Incorporated: 1982 as Kamps GmbH
Sales: EUR 1.50 billion ($1.41 billion) (2000)
Stock Exchanges: Frankfurt
Ticker Symbol: KAM
NAIC: 311811 Retail Bakeries; 311812 Commercial Bakeries
Kamps AG sees itself as Europe’s largest bakery group with leading market positions in western Germany and the Netherlands. Kamps AG’s main revenue source are the company’s retail chain bakeries in Germany and the Netherlands, which generate about three quarters of total sales. Kamps AG’s German retail bakeries have a market share of about 20 percent in the Rhine and Ruhr areas, Northern Hesse and Hamburg, and about 16 percent in Berlin. About 1,200 sales outlets in Germany belong to the Kamps group, about 80 percent of which are franchises. About three-fifths of them are independent sales branches while 40 percent of them are in shop-in-shop settings such as supermarkets, department stores, and shopping malls. Kamps AG’s Wendeln subsidiary is Germany’s leading industrial baker which delivers pre-packaged bread and other baked goods to supermarkets through its national distribution network, including the popular brands “Golden Toast” and “Lieke nUrkorn.” The company also has a strong foothold in France through its 49 percent shareholding in the French Harry’s group, the market leader in the industrial baked goods segment. Through Harry’s, Kamps also has an interest in the Italian baked goods manufacturer Morato Pane. Kamps AG’s management owns about 16 percent of the company’s shares with founder and CEO Heiner Kamps being the biggest single shareholder.
Founding, Sale, and Management Buy-Out: 1982-1996
The history of Kamps AG reads like a modern fairy tale from Wall Street, but it began in the small Westphalian town of Bocholt, Germany. The company founder, Heiner Kamps, was the oldest son of a baker who ran a small family business in the country. He learned the craft from his father, but didn’t want to take over the business from him and was looking for ways to escape small town life. A water sports enthusiast, Kamps took jobs in cities where good water ball was being played, such as Duisburg, Berlin, Würzburg, and Cologne. Besides pursuing his passion, he kept on learning the baker’s craft and received his master baker certificate in 1979. He went to business school and finally settled down in Düsseldorf where he took over a small bakery and founded his own retail bakery company under the name Kamps GmbH in 1982.
The success of his shop was partly due to an innovation. So far, it was common in the German bakery trade that everything to be sold that day was baked early in the morning. That’s why really fresh baked goods were only available during the morning hours. Kamps had a better idea. He wanted his customers to be able to buy fresh baked goods throughout the day. He put an oven right behind the sales counter and kept it running all day, so customers could see—and smell—the fresh bread, rolls, and sweet snacks coming out of the oven. His idea took off and within a decade became a standard in many German bakeries.
After only ten years, Kamps’ enterprise had become Düsseldorf’s biggest retail bakery chain, consisting of more than 20 branches, bringing in DM 22 million in sales. However, in 1992 Heiner Kamps decided to sell his company to U.S.-food giant Borden Inc. for DM 22 million. Borden was trying to strengthen its fastest growing European business with sweet snacks and specialty breads. Heiner Kamps became the CEO of Borden’s German subsidiary, Wilhelm Weber GmbH, located in Pfungstadt. At that time Weber operated five regional retail bakery chains in Germany, including Nuschelberg, Stefansback, Nur Hier, Lecker Bäcker, and Wriedeler, with a total of more than 300 branches. The company was also among Germany’s leading industrial bakeries, supplying packaged baked goods to super- markets under the brand names “Weber,” “Jaus,” and “Golden Toast.” For four years Heiner Kamps managed and expanded Borden’s Weber subsidiary, learning the bakery business U.S. style. He learned about raising venture capital, going public, and management buy-outs. Four years later his turn came again. By 1996, Weber had become Germany’s second largest baked goods group. However, Borden’s new majority shareholders, investment group Kohlberg, Kravis & Roberts, lost interest in the German market, trying to streamline the company’s activities. In 1996, Borden decided to dissolve its German subsidiary. Its industrial baked goods division was sold to Germany’s largest industrial baker, the Garel-based Wendeln Grossbäckerei. Heiner Kamps, together with a few management colleagues and equipped with the necessary venture capital provided by Dösseldorf-based bank Bankhaus Lampe and investment firm Apax Partners & Co. in Munich, bought the retail bakery business in a management buy-out.
