BSN Groupe S.A.

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BSN Groupe S.A.

7, Rue de Téhéran
75381 Paris Cedex 08
(01) 42-99-10-10

Public Company
1966 as Boussois Souchon Neuvesel
Employees: 42,234
Sales: FFr42.2 billion (US$6.96 billion)
Stock Index: Paris Zurich Basel Geneva Brussels London

The origins of the BSN Groupe lie in a small bottlemaker called La Verrerie Souchon-Neuvesel, but it grew into the giant it is today by filling the bottles that it made. One of the largest food manufacturers in Europe, BSN makes beverages, dairy products, grocery products, biscuits, and containers including such well-known brands as Evian mineral water, Kronenbourg beer, and Dannon yogurt.

In 1958, 39-year-old Antoine Riboud inherited the glass-making company founded by his great-uncle nearly a century before in Lyons. Riboud had begun his career working in its factory during World War II. Souchon-Neuvesel produced hollow glass, bottles, jars, flasks, and glass tableware. A small company, it recorded only about $10 million in sales that year.

Riboud concentrated on hollow glass-making until 1966, when La Verrerie Souchon-Neuvesel merged with Glaces de Boussois, a maker of flat glass for automobiles and housing. The new company was named Boussois Souchon-Neuvesel, and Riboud was named president.

In 1967, the company boasted FFr1.1 billion in sales and was renamed BSN. It had become a major European maker of glass containers, but was still dwarfed by its competitor and Frances largest glassmaker, Compagnie de Saint-Gobain, founded in 1665 by Louis XIV. The next year Riboud made one of the largest French takeover bids ever for this company, with more than ten times as many employees as BSN, using tactics considered radical in France at the time: he proposed to swap BSN convertible bonds for Saint-Gobain stock. Saint-Gobains board members fended off the offer by claiming that it violated French laws and European Economic Community rules on monopolies. Saint-Gobain also launched a major publicity campaign to rally support from stockholders against BSNs cheap bid. The Wall Street Journal called it the David-vs.-Goliath campaign, and Ribouds tactics brought him the admiration of younger businessmen ready for fresh air in the French business establishment. Sadly, in the midst of such publicity, Ribouds apartment in Paris was bombed by a terrorist gang. In the end, shareholders came to Saint-Gobains rescue, acquiring a 40% holding to BSNs 10%, and BSN dropped the bid.

BSNs defeat led Riboud to diversify into the food industry. I saw it would be better to fill the bottles rather than just make them, he explained to Forbes in 1980. In 1970, BSN acquired Societé des Eaux dEvian, Societé Européenne de Brasseries, and Brasseries Kronenbourg, becoming a leader in natural spring water and baby food, as well as the largest brewer in France. The next year, in an effort to tap the consumer taste for premium beers, BSN introduced its Kanterbraü beer.

In the meantime, BSN established its first flat-glass manufacturing subsidiary, Flachglass A.G., in West Germany in 1970, and two years later it acquired a controlling interest in Glaverbel, a Belgian flat-glass producer. Together with earlier expansion programs in West Germany, Austria, and the Benelux countries, these acquisitions gave BSN almost half the European market for flat glass.

The establishment of the Common Market at the end of the 1950s forced French companies to be more competitive, and between the early 1960s and 1973 France became the fastest-growing industrialized country after Japan. BSN also experienced rapid growth, culminating in 1973 with a merger between BSN and Gervais Danone, Frances largest food company and the leader in yogurt, natural cheese, deserts, and pasta. That year sales for the new BSN-Gervais Danone topped FFr9 billion.

By 1973, however, BSN began to suffer from the impact of the energy crisis, which had severe consequences for the two main markets for flat glass, the construction and automotive industries. For the next five years the profits of many major French companies declined sharply, mainly because of higher costs for energy and raw materials. After a period of growth, the French foreign trade balance fell into deficit. Fortunately BSN had made most of its acquisitions with stock rather than cash, so the companys finances were able to weather the crisis. Riboud tried to help the flat-glass sector recover by building three new glass units in northern France and adding more efficient float glass equipment to BSN plants all over Europe. Nonetheless, beginning in 1974, the company shut down 22 furnaces and reduced its workforce by 30%. In five years of restructuring the company spent FFr2.5 billion. The crisis was a turning point for the company; from now on glass would be primarily a complement to its food and beverage businesses.

BSN acquired a minority interest in Ebamsa (now Font Vella), the leading Spanish bottler of natural spring water in 1973, and between 1974 and 1977 introduced several new products, including Lacmil and Gervillage. In an effort to dominate the European beer market, in 1978 BSN acquired a minority interest in Alken, a large Belgian brewery. A year later it acquired one-third interests in the breweries Mahou in Spain and Wührer in Italy, and a majority interest in Anglo-Belge in Belgium.

BSN next bought four French food manufacturing firms through an exchange of stock interests with Genérale Occidentale, a move encouraged by the French government, which was eager to invigorate the food industry and actually drew up a special incentive agreement for investments in food processing and food exports. In 1980, the company entered Japans dairy market through a joint venture with Japans Ajinomoto. BSN also bought two French producers of frozen foods and ice cream and two breweries in Nigeria. As it moved into these new fields, BSN nearly doubled it annual sales in grocery products.

At the same time, BSN was finally leaving the flat-glass industry, prompted in part by the fear that another oil crisis was imminent. In 1980, BSN sold its West German flat-glass ventures to the British company Pilkington Brothers, and by 1981, BSN had sold its flat-glass subsidiaries in Germany, Austria, Belgium, and the Netherlands. The following year, it sold the French Boussois subsidiary, the last of its flat-glass operations, leaving it with only nine glass container factories. Also in 1981 BSN acquired Dannon, the largest American yogurt-maker, from Beatrice for $84.3 million.

