Vitalia: where capital meets experience

The deal was done at the beginning of May 2009: 51 % of the family business Vitalia was sold for an undisclosed sum to the entrepreneurs Harald Christ and Paul Vorsteher. At a stroke, the succession issue has been settled and enough capital has been raised to plug the credit gap being experienced by the market leader in the health food sector. “There’s enough capital available for all future plans,” Harald Christ explained in an interview with Organic-Market.Info that also included the founder of the company Bernd Büttner and the executive in charge of expansion Klaus Stocker. (Picture: The new wholesale warehouse with Vitalia organic store)
The annual turnover of 80 million euros should rise by over 20 % to around 100 million euros in the current year. Taking into account regional differences, growth was 6.7 % in the first quarter. As manager for business expansion, Klaus Stocker is anticipating between six and ten new stores, and on 9 July 2009 the 80 m² store in the passage under the Karlsplatz in Munich will re-open following refurbishment of the whole line of shops.
(Picture on left: 560 m² Vitalia organic store to the right of the warehouse)

Vitalia has 120 stores in Bavaria, Baden-Württemberg, Austria and Berlin, where 18 of the stores are located. As the majority shareholder Paul Christ points out, he has already done some of his shopping in these Berlin stores. The 37-year old banker has been committed to organics for a long time. For around 20 years he has been a member of the SPD, and he advises SPD politicians on economic policy.

He made his money with shares and lucrative posts in industry (at the Hamburg financial services provider HCI; chief executive of the Berlin Weberbank). He predicts rapid expansion of the health food chain in the next five years, with the number of stores doubling to 240. For Klaus Stocker the target store sizes are: 120 m² - 140 m² for health food stores and 250 m² - 350 m ² in the case of organic stores. (Picture from left to right: Harald Christ, Bernd Büttner, Paul Vorsteher. Photo made available by Vitalia)

After just a few months in his last job at Weberbank in Berlin, the appointment was terminated at Mr Christ’s own request in the spring of 2008. He insists it had nothing to do with the financial crisis – his motive was to move into a sector closer to everyday life and to operate independently. He regards health food stores as a sustainable sector with a future. According to Mr Christ, Vitalia is profitable, although it had got into difficulties when the British bank HSBC withdrew from Germany and no other creditor could be found. This resulted in a shortfall of 5 million euros that had to be made up.
(Picture on left: High-bay warehouse in Weyarn)

The need for more capital was created in 2008 by building a wholesale warehouse in the municipality Weyarn 40 km south-east of Munich. Mr Büttner explains that they were thinking about this new facility five years ago. Since the premises occupied by Vitalia’s own wholesale business (Ökonova) had become too small, for several years they searched for suitable new sites in the vicinity of Munich. Then in the municipality Weyarn in Upper Bavaria they found an ideal site with a motorway connection to the A8, and they were able to acquire this site on an industrial estate that had been reserved for IT companies but not taken up. (Picture: Klaus Stocker, Bernd Büttner on right)

Vitalia’s 16,000 m² central warehouse was finished in September 2008 at a cost of just under 17 million euros. The new building, in various shades of green, nestles behind a noise-prevention embankment, and for a building of this size it fits as well as possible into the landscape. The modern high-bay storage with a large area for small items (see picture) and a 2,500 m² chilled storage area seems rather large for the health food chain at the moment. The wholesale business Ökonova supplies only 180 customers, of which 75 % are wholefood stores (about 135) and the rest are hospitals, canteens and nurseries.

Now the health food wholesaler Dangel is also using the warehouse to store its goods, so that the pallet space is not standing empty. Dangel cartons can be found in various parts of the facility (picture); they are managed separately only in the software system. Although Mr Büttner emphasises that the companies are cooperating as partners, it is assumed that there will be a take-over in a few years. He said they were looking for more partners so that better use could be made of the warehouse, that Vitalia says is operating at only half capacity. The equipment in the high-bay facility was supplied by the firm Salomon IF Logistik in Austria. The initial software problems were ironed out after two to three months, and now everything is running smoothly.

Bernd Büttner struggled with the decision to bring a partner on board, what’s more a partner who would hold a majority of shares in future. He says he had many sleepless nights last year because there were plenty of “grasshoppers” – companies prepared to invest the required level of finance but about whose motives he had his doubts. After all, he wanted to remain managing director and develop the company further. His two daughters are 25 and 27 - the older one already manages a company store and the younger is a student of business studies – and they are still a few years too young to take on positions of responsibility and, if need be, to take over the management. Mr Büttner would like, however, to be the managing director for another five years at least.
(Picture on left: Large chilled storage area for Joghurt und Co.)

So, in future important decisions will be taken jointly by the three shareholders Bernd Büttner, (65), Paul Vorsteher (49) and Harald Christ (37). And Harald Christ predicts that it won’t be long before they have to make some of those decisions. He says that the industry is coming increasingly under pressure from the conventional retail trade, so there have to be new strategies and alliances. What that meant he was unwilling to reveal. “Our guiding principle is “Yes we do”. He said he was not in the business of making announcements. What seems obvious is the need to supply more health food stores so that better use is made of the warehouse. However, Germany has been divided up for a long time into regions that are covered by health food wholesalers. Infringement of this allocation of territory would mean war with Neuform and certain sections of the health food industry. This leaves taking over wholesalers, waiting for this division of territory to be brought to an end in the next few years or collaboration with a company in the wholefood trade.
(Picture on right: Chilled area for fruit and vegetables in the organic store)

Mr Büttner has been developing his empire ever since the first take-overs and new openings at the beginning of the 1970s. Today, Vitalia is the market leader in the health food sector and claims the distinction of having introduced health food stores in Upper Bavaria. Vitalia stocks around 7,500 articles in food, food supplements, natural cosmetics (picture at back) and natural remedies. The company employs more than 800 people, 130 of whom work in Weyarn.

(Picture on left: The finger scanner means rapid commissioning)

Tip: www.vitalia-reformhaus.de