Kamps AG Goes Public in 1998
The former Weber branches in Hamburg, Stuttgart, Nuremberg, and Weissenfels and the Kamps outlets in Düsseldorf, which altogether generated about DM 320 million per year in sales in 1996, were re-organized at the end of 1996 under the umbrella of a newly founded holding company named BBG Bäckerei Beteiligungsgesellschaft mbH. BBG based in Düsseldorf was by far the largest retail bakery group in Germany. The CEOs of the different chains held a total share of 20 percent in BBG. The two financial investors, Lampe and Apax, held the rest. Heiner Kamps, the new CEO of BBG, and his colleagues were ambitious. In an utterly stagnating market, they were up for growth, but in order to grow they needed more capital.
When Heiner Kamps first approached German stock market analysts, they didn’t seem to take him seriously. The argument Kamps got to hear most of the time was that bakeries were not an expanding market and were a rather awkward, old-fashioned industry. However, in order to expand further, Kamps needed more capital and the only way to get it was by going public. The transformation of BBG into the legal form of a public company was only logical. Effective December 23, 1997, BBG became Kamps AG. At the company’s first general meeting in March 1998 its capital base was increased to DM 20 million derived from its own funds. The company’s capital was again extended by DM 5 million in April 1998, just before Kamps AG went public at the Frankfurt/Main stock exchange, which brought the company a financial boost of DM 166 million. However, after the Initial Public Offering (IPO) on April 8, 1998, the value of Kamps shares did not move much for weeks. At a high time for Internet and telecommunications IPOs, investors didn’t seem to care about specialty breads. However, half a year later investors started to notice and the value of Kamps shares grew by 350 percent.
Further National Expansion After 1998
Encouraged by the success on the German “Wall Street,” Heiner Kamps discovered his passion for company-shopping. Within only 15 months, he spent the money the company had raised to acquire several German and Dutch retail bakery chains. The time when Kamps started his consolidation coup was right. The German market for bakery products was stagnating at about DM 26 billion. Many players in the sleepy industry, which was dominated by mainly small family businesses and a few regional chains, were confronted with stagnating or declining revenues and many were struggling to survive. Others had a hard time finding successors who would carry on their business. At the same time, competition had become more fierce. Industry insiders estimated that an independent master baker with one to a handful of local sales outlets needed to attract about 3,000 customers to be profitable. The more cost-efficient regional retail bakery chains needed to attract only half the number of customers to break even. Bakers who wanted to stay in the market were pressed to continuously cut costs by investing in new equipment. However, for the above reasons, the majority had a hard time getting the necessary loans from their banks. In that situation, many bakers were delighted to sell out and hand their businesses over to Kamps.
Kamps’ shopping list read like a Who’s Who of German retail bakeries: Berlin’s two competitors Thoben Kuchen with 50 sales outlets and DM 50 million in sales and Ostrowski with 85 shops and DM 42 million in revenues; Dortmund’s Klems bakery chain with 75 branches and sales of DM 50 million; Schwalmthaler Backhaus with 175 shops in the lower Rhine region generating DM 100 million in revenues; Ratingen-based Backpartner with 148 outlets in the Ruhr around Cologne and Düsseldorf and DM 80 million in sales; Heilbronn’s Weltin bakery with 15 branches and DM 7 million in revenues; as well as smaller chains, including Cologne-based Winkel-Potthoff, Nicolay in Bonn, Kautsch located in Mannheim, and Krefeld-based Berns.
After taking over a new retail chain, Kamps always employed the same pattern. The first step was to hire new management staff. Next, cost-intensive products were eliminated from the shelf. Finally, loss-generating sales outlets were closed down. The integration of the new outlets into Kamps’ logistics system also helped cut cost since delivery costs were a big factor for bakeries, estimated at about 30 percent of total costs. The closer together the sales outlets were, the cheaper were the transportation costs between production facility and bakery shops. Another cost-saving factor was that Kamps was able to realize lower prices from producers of raw materials. His integration concept enabled Kamps to boost sales by 20 to 30 percent within only a few weeks of taking over a new regional chain.
As the largest European Bakery, the Kamps AG is under a special obligation to its customers and that is for the highest quality. No matter how much and where we bake or in which country we offer bread, pastries, and cakes or by which channel we distribute our products: we make freshness and the best ingredients a matter of principle.
