Exploring key factors of rapid growth cheese companies in spain

Business Growth Strategy
Jesús Manuel Ruiz
EXPLORING KEY FACTORS OF RAPID-GROWTH CHEESE COMPANIES
IN SPAIN
ABSTRACT
This work includes the study of growth opportunities for Cheese business in Spain.
Normally, a greater business dynamism is associated with an accelerated growth in relation to
the average of similar companies. Through this study, it is intended to detect which are the key
variables of business growth in this sector.
It´s very common that dynamism and growth are correlated. The principal aim is to study the
characteristics of dynamic business in Spain. This paper presents a quantitative and qualitative
research of 8 companies, applying the methodology of Case Study. Among the analyzed variables
emphasize: previous experience of founder, knowledge in large business management before,
use of technological innovation in process and use of strategic planning systems.
The results constitute a model for every business that seek for the potential growth and better
differentiation of their products.
RESUMEN
Este trabajo comprende el estudio de oportunidades de crecimiento de empresas o cadenas
productoras de quesos en España.
Normalmente, se asocia un mayor dinamismo empresarial con un crecimiento acelerado en
relación al promedio de empresas similares. Mediante dicho estudio se pretende detectar cuales
son las variables clave de crecimiento empresarial en dicho sector.
El objetivo es estudiar las principales características de empresas de quesos en España. El trabajo
presenta un estudio cuantitativo y cualitativo de 8 negocios, analizados mediante la metodología
“Case Study”. Entre las variables analizadas destacan: experiencia previa del fundador,
conocimientos en gestión de grandes negocios previos, innovación tecnológica aplicada a
procesos productivos y uso de herramientas de planificación estratégica.
Los resultados constituyen un modelo para distintas organizaciones que buscan el crecimiento
de sus negocios y diferenciación de sus productos, sin necesidad de adoptar estrategias de
competitividad en precios.
1. INTRODUCTION
In a globalized world, where each brand has
relative facilities to get its product to new
consumers, it is interesting to make a review of
the strengths of the company, evaluating its
capabilities to meet new challenges of growth,
such as export.
This premise is a disadvantage for the Spanish
cheese producing companies, since the sector
does not have much knowledge about the key
factors that can explain an increase of the
competitiveness, not only in the local market
but also in future markets that can mark a fast
growth .
The aim of this study is to detect the main
drivers of business growth in cheese companies
in Spain, evaluating the level of capabilities that
allow the business to undertake a strategic plan,
with the aim of creating value, increasing its

Jesús Manuel Ruiz
sales volume, generating jobs and ultimately
generating a possible economic benefit from
such business activity, providing dynamism to
the industry.
This work compares 8 Spanish cheese
companies, divided into equal groups of 4
companies. The aim is to investigate which are
the driving factors of fast international growth.
All the companies selected have reported sales
volume abroad exceeds 70%. Four companies
chosen have shown a high growth rate since
their beginnings abroad and another 4 that
have had a gradual or stagnant growth. All
companies share a similarity: they are family
businesses. That is, there is at least one person
on the board of directors of the same or in a
relevant department.
Some factors that are supposed to stimulate the
cheese industry are:
- Previous experience of the founder in the
management of large companies or holding
companies.
- Investment in process innovation.
- Existence of a strategic growth plan.
Most of the factors could be associated with a
long career of the founder in previous
businesses, not necessarily in the dairy industry.
There is a broad consensus with scientific
studies that support that these managers have
had to adopt certain management models
based on customer loyalty, adding value to their
product, or the use of new technologies in the
operation of their processes. All these variables
are measures of business dynamism that reflect
the muscle of the business.
The study is structured as follows. After the
introduction, section 2 explains the selected
variables, section 3 the method of analysis and
section 4 the results of the case study. Section
5 shows the conclusions.
2. VARIABLES
Some studies can be found in economies with a
certain degree of development about the
factors that induce greater entrepreneurial
dynamism and, consequently, health benefits
for their economies.
Founder information
According to the characteristics of the founder,
it is believed that previous experience in the
industry can be a value for success in the
growth of the current business, through the
application of market knowledge.
In addition, it is believed that a high level of
higher education has a positive impact in better
developing business management tasks,
through acquired skills and interpersonal
communication skills.
Some studies have concluded that the
founder's experience in relevant businesses
(size) is a positive factor when detecting
business dynamism or showing rapid growth in
companies.
In terms of networking, the level of social
networks and interrelations within the analyzed
industrial sector has also been included.
- Experience as business founder and size of
them.
- Level of social contacts / interrelationships in
the business sector.
Table 1 shows the variables that have been
included in this paper.
Company information and networks
Several studies have shown that the
determination and focus on business growth by
the members generates positive effects in its
growth strategy.
On the other hand, the level of institutional
relations of the company at a public level has
also been measured, which can generate
framework work agreements for certain
products or segments of the company.
Sometimes, public-private partnerships can