In 1983, BSN-Gervais Danone changed its name back to BSN. In an effort to increase efficiency, Riboud installed computerized production lines, which meant that the company had to lay off 1,000 of its 40,000 employees, a move opposed by the unions but encouraged by French President François Mitterand, who praised BSN for its contribution towards modernizing French industry. By 1984, BSN had acquired all shares of the champagne makers Pommery et Greno and Lanson Pere et Fils, and had introduced a number of new yogurt products, as well as the Plastishield plastic-coated bottle. Since 1981, the companys sales had risen sharply, and that year it made a record capital investment totaling FFr2.4 billion. But in July, the European Economic Community imposed fines of about US$3.2 million on BSN and Saint-Gobain for price-fixing in the Benelux glass market.

BSN has continued to grow in the latter half of the 1980s. In 1985 BSN sold its glass-jar and glass-tableware operations to Verreries Champenoises and acquired a minority interest in that company. BSN also bought the pharmaceuticals-maker Bottu, which specializes in pain relievers and artificial sweeteners.

In 1986, the companys twentieth anniversary, sales were 35 times higher than the FFr1.1 billion of its first year. A year later, BSN merged with Genérale Biscuit S.A., the top producer of biscuits and toasted bread in Continental Europe. BSN also merged its Kronenbourg and Societé de Brasseries breweries under the Kronenbourg name. The company acquired Sonnen Basserman in West Germany, and became the worlds largest bottler of natural spring water. It also bought a majority interest in Angelo Ghigi, an Italian pasta maker.

In August, 1988, BSN acquired the Belgian Maes Group Breweries, the British H.P. Foods, and the American Lea & Perrins as part of Ribouds strategy to gain a more substantial market in Britain and America for BSN products (64% of BSNs total sales still come from France). Concentrating on growth, Riboud also built several new yogurt plants and bottling facilities in strategic locations, and he spent more than US$ 100 million on European television advertisements for BSN brands.

In 1989 BSN bought the European operations of Nabisco, making it the worlds second-largest producer of biscuits. Also in 1989 BSN made several Italian acquisitions and is now the leader in food production in that country.

Since the companys beginning, Antoine Ribouds aggressive and shrewd business sense has transformed BSN from a small glassmaker into one of Europes largest food companies. But experts say, and Riboud concurs, that BSN must quickly increase in size to avoid getting lostor broken upin the fast-paced restructuring going on in the European food industry in preparation for 1992.

Principal Subsidiaries:

Gervais Danone France; Laiterie De Villecomtal (50.2%); Stenval S.A.; Gervais Danone A.G. (West Germany); Richter KG; Gervais Danone Austria GmbH; Gervais Danone Belgique (Belgium); Gervais Danone Nederland (the Netherlands); Gervais Danone Italiana (Italy); Dannon Company (U.S.A.); LPC Industrias Alimenticias (55.1%) (Brazil); Danone La Madrague; RossignolGenerale Traiteur; Stoeffler; de Bellevue; Societe Fonciere et Commerciale du Silo de La Madrague; RopssignolGenerale Traiteur; Stoeffler; Diepal; Conserves Lenzbourg; Etablissements Lerebourg; Amora; Vandamme-Pie Qui Chante; Mariebel; Segma Liebig Maille; GalliaHPH; Panzani Ponte Liebig (Italy); Liebig Benelux (Belgium); Sonnen-Bassermann (West Germany); HP Foods (U.K.); Lea & Perrins (U.S.A.); LU; LAlsacienne; Heudebert; Generale Biscuit Expansion; Generale Biscuit Glico France; Generale Biscuits Belgie (Belgium); General Biscuits Nederland (the Netherlands); General Biscuits GmbH (West Germany); General Biscuits Osterreich (90%) (Austria); General Biscuits Espana (Spain); Galletas Siro (94.8%) (Spain); Proelga (Spain); Italu (Italy); General Biscuit Brands (U.S.A.); Mothers Cake and Cookie Co. (U.S.A.); Brasseries Kronenbourg; Sofid; Brasseries Alken-Maes (50%) (Belgium); Birra Wuhrer (98.1%) (Italy); Champagne Lanson Pere et Fils (99.9%); Champagne Pommery et Greno (99.4%); Chpl; Sa des Eaux Minerales DEvian Seat; Font Vella (61.7%) (Spain); Verreries Souchon Neuvesel; Verreres de Masnieres; Seprosy; Vereenigde Glasfabrieken (66%) (the Netherlands); Vidrieria Viella (99.9%) (Spain); Giralt Laporta (Spain); Compagnie Gervais Danone; Generale Biscuit S.A.; Cofinda; BSN Finance; Finalim; BSN Services (Belgium); Cofive (Belgium); Mecaniver (89.3%) (Belgium); Selba Nederland (the Netherlands); BSN Italia (Italy); Sifit (50%) (Italy); BSN UK; BSN Foods Co. (U.S.A.); Generale Biscuits of America; Ajinomoto Danone (50%) (Japan); Danone Espagne (20%) (Spain); SCBK (50%) (Congo); Mahou SA (33.3%) (Spain); Peroni (20.4%) (Italy); Acque E. Terme di Boario (35.2%) (Italy); Ferrarelle Spa (35.2%) (Italy); Sangemini (35.3%) (Italy); Sangemini Finanziaria (35.2%) (Italy); VMC (39%); Ifil Partecipazioni (20%) (Italy).

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BSN Groupe S.A.

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