Red Star, one of The Netherland's largest tomato growers, has announced plans to open up a market in Asia and Eastern Europe. But the Rabobank refuses to finance the international ambition of the company, and now they are in search of investors. CEO Rob Bal gives us an update on the situation and explains the ambition of the innovative Dutch grower.
Since when have you had plans for a production site in Asia?
Those plans stem from last summer. We decided that we wanted to increase our sales in Asia. The Dutch market is saturated, hence we looked for opportunities in other markets. We export already to Japan, but would like to expand this export more. Once we have enough outlets in Asia, we want to create a local-for-local production."
But how are you going to finance it?
The Rabobank will not finance our plans. That is why we are working hard to find external funding sources. Over the past nine months we have spoken to many parties, such as banks and other potential funders. We discussed our mission, ambition and plans. Right now we are hoping to create a partnership, nothing is final yet, but we're working on it.
Does it surprise you that the Rabobank refuses to fund your cultivation plans outside Europe?
No, that does not surprise me. We have already borrowed a lot of money from them, and the difficult situation in Dutch Horticulture is asking a lot from the bank. Nevertheless, the Rabobank supports our plans and is cheering for internationalization and where possible they will assist us with their knowledge.
In which countries in Asia does your focus lie?
We focus on countries such as China, Korea, Japan and Hong Kong. It is not yet possible to export directly from the Netherlands to China. Therefore, we must look for other opportunities. You can set up a company by itself, but a joint venture is also amongst the possibilities. We are seeking a good partner, because the marketing is very different than in the Netherlands.
You also mentioned plans in Eastern Europe, in which countries do you see chances?
Turkey is on our short list, as is Poland, Hungary and the Baltic States.
What consequences would this expansion have for cultivation in the Netherlands, Spain and the UK?
Expansion abroad will have no impact on our current production sites. Our interest in starting our own production in Eastern Europe and Asia, this does not mean that we will lose sight of our Western European home market. In fact, our flagship greenhouse 'in Dinteloord we would like to expand over time. Only we need to arrange the sales of the products first, before we start building.
Do you see a future for growing in Western Europe?
Yes, in our view, cultivation in Western Europe has certainly got potential and we try to maintain our position or even strengthen it. That future does not mean that we should do the same again because the competition is fierce in Western Europe. You will have to stand out and offer special things. We need to think above and beyond, a new type of tomato will not solve the issues. We are focusing on branding, category management and innovation by inventing new concepts.
What chance do you give you the foreign expansion?
I give the plans an 80% chance.
