Continuous innovation and finding new markets: a way out of the crisis

We have asked the president-CEO of PICK SZEGED Zrt., László Kovács about prospects for his company and the meat sector in general. The Hungarian meat industry suffered losses amounting to several billion HUF last year. The livestock of swine has dropped to less than 3.4 million which is the lowest figure ever. Further decline in the livestock of cattle is also feared. The very high proportion of illegal slaughtering and processing activities (30 percent) is also a major problem for legal enterprises in the sector. No taxes are paid after such products, which also represent a major food safety hazard. Unfortunately, authorities focus on inspecting legal manufacturers rather than going after black market enterprises. A further rise in VAT will not help in whitening the sector either – adds László Kovács. Increasingly strict food safety regulations and the economy of production both lead to concentration. Slaughter houses with a capacity of less than one million per year are not competitive in Western Europe. 80 percent of the market is shared between four-five big processing companies. – A secure financial background has become even more important than before. Fortunately, PICK is stable financially, as we are only pursuing development projects which we can finance. In times of shrinking purchasing power, manufacturers of premium products like PICK are at a disadvantage compared to manufacturers of cheaper products. However, the president-CEO is confident that consumers will remain loyal to PICK, because their products represent a good price/value ratio. The PICK message continues to remain unchanged: premium quality products made by experts using state of the art technology. In times of crisis, innovation becomes even more important than in periods of boom. In the opinion of László Kovács, anyone giving up innovation now will certainly not be able to stay competitive. For example, PICK sees a great potential in functional foods and is currently involved in such projects, regardless of the crisis. At present, no potential for further growth is seen in the domestic market, which means that PICK needs to focus on export. PICK has recently re-entered the US market and plans to expand into Mexico soon. PICK has also attended the FOODEX exhibition in Japan, where meat consumption is rising.