A boost for competitiveness among the Mercabarna businesses

Mercabarna has been commissioned by the Economic Promotion Area of Barcelona City Council to carry out an ambitious project: the production of a Strategic Plan for a Food Business Cluster in Barcelona. The main objective of this project is to improve the competitiveness of Mercabarna businesses, by identifying groups of businesses with potential and the development of shared strategies.

To carry out this project, Mercabarna is supported by other institutions and organisations, such as the Mercabarna Licensees' Association (ASSOCOME), the Zona Franca Consortium Barcelona and 22@Barcelona.

Mercabarna is working with the company Cluster Development, a consultancy specialising in strategic development projects, on the production of this plan.

“Mercabarna is an international benchmark for food clusters. That is why Barcelona City Council has commissioned Mercabarna to lead the Strategic Plan for the Barcelona Food Cluster, to foster the competitiveness of these small and medium enterprises to an even greater extent in the future,” says the chair of Mercabarna and deputy mayor of Barcelona City Council for the Treasury and Economic Promotion, Jordi William Carnes.

We need to know where we are to make the right decision about where we want to go. This is the first step in the production process of this Strategic Plan. For this reason - in order to find out exactly where we stand - the consultant producing this plan has spent almost six months studying the fresh produce food sector (in Spain and abroad), and carried out interviews with businesses in Mercabarna, purchasers and experts in the sector.

All this research work has led to the first study entitled “Diagnosis of the Situation and Positioning of the Barcelona Food Cluster”. According to Eduard Ribas, the head of Cluster Development, this study “aims to be a snapshot of the businesses in Mercabarna. We have analysed their strengths and weaknesses and we have identified and described the existing business segments. And, based on all that, we have defined three possible strategic positioning options for the businesses, which we think may be the most interesting in terms of the future”.

In order to present the conclusions of this study to businesses in the unit, Mercabarna organised a meeting on 14 October, which was attended by eighty businesspeople, who were very interested in this study. “This is a very positive initiative, as with all the changes taking place in trade, distribution and society in general, we need studies that help to make things clear and show us which path we should take,” said the managing director of Cultivar, Pere Sitjar. Other businesspeople, such as José Cánovas of Carns Catalana Pallejà, highlighted the importance of this study being carried out by professionals with no direct links to the food sector, “as they give you an external overview and provide different ideas, and a new perspective of the situation”, he pointed out.

An X-ray of the Mercabarna businesses
This initial study analyses the businesses at Mercabarna. In other words, it looks at their structure and their rates of economic growth in recent years. A total 300 companies selling fresh and frozen products were studied (all of which are based in this food centre), and they were grouped according to their business sector: fruit and vegetables, fish and meat.

Broadly speaking, the figures in the study show that businesses in these three sectors grew in the period between 2003 and 2007. However, while fruit and vegetable and meat firms did so at an annual rate of 10%, fish businesses grew more slowly, at 5% per year. The study also says that the fish sector was the only one to lose its market share - which declined by 0.8% - during this period.

In order to make sense of these figures, the study looks at who the clients of the businesses were, in order to explain these growth rates. As a result, it clearly shows the growth that has taken place due to the increase in sales to specialised retail chains (33%) and to food service (32%) – including organised and non-organised social and commercial catering – followed by traditional retailers (18%) and large-scale distribution (16%).

In specific terms, according to the authors of the study, part of the growth in the fruit and vegetable and meat sectors is due to the impact of specialised retail chains and food service. However, the same is not true of the fish sector. “This phenomenon is less obvious in the fish sector, as its clients have not evolved in the same way," says Ribas. “For example, the specialised retail chains still do not have the same importance as in the fruit and vegetable sector. Furthermore, the role of large-scale distribution should also be taken into account, as these clients sometimes decide to cut out the wholesaler and buy straight from the source. All this can help to understand the more limited growth in this sector.”

What are these clients like?
Based on this study, we can also obtain a good idea of the profile of the clients of Mercabarna businesses, and they can be classified in two large groups: food service and household (traditional trade, large-scale distribution and specialised retail chains). The analysis shows that food service is today a very fragmented sector which is still undergoing consolidation. Within this group, there is organised catering, which is increasing its market share and which requires ever increasing levels of service from suppliers, in terms of both logistics and products.
As regards the household segment, the emphasis is on the major influence of specialised chains and large-scale distribution compared to traditional stores. Furthermore, both these retail chains and large-scale distribution are increasing their purchasing power, cutting out intermediaries and demanding an increasing range of services.

Three possible business channels for the future
After carrying out this X-ray of the Mercabarna businesses and analysing their clients and their needs, the study identified three main clusters or business groups. These clusters are: food service companies, stores' own brands (specialised retail chains) and traders or wholesale businesses. According to the authors of the study, the food service and stores' own brand clusters have good potential for future growth and are very important business opportunities for the Mercabarna businesses. However, for the traders cluster, the study suggests that the future potential is limited to a few channels, and it is therefore a sector with greater risks.

“The food service and stores' own brands segments are what lies behind the growth of Mercabarna in recent years and we think that they will also be the factors behind the future growth of the unit and what will enable it to take up a differential position,” says Ribas, adding, “Furthermore, while in the traders cluster you have to seek out shared strategies for each product, for the food service and stores' own brand segments, the strategies can be established for services, thus opening up new ways of co-operation for businesses, regardless of the product.” .

And now what?
We now start on the second phase of the project for the strategic plan, called “Reinforcement and development of the positioning”, which will analyse the three strategic options and identify the areas for improvement among businesses and the environment as in terms of the clusters chosen. This entire process will conclude with the production of the Strategic Plan, scheduled for early 2010, which will propose specific initiatives that will benefit the Mercabarna businesses.

“This study begins opens up a good scenario for work and I think that all our businesses can obtain a great deal from it. When the various business options proposed are studied, we will look at whether our company decides to join one, two or all three clusters”, said Robert Casanovas, managing director of the Barrufet Group.

In order to continue with the development of its Strategic Plan, Mercabarna needs businesses in the area to participate. As Ribas concluded, “It doesn’t matter how good our analysis is. If the businesses don't do their own, it's pointless. We want everything we are doing to lead to changes."