle broke with Picard's past, however, steering the company's focus to the consumer retail market. The company maintained its small home delivery business (which later grew into a significant part of the group's business), but now turned its attention to the retail store channel. In 1974, Decelle opened a first Picard frozen foods supermarket, on the Rue de Rome, in Paris. The operation of the store not only served as an outlet, it also placed the company in greater proximity to its customers and allowed it to tailor its product offering to client needs.

Picard quickly built up a range of some 400 frozen food items. The success of the first store encouraged Decelle to open a second store, in Pavillions-sur-Bois, followed by several others through the decade. Supporting the company's growing retail network was a new logistic facility in Saint-Ouen L'Aumone in 1976. The opening of this site permitted the company to take control of its supply and transport requirements and backed Picard's first growth phase. By the end of the decade, the company operated more than 20 Picard stores.

Establishing a Frozen Foods Brand in the 1980s

In 1980, the company adopted a new store name, Picard Les Surgeles, as well as a new logo featuring a blue snowflake. By then, however, Picard was facing with growing competition from the supermarket sector, which not only had begun capturing the major share of the Paris region's fresh foods market, but also was coming to dominate frozen foods. Picard's suppliers soon favored the larger supermarket groups; faced with difficulties of supply, lower quality standards, and higher pricing than its competitors, Picard made the strategic move of launching its own branded line of foods, starting with vegetables.

The company soon took over much of the processing and packaging of much of the Picard line, which was launched with some 400 items, and later doubled. In support of this effort, the company moved to a new headquarters in Nemours. The site housed a new state-of-the-art warehouse facility, as well as a packaging plant and a small quality laboratory. The company established strict quality standards, firmly positioning itself on the high end of the consumer foods market. Although the company's prices were higher than those of the supermarkets (and even higher than the prices at the small grocery shops), Decelle, joined by twin sons Xavier and Olivier, put into place the company's promotional pricing policy.

Each month, the company's stores and catalog placed a number of items on promotion, with discounts ranging up to 40 percent off. Unlike promotional items at other retailers, however, which tended toward unsold and de-stocked items, Picard's promotions featured only ongoing items normally available at its shops. In fact, Decelle's original motivation for the discount pricing policy was to encourage its customers to try new food items. Yet the company quickly recognized the added benefit of the discounted pricing, in that the lower prices on those items allowed a customer to balance his spending at the Picard store, bringing their total purchases more in line with the prices at the supermarkets. Sales of the group's monthly promotions regularly accounted for 25 percent of total sales and more, and remained a mainstay throughout the company's expansion.

Picard invested little in promotional activities, preferring to generate new customers through word of mouth. In 1986, however, the company began publishing a monthly newsletter, Lettre Picard, which was distributed at the group's stores as well as in the Parisian editions of two television program guides.

Picard's commitment to quality and innovation resulted in the establishment of a full-scale laboratory in Nemours in 1986. The company also set into place a team of food engineers, assigned the task of developing new products and recipes for the group's ever-expanding line. Consumer testing of new products, however, remained in the field. Rather than invest in costly consumer research polling and studies, the company instead preferred to place products directly in its stores. Products were then given a four-month period to prove themselves.

Company Perspectives:

Picard is unique on the French frozen food market because it is both a distribution label and a brand name. The strength of this innovative concept enables us to offer our customers the double guarantee of a well-known brand and our own distribution network that now comprises more than 600 points of sale and 23 home delivery bases. For 30 years Picard has selected and created the best products and perfected the best recipes in order to enable our customers to enjoy the pleasure of eating well every day.

The company took a similarly organic approach to the expansion of its sales network. After establishing some 100 stores throughout the Paris region, the company decided to expand to the south of France, including the regions of Lyons and Nice, as well as the Antibes. The group's choice of new target markets was dictated by the reasoning that these were popular vacation destinations for its Parisian consumer base, providing a ready-made consumer base for the brand. The first stores outside of Paris opened in 1987, supported by a new logistics center at Vitry-sur-Seine. The following year, Armand Decelle turned over leadership of the company to sons Olivier and Xavier, who became co-CEOs.

