Vitalia: halt to supplies or company rescue?

The tug of war regarding the restructuring of the health food chain Vitalia and the wholesaler Ökonova continues. Bernd Büttner, the founder and shareholder with 49 % of shares in the company, is now in the firing line of the majority shareholder IC Innovation Holding GmbH. He is being accused of embezzlement. Because many bills have not been paid, a number of suppliers have suspended supplies to the company. IC Innovation Holdings held a meeting this week with the manufacturers. With an annual turnover of 80 million euros and 120 health food stores and organic supermarkets, Vitalia is a flagship in the health food trade. Organic-Market.Info reported on the takeover in June 2009.
“After the majority takeover of the health food and whole food specialist Vitalia group by IC Innovation Holding GmbH on 19 August 2009, the new majority shareholder intends to implement a rapid change of direction,” said a press statement issued by Vitalia through the communications company Vibrio. Kommunikationsmanagement Dr. Kausch GmbH in September 2009. The statement continued: “In particular, claims by the Vitalia companies against the founder of Vitalia, Bernd Büttner, will be pursued without delay.” On the basis of currently available reports provided by independent auditors, IC Innovation Holding GmbH is accusing him of illegally removing considerable sums of money from the company in recent months. (Picture: New Ökonova wholesale warehouse, occupied from autumn 2008, and the company headquarters in Weyarn)

In an interview with Organic-Market.Info on 17. 9. 2009, the managing director and investor at Vitalia, Paul Vorsteher explained the situation: “The purchase contract came into force at the end of August, so it was only after that date that an injection of finance became possible.” IC Holding Innovation is going to put several million into the ailing company to get it back on its feet. He said that they were working with two audit firms and two law firms and it had taken a long time to conclude the contract of sale. At the beginning of August they had asked one of the companies to investigate Vitalia’s operations over recent years and in 2008 in particular. There was “gross negligence in accounting” and “the acquisition has been seriously devalued,” stated Mr Vorsteher.

“We will demand the return of missing money by Mr Büttner and his daughters. For as long as that takes, there is a legal right of retention.” He said that to prop up the most critical areas they had injected considerable sums. He went on to say that the amount of money owed to the company by Büttner was far higher than the purchase price of 5 million euros.

At the moment, the management and the former owner Bernd Büttner (picture on right) are obstructing each other. Mr Vorsteher says he doesn’t want to “pour money into a black hole” but to sort out what went on in the past in order to recover the missing funds. Since 2006/2007 Büttner is said to have paid off private property with company money, thereby inflicting huge financial damage.

Bernd Büttner will have none of this. He says that far from embezzling money he introduced a company pension scheme. “They are 100 % wrong,” asserts the 65 year-old, rebutting the accusations. He had imagined the participation of IC Innovation Holding would be quite different from this. The new investor had not put 5 million euros into the company, as it said it would. That’s what had caused the present parlous state of affairs.

Paul Vorsteher is going to talk to Büttner in the next few days to seek clarification of the problems. He thinks that would restore the confidence of suppliers. He says that in future the company will adopt a completely different communications policy towards both manufacturers and the press, and that was the reason for hiring a communications agency. In Mr Vorsteher’s words: “There will be a change of culture.” Meetings and briefings like those held this week will become a regular feature in the future. Manufacturers were invited to the company headquarters in Weyarn on Wednesday, 16.9.2009. The main point was to tell them about the auditors’ reports on the financial situation of the company.

According to what was said by some of those attending the meeting, about 20 company representatives, including a number of lawyers, left after a short time. The reason was that, before discussion could start, they were required to sign an agreement to keep proceedings secret. Paul Vorsteher justified this by stating that it was perfectly normal when sensitive company data and information was about to be revealed. Some 15-20 representatives of manufacturers did stay, however, so that they could get information.

Andreas Wenning, Assistant to the Board of Fa. Rapunzel, was impressed by the creative ideas and proposals of the very committed management team of Vitalia. “Having said that, we are still checking everything being proposed to make sure it’s appropriate,” said Wenning. He added that a decision would be made in the next few weeks. The constructive discussion had lasted about three hours.
(Picture: The discussion with Vitalia was also attended by Joseph Wilhelm, seen here indulging his passion for the anti-GMO march in Hessen)

In the meantime, various people have reported seeing gaps appearing on the shelves in Vitalia stores, and Mr Vorsteher concedes that mainly fresh food has been affected. Heinz Claus, the head of the firm Claus-Pural in Baden-Baden, has now declared that they will not supply Vitalia stores or only if payment is made in advance. The announcement that Vitalia could have goods removed from their stores under retention of proprietary rights resulted in outstanding payments being made.

Terra Naturkost in Berlin also suspended supplies a week ago. For about five years, this wholesaler had been supplying mainly fresh food to 18 Vitalia stores in Berlin. The health food wholesaler Dangel, the tenant in Vitalia’s wholesale warehouse in Weyarn, is similarly said to be no longer delivering to Vitalia stores. Dangel was not available for comment.
Sascha Damashun von Bodan does not see a problem with supplies to two Bio B stores in Stuttgart. Both stores belong to Vitalia and were continuing to be supplied.
(Picture above: There could be problems with dairy products in the future, since Andechser Molkerei Scheitz has also suspended supplies to Vitalia)

What will happen now? It’s a tricky situation for the manufacturers: if they assume a positive outcome and continue supplying the company, they could be left hung out to dry if the financial situation of Vitalia does not improve significantly. For some companies, their own existence could be at risk. If they don’t supply the company, they risk being replaced by other suppliers or finding that they have contributed to the demise of Vitalia. So at the moment a split runs right through the industry. And, if Vitalia collapses, it could impact too on the purchasing network for health food companies that was recently set up in Hamburg.