An SME in the canton of Aargau produces dried Swiss fruit and vegetables, successfully competing with cheap imports.
The concept was clear from the outset – to produce dried fruit without preservatives or added sugar, and to use Swiss produce. The concept was duly implemented and proved a success, with the business now producing 150 to 200 tons of dried produce a year. Since last year, the introduction of dried beans have also been a strong sales driver. "Without a clear focus we would not have had a chance of competing with cheap imported products," says Philipp Käppeli, CEO of agrofrucht-Inn AG, with conviction. "It's clear that we can't compete on price terms with products from China or southern Europe, but that's not our objective – we emphasize the Swiss origins of our products and their quality."
After the company was founded in 2008, the first comprehensive product field tests were carried out, ranging from the suitability of growing methods to the drying process itself. "Our fruit is dried very gently, and is not subjected to a harsh desiccation process. That way we preserve the cell structure and thus the taste." Indeed, the ingenious drying techniques are crucial: "The procedure is individually determined for each product. The key is to get the right combination of temperature, duration, air volume, and humidity," explains Käppeli.
After a successful test phase, the products were launched in 2010. Around 70 percent of the end product is sold to the food industry, 20 to 25 percent to retailers, and the remainder to restaurants and caterers. agrofrucht-Inn offers a wide range of products, which includes traditional dried fruit such as apples, pears, plums, cherries, apricots and strawberries, and also vegetables such as onions, pumpkins and runner beans. In addition to undergoing special drying procedures, the products are also completely free from preservatives. Neither sulfur dioxide nor ascorbic acid is used, which clearly sets the company apart from its competitors.
Competition for Dried Beans from China
Philipp Käppeli quickly learned that there was also market demand for dried vegetables as well as dried fruit. Last year he began producing dried runner beans, albeit long after a wholesaler had originally approached him with this request. "This only became an option once we had found a pre-processing partner who could trim the runner beans and then blanch them. Our dried runner beans may cost around two-and-a-half times the Chinese equivalent, but it's clear that consumers are willing to pay this premium for a Swiss product. That strengthens us in our strategy of focusing on domestic produce."
The company's business with dried runner beans, which are primarily sourced in the canton of Aargau, has swiftly become a key sales pillar of the business. "This year we will double our processing volumes to 200 tons of fresh runner beans," says the manager. "In the medium term, we will be looking to achieve a market share of around 700 to 800 tons, or 15 percent of all dried runner beans sold in Switzerland. That's equivalent to a sizable cultivation area of 120 to 140 hectares, which would require some 70 producers," explains Käppeli. The company's retail clients now include almost all major wholesalers, particularly in the area of dried runner beans.
The proprietary brands of agrofrucht-Inn are 'fruchtis®' for dried fruit and 'vegusti®' for dried vegetables. A number of products can be bought directly via the company's online shop. The business employs 12 to 14 staff, including temporary labor, and already generates impressive sales. Apples, pears, and dried runner beans together account for 70 percent of a distributed sales volume that now totals 150 to 200 tons. The business is currently operating at almost full capacity. Given the robust level of demand, Philipp Käppeli is having to think about expanding the company's drying facilities from 2013: "We are seeking to grow organically, and want to at least double our sales over the next three to five years. That's a realistic target," says Käppeli.
Services as an Additional Line of Business
The company has developed another line of business in the form of packaging services, which range from pre-processing food industry services to customized packages that include end-customer distribution. For example, for the regional development project 'Zuger & Rigi-Chriesi,' agrofrucht-Inn is taking responsibility not only for pitting, freezing and drying, but also distribution. To this end, agrofrucht-Inn has purchased the most modern cherry pitting equipment in Switzerland.
The company now holds all the pertinent system and product ISO certifications (9001:2008 and 22000:2005), as well as the Suisse Garantie, Bio Suisse, and kosher labels. "That's a prerequisite if you want to do business with bulk buyers nowadays. Given the small-scale nature of our business, these requirements represent a very high hurdle, so we're pleased that we managed to achieve the ISO food certification 22000:2005 last year."
A Good Idea Is Useless without Money
The capital injection received from Credit Suisse Entrepreneur Capital Ltd. is used mainly for the pre-financing of fresh produce, additional capital expenditure investment, the necessary expansion of specialist labor, and marketing. In Switzerland, a good idea alone is not sufficient for a successful market launch. Nor are banks the right partners for a long and intensive expansion phase, unfortunately. Thanks to the assistance of Credit Suisse Entrepreneur Capital Ltd. and private credit financing, this phase has been bridged. In the long term, agrofrucht-Inn will be looking to acquire a ten percent share of the Swiss market for dried fruit and vegetables. And gradually the company should be able to create additional jobs – as long as the Swiss continue to succumb to the temptation of dried fruit.