February 12, 2013 3:44 pm

Two smart French cookies

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Augustin Paluel-Marmont and Michel de Rovira at the Bananeraie, Michel & Augustin's headquarters at Boulogne-Billancourt.©Picture Tank

Stunt men: Augustin Paluel-Marmont, left, and Michel de Rovira have a flair for getting attention for their Michel and Augustin brand by selling their personality, whether dressing up or using cartoons on packaging

It is late afternoon near the busy Saint-Lazare railway station in Paris, and a tide of commuters is heading home. A fashionably dressed young woman has nipped into a supermarket before boarding her train and is looking at the biscuit shelf. She hesitates before choosing a bag of Michel et Augustin chocolate petits cookies. “They’re good but they’re a bit expensive . . .” she says, looking slightly guilty at her indulgence, before walking quickly to the checkout with her purchase.

Michel et Augustin biscuits are indeed more expensive, sometimes double the price of other, more mass-market brands. But when Michel de Rovira and Augustin Paluel-Marmont started their biscuit venture in an apartment kitchen in 2005, they knew they would have to compete on taste, quality and feeling rather than price. “Michel et Augustin’s core value is friendship,” says Mr Paluel-Marmont.

As well as biscuits, the Michel et Augustin brand now encompasses cakes, yoghurts, snacks and desserts, which are sold in 7,000 urban outlets in France and a few as far away as Singapore and Los Angeles. The company posted revenues of €18.4m last year, a 40 per cent year-on-year rise. It was profitable for the second consecutive year.

“It has been seven years of rapid and constant growth,” says Mr Paluel-Marmont. The two men, dressed in fashionably casual clothes, are speaking in a meeting room at their headquarters in Boulogne-Billancourt, a smart area just outside the périphérique ring road that divides the centre of Paris from the outskirts.

At first, they say, it was just about two friends making and selling biscuits locally. But they had a flair for getting attention, with stunts that include handing out cookies in the streets of Paris, holding open-air press conferences dressed up as a cow, or renaming the metro station for their office by putting stickers on the maps inside carriages.

Occasionally, the stunts get out of hand, they say. In the run-up to last year’s French presidential election, Michel et Augustin biscuit packets and yoghurt bottles featuring cartoons of the candidates were removed from some shops’ shelves. There had been incidents of customers, wound up by the electioneering, shouting and throwing them about.

But usually the two men have the kind of sure touch for evoking a good mood that has been honed by food companies such as Ben & Jerry’s ice cream in the US or Innocent drinks, the UK juice company.

Typically, Michel et Augustin packaging has light-hearted details of how the product was made or how the company works. “If you are looking for two French crazy nuts, here we are!” says a label on some biscuits. “Michel has two houseplants, a bike and not much hair on his head. Augustin has an odd van with five baby seats and a tuft in his fringe,” reads another. The brand taps into the bo-bo, or bourgeois-bohème, market of affluent, digitally savvy consumers who are often engaged by quirky, off-the-wall brands. From the outset, Mr de Rovira and Mr Paluel-Marmont presented themselves as two inexperienced guys trying to offer an alternative to brands such as United Biscuits or Danone.

They had been friends at school in Paris before attending ESCP Europe business school. Mr de Rovira tried banking in New York and strategic consulting in Paris before doing an MBA at Insead; Mr Paluel-Marmont went into marketing at a resorts operator and then Air France – with a brief stint setting up a database software business with 10 others.

In 2003, they took time off to write a guide to Parisian bread and bakeries that sold 120,000 copies. Mr Paluel-Marmont, who now had a diploma in baking, started making biscuits in his flat with the aim of creating a brand using good ingredients that could be found in the consumer’s own cupboard. “I wanted to share a number of my values [about making food] and I couldn’t understand the ingredient lists on food packaging,” he says.

Mr de Rovira turned down a job with Bain Capital, the private equity firm, to join him. “I thought if I did not start a business adventure then, I would never do it.”

They set about persuading retailers to stock the homemade biscuits. “In the beginning, nobody understands what you are doing,” Mr Paluel-Marmont says. “You’ve got this guy, who could be working at Bain Capital, but is selling door-to-door homemade biscuits with a trolley.”

The breakthrough came in 2005, when the deli below Mr Paluel-Marmont’s apartment in the 18th arrondissement decided to stock the biscuits, which were either butter or chocolate. Then other outlets stocked them, and demand grew to more than the apartment kitchen could cope with. The pair used their contacts to get the use of two bakeries on the days they were not operating.

In 2006 Mr de Rovira and Mr Paluel-Marmont added dairy products, starting with yoghurt drinks. They say the decision was “intuitive” but they were also shrewd in thinking they could create an upmarket niche. Dairy products, however, need a stricter hygiene regime than biscuits, so they looked for a small industrial partner. Luckily, France’s food sector is not short of small companies with overcapacity. Soon all production was outsourced, and the pair were able to focus on product design, brand management and developing distribution.

But they insist that all products are designed and tested at the Bananeraie – banana plantation – the name they gave their HQ. Once a month, they hold an open evening so people can meet the crew, try products and take home samples.

They admit to some rough patches. In 2009, for instance, when sales growth was not as fast as forecast, a slowdown in cash flow meant they cut their salaries temporarily.

But now, the company is aiming for €100m revenues by 2018 and talks are under way with potential new backers. Mr Paluel-Marmont says any new deal will simplify the ownership structure and enable some historic partners to leave.

While 75 per cent of the company is owned by Mr de Rovira, Mr Paluel-Marmont and about 40 individuals, including family and friends, the other 25 per cent is in the hands of Artemis, the investment arm of the Pinault family. It first became involved with Michel et Augustin in 2008 and is expected to stay.

“We now want to speed up,” Mr Paluel-Marmont says. Investment would fund tasks such as strengthening the management team, including hiring more experienced people – the average age of the 43-strong workforce is 29 – boosting the salesforce across France’s 10 biggest cities, and increasing exports.

Raising brand awareness yet further is also on the list. “We need to be smart about it, just as we have been up to now,” Mr Paluel-Marmont says.

Perhaps he is planning some more attention-grabbing ploys.

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