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March 24th, 2014

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German slaughterhouse giant Tönnies Fleisch has grabbed such a strong foothold in Denmark that its expansion is posing a real threat to domestic competitors.

The Tönnies Danish subsidiary slaughtered almost 1.5 million pigs in Denmark last year – a 25 percent rise that makes it number three in the country, and the indications are that the German group, which has applied for an environmental permit to expand its operation in Brørup in south Jutland , could move into second place either this year or next.

“We have hit our capacity limit, so we are obviously looking for ways to expand,” Jann Jensen, the head of the Brørup slaughterhouse, told Jyllands-Posten newspaper.

 Jensen says that the company's major markets are Germany, Japan, USA and China.

Expansion at a loss?
The question remains whether the increase in production at the slaughterhouse has brought the company’s accounts into the black, or if it has paid such a high price for animal stock to compete with Danish competitors that it remains in the red.

Danish Crown's chief analyst, Karl Christian Møller, said that some slaughterhouses have “chosen to expand by buying pigs at a loss”.

This little piggy went to Germany
Danish Crown has been forced to close a number of its slaughterhouses and sack thousands of employees in recent years due to a drop in the number of pigs being slaughtered.

The decrease is due to Danish farmers exporting more and more live piglets, especially to Germany, and reducing the number of animals being slaughtered.

Danish Crown, unlike Tönnies, operates as a co-op and works under a fixed payment model to purchase pigs from farmers.

“We cannot just go out and outbid rivals to win pigs,” Danish Crown spokesperson Jens Hansen told Jyllands-Posten.

Danish Crown executives have often pointed to the high cost of doing business in Denmark – especially  slaughterhouse wages – as the major reason behind the many lay-offs and plant closures in Denmark .