Jesús Manuel Ruiz
become strategic for the development of a
business.
Within this group, the variables Family
participation in the business and the existence
of a strategic growth plan have also been taken
into account.
Business practices
In this group have been included variables for
study such as Price of the product offered,
generation of innovation in the production
process, number of international collaboration
markets, investment in innovation or number of
brands.
A distinguished and unique product with high
added value will be difficult to replicate and, as
a result, can be a driver of high business growth
internationally. On the other hand, innovation
applied to productive and operative processes
induces the company to identify, assimilate and
exploit better the available knowledge,
channeled through talent management.
3. METHODOLOGY AND DATA
This paper uses a quantitative and qualitative
methodology to explore those factors that may
determine the fast-international business
development. The quantitative variables have
been compiled from the main statistics
databases in Spain and Europe, as well as the
qualitative study lies in the objective of
approaching the reality of the business through
consultations with analyzed companies.
3.1. Methodology
Through the "Case Study" method, the main
factors that could generate rapid growth of
cheese companies in Spain have been analyzed.
The industrial growth must be accompanied by
a growth of the components (players) of the
market, and consequently, it becomes
important to determine which is the main
business model to follow.
3.2. Data of the companies under analysis
The general information relevant to each
company has been detailed. To keep the
anonymity of the same and, consequently, to
incur a conflict of interest, the right to show
their social reasons has been reserved. It is
declared that there are no conflicts of interest.
3.2.1. Q1 valley
Company officially created in 1990, after a
careful selection of animals. The initial
investment was 1.5 million euros. Based in the
Spanish region of Valladolid, but with
distribution of factories throughout the
national geography, Q1 is the continuation of a
family lineage that produces all types of cheese,
more than 250 brands and with a production
volume of more of 60 million kg per year.
One of the strengths of the company without a
doubt is the focus on innovation and technology
in its operating processes, being the first
Spanish producer in terms of turnover and
volume. Between the first year of export and
the second, sales increased by 60% and
between the second and third, more than
120%, being the clear example of fast-business
development in European markets such as the
UK, Germany or Switzerland, and in third parties
such as Australia or USA.
3.2.2. Q2 alte
Founded in 2002, it made an initial investment
of 2.1 million €. It stands out for being a
company that shows high levels of operational
efficiency, through the development of
economies of scale, reducing costs and
increasing sales prospections.
Through the acquisition of national leading
companies has grown at an exponential rate.
With a very strong culture, which it implements
in its acquisitions without modifying the range
of products offered, it achieves an excellent

Jesús Manuel Ruiz
quality price relationship with a high range of
loyal customers.
Tabla 1
Business Features
Founder information
Previous experience
in the industry
High level education
Previous experience
in business creation
Size of business
management
Professional
networks in industry
Company
information
Focus and
determination on
growth
Public private
partnerships
Quality certifications
Strategic Growth
planning
Family Business
Business practices
Price of product
Number of new
brands in last year
Investment in
innovation
Number of
international
markets
Use of new
technologies
3.2.3. Q3 Cania
Company located in the north of Spain, standing
out for the quality of the raw material for the
manufacture of its cheeses. Founded in 1995,
the second generation runs the business.
They are defined as a sustainable company
focused on the production of first quality
cheeses and environment-friendly. They have
certifications in this regard.
Exports account for 78% of sales volume with
focus on the UK, Germany and the USA.
Plan to enter Australia next year.
3.2.4. Q4 Zamo
This family business created in 1994, exports
more than 85% of its production. Since its
inception in the international market, its sales
have grown at a rate of 78% and 105% between
the first and second, and second and third year
of the foreign business.
It has 31 brands that have been awarded with
the most prestigious awards and recognitions
worldwide.
Careful selection of raw materials, respect
during the transformation process and
innovation applied to the distribution are the
maxims of this company.
These cheeses are highly demanded in
Switzerland and the UK. It has more than 240
employees.
3.2.5. Q5 RIDA
Founded in 2001, the company has 51 brands of
cheese. Although only two varieties work, it has
obtained some international certification.
Since its entry into the international market, its
sales have not shown great variations,
decreasing by 10% during the first year and
increasing by 22% the following year. The main
international market is Australia.
3.2.6. Q6 VAID
Vaid was created in 1990. Its founder has
extensive international experience that he has
transmitted to his children, now managers of
the family business.
It has 4 little diversified brands. Exports have
grown at an annual rate of 2.8% during the last
five years despite having a large presence in
markets such as the UK, Germany and France.
It has 30 employees and the last year billed €
38,706,222.

