With its recent acquisition of Sidroga, the 180-year-old firm extended its reach into Germany, Austria, and Switzerland, and entering new product categories including immune support. Uriach’s CEO Oriol Segarra has led the business since 2012, navigating through a time of transformation and the desire to meet consumer demands.
- With greater market consolidation in the pharma space, there has been an opportunity for smaller organisations to take on whitespace opportunities in the natural health care space.
- Consumers continue to seek new solutions for their health care needs, particularly driven by last year’s pandemic, further focusing on preventive solutions.
- What lies ahead? Segarra expects to see the company extend its reach geographically as well as further differentiating the product mix it offers.
Vitafoods Insights: 0:05 Welcome to the Vitafoods Insights podcast. Join us as we explore the latest science innovation, helping the global health and nutrition industry connect, develop and progress. Today's host is Heather Granato, Vice President of content.
Heather: 0:23 Consumers around the globe are seeking more natural healthcare solutions, driving companies to evaluate their product offerings and strategic positioning. Consider the case of Uriach which recently further extended its reach into the natural consumer healthcare business with the acquisition of Sidroga. In the last decade, this 180 year old firm has actively extended its growth organically and through acquisition to transform its business away from pharma and into natural solutions. CEO Oriol Segarra has led the business since 2012, navigating it through this time of transformation. I'm Heather Granato and I recently connected with Oriol to dig deeper into the why and make some future projections starting with a desire to understand why the company saw a need to make this type of pivot away from the prescription business toward natural health care.
Oriol: 1:22 We start the story after the strong economic crisis financial crisis of 2007-8 time, and clearly the pharmaceutical sector was on the one hand increasingly competitive and capital intensive, and especially in the prescription world, more risky, more capital intensive, as I said, timings were becoming really, very, very large. And then Uriach shareholders came to the conclusion that it was necessary for a company like us to redefine, and let's say, reorient the business of the company. They first took a decision which in a family owned company like Uriach is not always easy, which is to professionalise the company 100%. So this moment from the CEO, which is we, the rest of the organisation is purely professionals, no members of the family. And then secondly, they started to focus on the business on these consumer health care, let's say progressively out from the public financing, and the doctor prescription and all the stuff invested or stopped certain other activities that were clearly not sustainable for a company of our size. That's where everything started. The main two reasons why I think that we did this move was, as I said, on the one hand, the prescription business, which was not sustainable for a company of our size because of all the implications that had to discover, let's say new chemical entities. And on the other hand, we clearly started to see, and at that time, it was quite pioneer, I would say, that there was a long potential benefit on the consumer healthcare business, and especially on the natural part of it, so the food supplements categories, the medical devices, the cosmetics, but everything more in the natural range of products. Because this was clearly starting to be a mega trend that we now see everyday, of people wanting to take better care of themselves, to live better, not only longer, but better. And especially to do all these with more natural alternatives than chemical, so to speak. So this is everything was behind this move.
Heather: 3:33 That makes a lot of sense. Absolutely. So take me back to the acquisitions in Italy and Portugal starting in about 2015. How did that fuel the company's extension both in the new geographies, but also into these new categories?
Oriol: 3:49 We started to look at different countries in Europe analysing different territories. We clearly identified other markets, but Italy was one of the most interesting because it was not only one of the biggest and most innovative food supplement market with very mature educated consumers on that companies with very innovative new ways to do things, but also apart from this was quite similar to Spain, which was of course our comfort zone so to speak. So in terms of market and channels and everything, it was clearly the most similar one. So then for all these reasons were identified that Italy was clearly maybe the first market that could be interesting. Then we started by acquiring Labares, which was a niche company, specialised in doing super sophisticated food supplements, promoted through doctors recommendations. And these was not only offering a new territory for us, but offering a new approach on the business we were in; we were much more focused directly to consumer, with products a little bit less sophisticated, in the sense of being able to explain directly to consumers. And then we found this company, which again, was a good vehicle for us to enter in Italy. But at the same time, we found very strong cross synergies between Italy and Spain being able to launch in Italy more consumer approach products and in Spain, more medical approach products. Then, in Italy, we complemented this company with two more acquisitions, which were small niche companies focused on paediatrics, and another specific focus to complement what we have in labares. And then we started from scratch in Portugal, but rapidly, we saw that we wanted critical mass, and then we found another company in Portugal to grow. So at the end of the day, is mentality that we started by expanding our footprint, but not only thinking about territory, but also thinking about business synergies and new approaches that were complimentary to what we had.
