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Interview with Felix Ahlers: “Price inflation has never been so extreme” – Frosta boss Ahlers announces price increases

Düsseldorf Wind and weather do not deter Frosta boss Felix Ahlers. After all, he is a passionate kite surfer. Like every morning, the entrepreneur rode his bike to work, this time to the Hamburg headquarters in a historic brick building.

In an interview with the Handelsblatt, he talks about the strong pressure to push through higher prices in retail: “Everything has become more expensive for us – fish, vegetables, energy, packaging and logistics. Inflation has never been so extreme,” said Ahlers.

The fast-growing company is also concerned about the restaurant and canteen business: “It is subject to strong fluctuations – depending on the Corona situation. Basically, we see good opportunities in gastronomy,” says the Frosta boss. The 2 G Plus rule currently applies in restaurants. Many restaurateurs therefore fear for their sales.

In addition, Frost wants to make the first vegetable plant near Meissen climate-neutral: “That will take a few more years. Because we do not want to compensate for emissions – for example by planting trees – but achieve climate neutrality with wind, solar energy and biogas plants”.

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In this context, Ahlers also welcomes the plans of the traffic light coalition to increase the CO2 tax and abolish the EEG surcharge. He demands “more transparency and stricter legislation” from the Minister of Food, Cem Özdemir (Greens). Food manufacturers need clearer specifications for the declaration”.

Read the entire interview here

Mr. Ahlers, Frosta was one of the first food manufacturers to announce in the summer that it would have to raise prices. Were you able to enforce your price demands in retail?
Yes, we have implemented the urgently needed price increases and are now in the final talks. We estimate that our most important products such as paella, bami goreng or chicken fricassee will cost around 20 cents more in the future. Everything has become more expensive for us – fish, vegetables, energy, packaging and logistics. Inflation has never been so extreme. Never before has there been so much pressure on us manufacturers to push through higher prices in retail. Otherwise we would be in the red.

Does the trade understand this? Everywhere one hears of escalating price negotiations.
Delistings are increasing, fortunately not with us. This time the negotiations are incredibly tough, and in some cases we can only raise prices later than is necessary. We hope that the increase in costs will calm down and that we will not have to renegotiate. Because the prices – especially for energy and transport – are difficult to forecast.

What exactly has become more expensive for Frosta?
A container from Alaska now costs 70 percent more. That’s just the transportation. Alaska Pollock is also scarce and has become about 20 percent more expensive. Because there were many corona cases on the fishing trawlers, so that in 2021 much less fish was caught than was allowed according to the catch quotas.

Fishing quotas in the Bering Sea have been reduced by 19 percent this year.
Then the fish prices will probably continue to rise. Perhaps demand will then also fall because consumers will not accept even higher prices. What most people don’t know is that of all animal foods, fish is the cheapest. Frozen Alaska pollock fillet costs about 20 percent less than chicken fillet. Fish is the only food that grows freely.

Animal rights activists criticize the overfishing of the world’s oceans. Why are you against farmed fish?
Breeding itself is not the problem, but what is fed. For a kilo of fish fillet you need six to seven times the amount of forage fish as sardines. For this, the world’s oceans are fished out like predatory fish without controls. Alaska Pollock, on the other hand, is heavily controlled, so fish stocks remain stable. Nevertheless, we need good alternatives to wild capture. That’s why we launched a salmon from the Faroe Islands last year. It took a long time to find a breeding farm that met our requirements.

In the lockdown, consumers have hoarded pasta, toilet paper and frozen food. Is the corona surge easing now?
Fish and vegetable mixes have benefited the most. Pan-fried meals from the freezer increased sharply by ten percent in the first year of the corona virus. The high level remains. Because in the home office, many cook themselves, but have little time for it.

Frosta also produces many private labels for discounters, for example. Why is this business declining sharply while the Frosta brand is growing at double digits?
Higher prices have been an issue since 2020. We consistently dropped out of private label contracts that were no longer profitable. It makes no sense to produce at a loss. We have therefore also given up our business in France.

Are your plants still working to capacity?
Yes, because we have grown a lot with the Frosta brand and in Italy. The brand now generates half of the turnover, private labels still 40 percent. Our third mainstay, the business with restaurants and canteens, is subject to strong fluctuations – depending on the Corona situation. Basically, we see good opportunities in gastronomy. Even a waiter can quickly prepare our frozen products in a pan. You don’t need a trained chef to do this. Even before the pandemic, there was a shortage of cooks.

How big was the culture shock when you started working in your father’s deep-freeze plant in 2003?
In the upscale kitchen we have made everything ourselves. Fish bones, bones or leftover vegetables are boiled down to make stock. This forms the basis for the taste. The industry has replaced this effort with aromas and flavor enhancers. Additives make everything machine-compatible. Frosta has also practiced this for 20 years. When I came to the company, no employee wanted to eat the dishes themselves. We only employed food chemists, but no cooks. I wanted to change that fundamentally. So I transferred to our production what I had learned in the restaurant kitchen.