Jesús Manuel Ruiz
3.2.7. Q7 ZAGO
It has 9 brands, focused on transmitting quality
seal to the client. It is the third generation of the
family.
They are stationary of the cheese contest in
London. In addition, one of the characteristics
of this company is that it relies on the extra
family advice of a group close to them, which
started them in the export.
One of the reasons why the director believes
that they have not grown at a higher rate is due
to the lack of talent at the local level and the
pace of digitization.
3.2.8. Q8 NAVAR
Created in 1998 with an initial capital of 3.1
million euros, it has an important production in
the Spanish scene, producing more than 5
million kg per year.
It has a certificate of sustainability and good
practices in the farms. Currently its export
volume reaches 72% with a level of growth
slowed in recent years.
Results are shown in table 2.
4. RESULTS
It has been detailed how companies behave in
relation to the factors described in Table 1.
- CAGR interannual growth rate (Q1-Q4): 95%
- CAGR interannual growth rate (Q5-Q8): 7%
Fast-growing companies have a year-on-year
growth rate of 95%, higher than 20% is
considered as a criterion for discerning rapid
growth from slow or gradual growth.
All the companies analyzed exceed the barrier
of 20 employees, considering according to
some studies a factor of business dynamism.
According to the observations, the barrier to
distinguish a company with a high growth rate
from a company that does not have it, would be
150 employees, with this sector presenting
some peculiarities.
On the other hand, the correlation coefficients
between:
- Number of employees vs Export sales levels:
0.887 (Pearson)
- Number of employees vs Volume produced:
0.789 (Pearson)
- Export sales levels vs Volume produced: 0.954
(Pearson)
Being the three correlation coefficients positive
and close to 1, they indicate that the variables
analyzed have a high relation between them.
First, to achieve a high level of production, a
high number of employees is needed, which
implies high fixed costs in the industry and the
need to raise capital to start the business.
Continuing the analysis in Table 3, we can see
that all the founders or managers have had a
higher education, so the cheese industry
presents a particularity and is that a higher
education level is not indicative of high growth.
In relation to previous business experience, the
members of the group with gradual growth
except Q5 have had previous experience, which
is why it cannot be an indicator of rapid
business development.
This last point contributes to the argument
described above about the need to have a level
of economic resources before starting in this
business. Of all the analyzed, the only one that
had a priori less possibilities was Q5, but it was
supplied with the portfolio of contacts in the
industry (third parties) that could collaborate
through the donation of special resources in the
first step of business. This praxis is very
common in some industries players.

Jesús Manuel Ruiz
Tabla 2
Rapid growth companies Gradual growth companies
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Foundation
year
1990 2002 1995 1994 2001 1990 1999 1998
Exports 1
year
32.638.456 33.734.420 16.091.596 13.889.768 34.622.435 31.664.974 29.294.548 26.779.117
Exports 2
year
52.221.530 57.348.514 24.137.394 24.723.787 31.160.191 36.626.454 31.931.057 27.314.700
Exports 3
years
114.887.366 108.962.176 53.102.266 50.683.763 38.015.433 37.651.995 35.124.163 30.592.464
Exports 4
years
287.218.414 250.613.004 111.514.758 89.839.020 43.454.964 38.706.251 36.529.129 32.122.087
Number of
employees
380 258 245 242 122 30 28 41
Cheese
volume
produced
(kg)
60.000.000 55.000.000 32.000.000 30.000.000 13.000.000 6.000.000 4.500.000 5.000.000
Export
volume on
total sales
>70 % >70 % >70 % >70 % >70 % >70 % >70 % >70 %
On the other hand, the size of the company
previously managed is decisive, since the 4
leaders of the high growth group have managed
large businesses.
The ability to manage large businesses is a
driving factor in the cheese industry. The only
atypical case is Q8, since it could meet all growth
parameters and yet shows moderate growth.
Surprisingly, having experience in the dairy
industry is not indicative of rapid business
development, since 3 of the 4 members of the
fast-developing group do not have it.
It can be seen that all the companies have family
participation (Table 4) in the business, as well as
certifications, therefore, both factors are not
generators of high growth in the industry.
A fundamental fact is that from Q1 to Q4 they
present a well-structured and defined strategic
plan, a fact that is not observed in those of
gradual growth, which do not consider it
necessary.
This disruptive event could be incorporated as a
key development factor.
As for public-private partnerships that in other
sectors can be strategic for the development
and external promotion of new products, in this
case only 2 of the 4 companies of the high
growth group have been favored, so it cannot be
concluded with certainty that this factor has a
relevant weight in the variation of business
abroad.
Analyzing table 5, it can be observed that high
growth companies in general show a unit price
(calculated as the average of all products offered
abroad) higher than those of gradual growth,
which may reflect a better relationship product
quality and accelerated growth.
Three of the four high-growth companies claim
to use new technologies in the production
process, increasing the efficiency and
performance levels of the plants. An atypical
case is Q8.