Becoming Europe’s Largest Bakery in 2000
Kamps had taken the industry by storm. In the 1980s, DM 100 million was believed to be the absolute maximum a large bakery could possibly generate a year. Between 1998 and 1999, Kamps’ sales doubled from DM 169 million to DM 341 million. The number of the company’s production sites went up from 783 to 1,940, and the number of Kamps’ employees increased from 3,849 to 6,229 in the same period of time. However, this was not the end of the story. In the following year, Kamps AG acquired the debt-free Wendeln Group, Germany’s largest industrial bakery which had taken over part of Borden’s Weber subsidiary three years earlier, for an estimated DM 2.1 billion. Wendeln Group manufactured pre-packaged bread, cakes, and pastries in 29 production facilities, and through its 47 distribution centers supplied some 27,000 supermarkets and grocery stores throughout Germany. With about 11,000 employees on their payroll, Wendeln owned the national brands “Golden Toast” and “Lieken Urkorn” and dominated the industrial baked goods segment with a market share of about one-fifth. Wendeln’s factory in Günzburg supplied all German McDonald’s outlets with hamburger rolls. With this transaction Kamps AG became Germany’s largest bakery, but Kamps wanted more.
Kamps’ international expansion had begun in 1999 when the company ventured into the Netherlands. In that year Kamps took over the Dutch Bakker Bart Food Group, the market leader in that country’s baking trade. Bakker Bart owned more than 720 sales outlets in the Netherlands, about 80 percent of which were stands at markets. Three more acquisitions in the Netherlands followed, including the bakeries Schothius, Quality Bakers, and Bäckerei Vogel, with combined annual sales of about DM 407 million. After Kamps had reached a leading position in the Dutch market, his next target was France. In 2000, the company acquired a 49 percent interest in French industrial bakery group Harry’s with an option to the remaining 51 percent. Harry’s, however, was not only active in France. The company owned eleven production facilities in seven European countries, generating about DM 900 million in revenues per year. Finally, Kamps—via Harry’s—bought Italian baked goods manufacturer Morato Pane. Within just over two years, Kamps had become Europe’s largest baker, pushing its sales up twelve-fold to reach almost four billion German Marks.
Explosive Growth Stops in Late 2000
Heiner Kamps’ expansion coup did not only cause sympathy. The German baker trade had applauded when Kamps’ takeover of the two Berlin rivals Thoben and Ostrowsky suddenly ended a ruinous price war in the capital. But when Kamps took over the Wendeln group, they changed their mind, since industrial bakeries were the arch-enemy of the family-driven part of the trade. The same happened with Kamps investors. When Heiner Kamps asked them for more money to cover the expenses of integrating the new acquisitions into the group in 1999, they gave him DM 300 million. However, Kamps ran out of money again to finance even more acquisitions. In April 2000 the company raised more money to finance the Wendeln deal through a stock split.
After the mega-deal, many of those who formerly sympathized with Kamps’ strategy became more skeptical. While retail bakeries were his field of expertise, industrial bakeries were a subject of their own. Unlike retail bakeries, they relied on the big retail giants to get their products on the supermarket shelves and were able to realize significantly smaller profit margins. Many analysts and investors were afraid that the explosive expansion was a bad move and diminished confidence in the company’s future success potential. Not only did Kamps get heavily into debt for the Wendeln and Harry’s takeovers but also the company generated a DM 70 million loss which was balanced out with cash reserves in 1999. By mid-2000 it became clear that the integration of the company’s purchases would take longer and cost more than expected. The negotiations with big mineral oil concerns about Kamps plan to sell baked goods at 1,000 German gas stations under the “Bakerstreet” brand didn’t seem to move forward fast enough. Then, in fall 2000, the Kamps board of directors approved fundamental changes in the company’s bookkeeping, which critics saw as a way to manipulate its balance sheets. The stock market’s reaction was sudden. After a dynamic upswing between Kamps AG’s IPO and February 2000, when Kamps shares grew tenfold in value, reaching a peak of up to EUR 46 a piece, the value of Kamps shares lost over 75 percent of its value within a year, with lows under EUR 10, reaching about EUR 11 in April 2001.
- The first Kamps retail bakery branch opens in Düsseldorf.
