Ledo, Todorić’s Biggest Mistake, Performs Well Even Without a Monopoly in the Domestic Market

The value of sold industrial ice cream in the first nine months of this year in the Croatian retail network increased by 27 percent compared to the same period last year. However, this does not mean an explosion in demand for ice cream. On the contrary, the quantitative sales of ice cream, as reported by NielsenIQ data, were lower than in the first nine months of last year, but this decline was offset by an average price increase of 30 percent, making this category one of the top lists of the largest price increases in food products this year. With an average increase of 40 percent, frozen vegetables top that list.

Despite lower sales volumes, the prospects for Ledo plus, the undisputed leader in the Croatian market of frozen food production and distribution, to achieve record high revenue and profit this year, the second full year since it was acquired by the British-American company Nomad Foods, are more than realistic. After all, Ledo plus recorded a quantitative decline in sales last year, which did not significantly reflect on its financial results. Last year, total revenue increased by 13 percent to over 157 million euros, while net profit, which amounted to nearly eight million euros, was 65 percent higher than in 2021. While inflation has its downsides, it is clear that it also has its advantages.

– Trends in the food segment, including frozen food, have been strongly influenced by inflation over the past two years. Therefore, these times are not the best for drawing conclusions. Of course, sales volume is affected by elasticity, but we expect the frozen food market to continue to grow in the future. This is a conclusion you must draw when considering modern consumer trends, such as the search for convenience, a focus on healthy eating, and the desire to reduce food waste, all of which point to frozen food as the best choice, Ledo comments on the value growth of sales alongside the simultaneous quantitative decline.

Of all the mistakes that Ivica Todorić has made in his life, perhaps his biggest was not wanting to sell Ledo. Todorić managed to ‘bulk up’ Ledo to such an extent with his methods (not allowing competition into Konzum stores and other tricks that discouraged all other major European ice cream producers and distributors from entering the Croatian market more ambitiously) that Ledo’s market share in the Croatian ice cream market exceeded an incredible 90 percent, while shares in other frozen categories (vegetables, fish, pasta) were all above 50 percent and were growing relentlessly. Generous takeover offers for Ledo arrived almost every year, but Todorić regularly rejected interested parties by asking for double the amount they offered.

Fortenova’s leadership was much more pragmatic in this regard. When the opportunity arose to sell Ledo, specifically its entire Frozen Food Business Group, to at least somewhat improve the company’s debt situation, it was done. Nomad Foods paid 615 million euros for Ledo plus, Serbian Frikom, Ledo Čitluk, and several smaller companies in Fortenova’s frozen food business two years ago. Had Todorić done this a few years earlier, Agrokor would likely still be alive and well today.

The integration into Nomad Foods has ushered in a new era for Ledo, in which its market position will significantly change. Although Ledo’s new owner is one of the three largest players in the frozen food market globally, Ledo and Frikom are actually the first ice cream producers in its portfolio. Ledo will likely never again have more than 90 percent market share in the Croatian market, but it has wide-open doors to become a central point for ice cream production within Nomad Foods.

Aside from Ledo ruthlessly increasing the prices of its products over the past two years, nothing revolutionary has changed in its operations so far. There are no indications that a sharper strategic shift is planned; everything seems to be a matter of continuity.

– Ledo is a large company with an incredibly beloved brand, exceptional people, and products that generations love. This year we marked 65 years of existence, and for the last two years, we have been part of Nomad Foods. Being part of the leading frozen food company in Europe is a continuation of Ledo’s successful story and brings multiple benefits. Accelerating the investment cycle is part of those benefits, but not the only one. The availability of a great new portfolio of frozen foods is another advantage, but there is also knowledge transfer, the introduction of new standards, for example, in health and safety or revenue management, and attracting new talents since we are part of an international company. We firmly believe that Ledo will continue to be a leader in the ice cream and frozen food market in the years to come, emphasizes Andy Michaux, CEO of Ledo plus.

The policy of Ledo’s business continuity is best seen at the factory location in Zagreb’s Žitnjak. At the entrance to the factory grounds is a small and unremarkable shack that houses the Management’s headquarters. Todorić stubbornly avoided building a new administrative building, Fortenova could not do it either, and apparently, there is no interest in constructing a representative headquarters from Nomad Foods either. The construction of a new administrative building is simply still not in the plans.

You can read the entire article in the new printed and digital edition of Lider.