Jesús Manuel Ruiz
Tabla 3
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Previous
experience
in business
creation
SÍ SÍ SÍ SÍ NO SÍ SÍ SÍ
Relevant
experience
in the
industry
NO NO NO SÍ NO NO NO SÍ
Size of
previous
projects
GRANDE GRANDE GRANDE GRANDE - PEQUEÑO PEQUEÑO GRANDE
Network in
the industry
NO NO NO SÍ - SI SÍ SI
Tabla 4
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Family
participation
SÍ SÍ SÍ SÍ SÍ SÍ SÍ SÍ
Strategic plan SÍ SÍ SÍ SÍ NO NO NO SÍ
Certifications SÍ SÍ SÍ SÍ SÍ SÍ SÍ SÍ
Public-private
partnerships
NO NO SÍ SÍ NO NO NO SÍ
Determination
(focus) on
growth
SI SÍ SÍ SÍ NO NO NO SÍ
Tabla 5
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Unit price (€ /
kg)
22 30 25 15 15 12 9 10
Number of
brands last
year
2 1 1 0 0 0 0 1
Investments
in innovation
(on total
sales)
+2.5 % +2.5 % 2 % 1.5 % 0.5 % 0.3 % 0.5 % 2.3 %
Number of
international
markets
6 4 5 3 1 2 2 2
Use of new
technologies
SÍ SÍ SÍ NO NO NO NO SÍ

Jesús Manuel Ruiz
Related to innovation, all fast-growing brands
allocate between 1.5 and 2.5% of total sales to
investment in innovation. This fact is not
reflected in the companies of gradual growth, so
it can be a disruptive factor of rapid
development.
While high growth companies are present in four
countries (average), those with gradual growth
do so in less than half. The diversification of the
business in several markets is a key factor of
development, as demonstrated.
In relation to the case of Q8 that meets all the
conditions to belong to the group of rapid
growth, in reality that growth is not such. Among
the causes of this disparity may be a poorly
designed or applied strategic plan and / or the
presence of third parties that divide the
attention of the manager.
5. CONCLUSIONS
This analysis can serve both public and private
institutions when determining and selecting
which potential businesses can be subject to
rapid growth, either when determining public
financing or private investment.
Among the 8 companies analyzed in this study, it
has been possible to detect which factors can be
key in terms of business dynamism and,
consequently, of international business
development.
On the one hand, all companies share common
aspects such as:
- Quality certifications
- Exports level (> 70%)
- Family business
- Previous experience in the creation of
companies
The presence of these parameters is not
synonymous with rapid business growth and
dynamism, as happens in other sectors.
There are other characteristics whose level of
influence is practically negligible in terms of
dynamism, for example:
- Public-private partnerships
- Previous experience in the industry
The low impact of PPPs in the business
development policy may be due to the absence
of strategic government plans to support this
sector. In this sense, it constitutes a relevant
opportunity to generate public-private
framework agreements that help business
development.
However, you can find fast-growing parameters
that are very useful for discerning rapid growth
from those that show a gradual one. These
parameters include the presence of a strategic
plan, investments in innovation, focus on
growth, differentiated products, experience in
managing large businesses and use of new
technologies in production.
Finally, we should choose for a product
differentiation strategy for premium segments
instead of pricing competition.

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