Changing Owners in the New Century

As it continued its expansion, the Decelles decided to open up the company's capital to outside investors. In 1991, the company sold a 10 percent stake to French hypermarket giant Carrefour. The company now launched a new expansion drive, opening as much as 15 new stores each year. By 1994, the company's network had expanded to 300 stores, and the group had opened a new logistics center in Avignon to support its rising sales. In order to achieve still faster growth, the Decelles agreed to sell a majority stake in the company to Carrefour that year. Carrefour now took control of 79 percent of Picard, paying the Decelles, who retained 21 percent of the company, nearly EUR 140 million.

Despite the change in ownership, the Decelle brothers remained at the head of the company and continued to lead Picard as an independent operation. Yet the backing of Carrefour enabled the company to shift its expansion into overdrive; through the rest of the decade, the company began opening as many as 40 and even 50 new stores each year. By the end of the decade, Picard had established itself as a national chain, with more than 500 stores. The company also had launched an effort to replicate its successful retail formula on an international level, buying up the 45-store Gel Market from struggling French rival Gel 2000.

Picard also launched its own e-commerce capable web site. The group's Internet sales, while limited to the larger metropolitan markets, built on the strong home delivery unit, which boasted more than 20 delivery bases throughout France into the 2000s.

Carrefour's takeover of Promodes, creating not only France's leading distribution group, but also one of the world's largest retail companies, led to a change of strategy. In 2001, Carrefour sold Picard to a management buyout, led by the Decelle family, and backed by an investment consortium headed by British buyout specialist Candover. The buyout marked Olivier Decelle's exit from the company's direction; Xavier Decelle continued as sole chairman and CEO.

With Candover's financial backing, Picard continued on its growth course, boosting its store network to 600 stores by the end of 2004. The company began eyeing the possibility of going public. Instead, in December 2004, the company announced that it was being sold to a new investment group, BC Partners, in a secondary buyout that enabled Candover to nearly triple its initial investment. Despite the change in ownership, Xavier Decelle remained as head of the group, which in just 30 years had established itself as the French frozen foods leader. Picard hoped to build on this position, establishing its brand on an international scale into the new century.

Principal Competitors

Carrefour S.A.; Etablissements E. LeClerc S.A.; ITM Entreprises S.A.; Groupe Auchan; Rallye S.A.; Toupargel-Agrigel S.A.; Thiriet S.A.; Maximo.

Key Dates:

1906:

Raymond Picard begins producing and delivering ice blocks in Fontainebleau.

1920:

The company becomes Les Glacières de Fontainebleau—Etablissements Picard.

1940s:

Picard begins the first wholesale sales of frozen foods and freezers.

1962:

The company changes its name to Etablissements Picard and focuses on the distribution of wholesale foods and freezers.

1971:

The company launches the first frozen foods catalog and home delivery sales.

1973:

Armand Decelle acquires Picard company.

1974:

The first Picard retail store opens.

1979:

Headquarters are moved to Nemours.

1980:

The Picard frozen foods brand is launched.

1987:

The company opens its 100th store; the first store outside of the Paris region opens.

1991:

Carrefours buys a 10 percent stake in Picard.

1994:

Carrefour boosts its stake to 79 percent and backs an accelerated store expansion program.

1999:

Picard acquires 50 Gel Market stores in Italy from Gel 2000.

2001:

Carrefour sells Picard to a management buyout backed by an investment consortium led by Candover.

2004:

Candover sells the Picard stake to investment group BC Partners.

Further Reading

"Carrefour Sells Frozen Food Division to Consortium," Grocer, February 24, 2001, p. 14.

O'Donnell, John, "Backers to Cash in Picard Chips," Sunday Times, May 5, 2002, p. 2.

Mitteaux, Valérie, "Nous voulons gagner la bataille du quotidien," e-marketing.fr, March 1, 2002.

"Picard, le bon élève de la galaxie Carrefour," e-marketing.fr, April 1, 2000.

"Picard manie les P et refroidit ses rivaux," Challenges, September 5, 2002.

"The Secondary Buyout of French Frozen Food Retailer Picard Surgeles by BC Partners Has Been Backed by 913m [euro] of Debt," Acquisitions Monthly, March 2005, p. 62.

"Sur toute la chaîne, Picard reste de glace," Challenges, September 1, 2000.