Heather: 5:54 And now you've obviously closed this acquisition of Sidroga, which has extended your reach even further into Germany, Austria and Switzerland. So tell me about the focus on this new geo and the consumer market it brings
Oriol: 6:07 We of course, identify as it cannot be differently, Germany and France, as the other main markets in our continent, of course, UK, but UK has a lot of different uniqueness, things like channels being much more the US type maybe, or Anglo Saxon, whatever you want to call it, different from the pharmacy, the more Mediterranean pharmacy. So we prefer to start it in both, or France or Germany, we've been looking at both of them. And finally, we have this opportunity in Germany, which is also covering Austria and Switzerland. It was a company that we found like very sister company, to us, it's a family owned company, created as a family owned company, with a long history like us, more than 100 years of history, with very traditional brands, and offering not only again, the geographical expansion, but also giving us new segments, like medicinal teas they have in Germany, which is very German, or North Europe, proach for tea, and also cough and cold, very strong in this company, which we are not so strong in other countries. So again, we found, not only geographical expansion, but also business expansion and possibilities to cross synergies between countries, which is always what we try to do because at the end of the day, we want to continue diversifying our risk, not only in territories, but also in the segmented different parts of business. And that's the explanation behind Germany, of course, it's very recent, so we are just starting the integration and still COVID it's affecting very much, in this case, Germany, because they are still under sort of the lockdown. This is also just starting, but it sounds very, very promising.
Heather: 7:54 It's nice to hear that there are those synergies that you'll be able to approach in terms of the businesses, and certainly, as you mentioned, Germany, a target market. So take a little look in your crystal ball, what's next in terms of expansion for Uriach?
Oriol: 8:10 Well, I must say first, before entering in what's next, I must say that apart from the six territories, or countries in which we are already in directly, being Portugal, Spain, Italy, Germany, Austria and Switzerland, we also have joint ventures in Greece and Romania. So we also have our brands present over there. But instead of acquiring companies, we wanted to first start to maybe make a kind of an agreement with a local player that could be maybe wanting our type of product and know how about the business, but they know about the market of course, and then we could start in a different way than only acquisition. Apart from these what's next? we clearly will continue our expansion in Europe because we have the vision to dominate or to be one of the leading companies in the natural consumer healthcare field in Europe. Then clearly France is one of the next steps. We are not a big multinational so we have to digest our steps. The acquisition in Germany has been quite sizable for our company, so maybe before going into France, we will look at somewhat smaller territories like, for example, the Nordics or the Benelux type of countries. East of Europe is also of our interest. I would say that first would come Nordics, France, and then maybe these other smaller territories that could complement our companies. And we will also look at the logic of building some hubs or regions, you know, probably around the big countries, around France, Spain, Italy, Germany, and complementing these with some, let's call it this way satellite territories that we could add from these big hubs.
Heather: 9:50 It sounds really wonderful. What I also like is the fact that you're looking at this expansion at a time when this this has been really tough. 2020 was a tough year for a lot of businesses. However, your company posted strong growth overall, and even stronger growth in the consumer healthcare business segment. So what do you think that says about consumers willingness to turn to more natural solutions? Is that something that we're going to see long term?
Oriol: 10:18 Certainly, COVID affected us, unlike like many others. The good thing is that we had a lot of ups and downs, but at the end, that total balance was very positive. There are specific products that were really, clearly negatively impacted by COVID; there were on the other hand products or segments that were clearly having a push. And the same with territories, and the same with channels. In a sense, we also had the luck or the vision to start also sizable activity on e-commerce just one year and a half before the COVID. So this, of course, was extremely beneficial, in the sense. The pandemia benefit a lot this activity, and then we grew a lot on that. And that's a good thing of diversifying a little bit risks, that one things can fall and one things can go better than expected. But at the end, the balance is positive. So 2020 gave us a lot of lessons to learn. Fortunately, we were really how we were able to continue growing, even all the consequences of COVID. And then I will say that, as a whole, and natural consumer health care, the willingness of the consumer to take care of themselves, and prevent in a more natural way is not only continuing but even reinforce with the pandemia because I think consumers have even noticed more, these need to take care of themselves, and if possible, in a natural way, with less chemicals with less secondary effects, etc.
Heather: 11:45 I think so. So let's end on a kind of a strategic note, what is your long term goal for Uriach? And how do you expect to kind of become that market leader?
Oriol: 11:57 We are in the good situation of having, for the last seven, eight years, grown at a kegger 15%, which is on the one hand can be a lot, can be knowing the context of the family owned company without any financial sponsor behind, so to speak, not private equities, whatever, we are a fully private company. And with, I would say not a lot or even close to zero, external depth. This means that we have been growing at a rhythm that for us is very fast and it's like the limit on the circumstances that we have grown. So we have a good track record and we have all the intentions to continue growing. How our vision, as I said, is to become one of the leading companies in the natural consumer healthcare business in Europe, we are convinced that this is a great opportunity, very atomized business in which there is room for consolidation and will happen for sure. So we want to take advantage of this window of opportunity and be one of these companies that are there. And then, we still have a lot of room for improvement and a lot of room for growth with this vision. What's next beyond that? probably, we don't know for sure yet, but probably then it will become other geographies, like the US or other parts of the world. But I think that we have enough challenge with Europe at this moment. We are, again, not a big multinational. We are a family owned company that wants to do things in a good way, step by step consolidate in a good way. And that's what we have in mind at this moment.
Heather: 13:30 That sounds wonderful and certainly respectful way to approach business and the future for the family that owns the company as well as all the people who are working there. Wonderful times ahead for sure. Oriol, thank you so much for joining me today, I certainly appreciate it.
Oriol: 13:46 Thank you so much for inviting me. It's been a pleasure.