Tasting at Frosta

About half of Frosta employees hold shares in the employer.

(Photo: Frosta AG)

In 2003 you introduced the “Purity Law”, which initially endangered the existence of the entire company.
Back then we were the lonely knight because we didn’t use any additives. However, we completely misjudged that the customers didn’t want to pay more for it.

Frosta’s sales collapsed by 40 percent, and you had to lay off every tenth employee.
That was very painful. It took four years for consumers to understand what we are doing differently. Then things went uphill. Only family businesses can afford such staying power, even if they initially suffer financially.

The purity law also applies to your new vegan dishes such as chicken fricassee or bami goreng with pea meat substitutes. What bothers you about meat substitutes from many competitors?
Most contain extremely high levels of chemicals to mimic the taste of meat. In the case of the Beyond Meat burger patty, flavor already appears in position five on the list of ingredients. We have been successfully working on meat substitutes without additives for more than a year.

Doesn’t that make you jealous as a solid medium-sized company?
One really wonders where such a high rating comes from. It remains to be seen how long Beyond Meat’s success will last. I certainly would not invest in such companies.

They have developed vegan fish fingers made from cauliflower and salsify. However, even these cannot do without a stabilizer. Is that why they are sold under the Fisch vom Feld brand and not Frosta?
Exactly, because additives do not comply with Frosta’s purity law. When it comes to vegan fish fingers, we still can’t do without methylcellulose as a stabilizer. But we’re working on it. “Fisch vom Feld” is doing very well where it is listed and in our online shop. However, the market potential for vegan fish is not as great as for meat substitutes. Because unlike meat, fish is perceived as a very healthy food. Consumers who are critical of fishing are more likely to eat vegan fish.

However, there were problems with the new paper bag. Are they fixed?
Soy sauce, beetroot, and very oily stuff can unfortunately leak through the bag over the months. Our goal remains to replace 40 million plastic bags a year with compostable paper. The example is the cement bag. Long-fiber paper structures keep moisture out. Four out of 45 products in plastic bags have been converted. We’re currently testing the next ten.

Frosta prints the countries of origin of all ingredients on the pack. Many of them come from overseas. Why are you importing broccoli from Ecuador? Others consciously rely on raw materials from the region for environmental reasons.
The most important thing: With us, the country of origin is transparent on every packaging, which is still unique. In the highlands of Ecuador there are three harvests a year and hardly any pesticides are needed. Despite the long transport, broccoli from there has a significantly better C02 balance than that from colder regions.

If you care so much about the environment, why don’t you offer organic vegetables?
That’s why we don’t switch completely to organic, because ingredients such as organic meat are three times as expensive. Then Frosta would become a niche brand.

Vegan Fish Fingers

“Fish from the field” consists of cauliflower and salsify.


(Photo: dpa)

Since 2011, Frosta has published the C02 footprint of each product on the homepage…
We even had it on the packaging. But as long as we’re practically the only ones, consumers can’t compare. That’s why we, like Nestlé, joined Oatly’s “Together for Carbon Labelling” initiative in September. However, a uniform approach is more difficult than expected.

When will Frosta products be produced in a climate-neutral manner?
The first thing we want to do is make our vegetable plant near Meissen climate-neutral. That will take a few more years. Because we do not want to compensate for emissions – for example by planting trees – but achieve climate neutrality with wind, solar energy and biogas plants.

What impetus are you hoping for from the new federal government and from the Green Minister of Food, Cem Özdemir?
We demand more transparency and stricter legislation. Food manufacturers need clearer specifications for declarations. Flavored fruit tea, for example, must say “flavored” on the front of the pack. This should finally apply to all foods – from yoghurts to ready meals. The Greens seem relatively open to that.

The traffic light coalition wants to further develop the Nutriscore nutritional labeling across the EU. You are known to be a vehement opponent of Nutriscore. What would have to change about it?
The important component of the additives is missing. In addition to sugar, salt, fat, fiber and proteins, these must also be included in the evaluation. Then Frosta would immediately take part in the Nutriscore.

What do you think of the new government’s plans that the CO2 tax should increase and the EEG surcharge should be abolished?
I welcome the plans. This makes fossil fuels unattractive. And environmentally friendly initiatives like our wind turbine in Bremerhaven pay off better. As an entrepreneurial family that thinks in terms of generations, we have to help improve the climate balance.

Frosta AG is a family company, but is still listed on the stock exchange. What are the advantages?
Before we became an AG, we already had external investors. A company has to be able to measure itself in the market on the stock exchange, and that’s a good thing. As a family company, however, we are not driven by the share price. The main advantage is that we can easily involve everyone at Frosta in the company. Once a year, our employees can buy shares at a particularly low price. Half of the workforce now holds Frosta shares. This noticeably strengthens entrepreneurial thinking.
Thank you for the interview, Mr. Ahlers.

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Reference-www.handelsblatt.com

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