A. Moksel AG - Emphasis on Processing: 1998–2003

Emphasis on Processing: 1998–2003

Tillman carried on with Moksel's focus on the processing sector of the meat business. Because of demographic changes in Germany, more and more people were buying convenience foods. Moksel introduced the "Food Family" brand name in 1998 and planned to move forward aggressively in marketing prepared food. "Meat must not be anonymous anymore," Tillman announced that year. Moksel also won organic certification for its slaughterhouse in Landshut, opening up another potential special market. The company reported another small profit in 1998: EUR 3.2 million (DM 6.3 million) on sales of EUR 1.7 billion (DM 3.3 billion). Moksel had added to its workforce a bit, bringing its employees up to 2,570. But a debt totaling nearly DM 500 million was coming due in the near future.

Moksel further diversified its activities in 1999 in an effort to expand the more profitable areas of its business. In response to growing economic globalization, the company's activities grew in the European Union, Eastern Europe, and the Near and Middle East, although the economic crisis in Russia hurt Moksel's export business there. Now that consumers were wary of beef, lamb and poultry accounted for nearly a quarter of Moksel's sales and the company planned for further expansion in those areas. Moksel also continued to develop an even greater range of prepared and packaged convenience products.

Meanwhile, the search for an investor with capital reserves dragged on. Werner Folger, a board member at Moksel and the liquidator for the bankrupt März AG, had searched unsuccessfully since the late 1990s for a buyer for März's 34 percent stake in Moksel. In 2000 he acquired shares from smaller shareholders and bundled them with his existing holdings to create a nearly 49 percent stake, hoping that the prospect of majority control would make the package more attractive to an investor. The sale also was complicated because the meat industry in Germany was quite fractured, so that no acquisition could give the buyer a large market share. While a single company in Denmark or The Netherlands, for example, had about an 80 percent market share, there were about 240 different slaughterhouses in Germany.

In 2000 a renewed crisis hit the meat industry. Mad cow disease was discovered in some cattle in northern Germany. At the same time consumers discovered that some sausage packages had been incorrectly labeled as being free of beef. Meat sales plummeted 20 to 30 percent; grocery stores quit buying and farmers quit selling cattle in the face of low prices. France was an important customer for the high-quality Bavarian beef, but exports there fell drastically after three French citizens died of mad cow disease. Sales of organically produced meat, on the other hand, went way up. Moksel's banks refrained from collecting another DM 50 million in debt to save the company from total collapse.

In 2001 the industry began to recover from the mad cow disease crisis and there was hope that Moksel's decade-long string of troubles might be over. The company reported net income of EUR 10.3 million that year—its best showing in ten years—on sales of EUR 1.89 billion. Exports were growing, the company's operations were more efficient after all the restructuring, and Moksel's modern facilities, a burden during times of overcapacity, now gave it a competitive advantage. The company increased its organic meat offerings and anticipated substantial growth in sales of convenience foods. In 2001 Moksel increased its share in Eyckeler & Malt, an important producer of prepackaged meats, to nearly 75 percent.

In 2002 Moksel finally found an investor. The Dutch firm Sobel acquired Werner Folger's 50 percent stake for EUR 100 million, took on Moksel's debt and announced plans to invest EUR 40 million over the next two years. Moksel's shares rose 70 percent on the news. Sobel formed the Bestmeat Company as a holding company for Moksel. Bestmeat eventually increased its stake in Moksel to 85 percent and acquired Dumeco, the Dutch meat industry's market leader, as a sister company to Moksel. Moksel's sales and net income in 2002 fell slightly to EUR 1.8 billion and EUR 7.2 million, respectively, but sales in the convenience products division rose 23 percent. Overall, sales of frozen and convenience products had grown five times since 1997. The slaughtering business, however, continued to stagnate. Moksel leadership said the company was still in no position to pay dividends. In 2003 Bestmeat announced that it was planning to take Moksel off the market. Tillman reportedly was being considered for a leadership position at Bestmeat, leading to speculation that Moksel and Dumeco might merge.

Key Dates:

1948:
Alexander Moksel builds a slaughterhouse in Buchloe.
1957:
Moksel begins importing meat from Austria.
1964:
Moksel increases exports, particularly to Italy.
1974:
Through acquisitions, Moksel expands activities into refrigeration and storage.
1987:
Moksel is floated on the stock exchange.
1992:
Hidden debt discovered at a recently acquired subsidiary starts off a series of difficult years.
1998:
Moksel introduces the "Food Family" line of convenience products.
2000:
Mad cow disease desolates the meat industry.
2002:
Bestmeat of The Netherlands acquires majority control of Moksel.