- Heiner Kamps sells his company to US-food giant Borden Inc.
- The founder buys his company back in an MBO
- Initial Public Offering of Kamps AG in Frankfurt Main.
- Kamps AG takes over industrial baker Wendeln Group; the company acquires a 49 percent share in French industrial baker Harry’s.
Heiner Kamps seemed to be unimpressed with the spreading skepticism about his strategy. The company announced in July 2001 that due to delays in the realization of the expected synergies Kamps reduced its profit expectations for that year, but didn’t question that its ambitious plans would finally materialize. Heiner Kamps used his new position as a public figure to establish “Brot gegen Not,” meaning “bread against hardship,” a private foundation supported by the UNESCO. Kamps used discarded bakery equipment to set up an educational bakery in Namibia for areas with malnutrition and planned to set up similar facilities in Brazil, Pakistan, and Romania. He shared his vision of the ideal bakery with Die Woche’s Lutz Spenneberg: the communication center of the neighborhood where packages are delivered for absent neighbors, where kids deposit their fanny packs and mothers their house keys. Even Internet terminals might have a place there, where customers—while sipping their coffee and enjoying a Kamps pastry—could reserve theater tickets or find out what is at the movies. At the beginning of 2001, Kamps was convinced that he had outperformed—or bought up—any potential competitor. He envisioned the yellow pretzel, the company’s logo, all over Europe, including France, Spain, Italy, and even Russia. The main question many insiders asked was if Kamps wanted to stay in his niche, or build a food concern and compete with big name multinationals such as Nestlé or Kraft Foods.
Kamps Nord GmbH & Co. KG; Kamps Südwest GmbH & Co. KG; Kamps Nordhessen GmbH; Kamps Berlin GmbH; Kamps Rheinland GmbH; Kamps Bonn GmbH; Kamps Niederrhein GmbH; Kamps Westfalen GmbH & Co. KG; Wendeln Brot und Backwaren GmbH & Co. KG; Wilhelm Weber GmbH; Hubert Zimmermann Toastbrotfabrik GmbH & Co. KG (95%); F. Dahlhoff GmbH & Co. KG; Market Food Group (Netherlands); Bart’s Retail BV (Netherlands); Kamps International NV (Netherlands); Bakkerij Arie Bertram BV (Netherlands); Bakker Bruinsma BV (Netherlands); Bakkerij Schothius BV (Netherlands); Bakkerij Schothius Niuw-Amsterdam BV (Netherlands); Quality Bakers Europe BV (Netherlands); Harry’s SA (France; 49%); Carrs Foods Ltd. (U.K.; 49%); Fresh Cake AS (Turkey; 24.5%); Dan Cake A/S (Denmark; 49%).
Harry Brot GmbH; Müller-Brot GmbH; Wiener Feinbäckerei Heberer; Kronenbrot KG.
“Borden Acquires German Retail Bakery Chain,” Business Wire, October 10, 1992.
Hoffmann, Kurt, “Filialisten auf Einkaufstour,” Lebensmittel Zeitung, February 27, 1998, p. 38.
“Kamps-Aktionäre ein Jahr nach Going Public mit Vorstand zufrieden,” vwd, March 30, 1999.
“Kamps expandiert mit Ostrowski,” Lebensmittel Zeitung, October 16, 1998, p. 22.
“Kamps geht als erste Bäckerei an die Börse,” Frankfurter Allgemeine Zeitung, March 26, 1998, p. 29.
“ ‘Kamps’ wird bundesweite Marke,” Lebensmittel Zeitung, March 5, 1999, p. 22.
Kerbusk, Klaus-Peter, “Unschuld verloren,” Der Spiegel, September 13, 1999, p. 124.
Schlitt, Petra, “Grosse Brötchen,” Manager Magazin, January 1, 2001, p. 116.
Spenneberg, Lutz, “Der grösste Verführer,” Die Woche, April 27, 2001, p. 14.
“Weber geht an die Wendeln-Gruppe,” Lebensmittel Zeitung, December 27, 1996, p. 12.
Weber, Stefan, “Kamps backt mehr als grosse Brötchen,” Süddeutsche Zeitung, September 11, 1999, p. 29.
“Wendeln übernimmt Teile von Weber,” Handelsblatt, December 20, 1996.