19 - 25 July 2001

Magro Brothers interested in exporting pasta sauces to UK

• Success depends on agriculture package negotiated by the government with EU

by Ivan Brincat

Magro Brothers will invest in another production line to produce pasta sauces for the UK market if Malta manages to get a good package in its negotiations on the agriculture chapter with the European Union.
The managing director of Magro Brothers John Magro told The Malta Business Weekly that the British market for pasta sauces is extremely lucrative. “The majority of these sauces are produced in countries like Ireland and the Netherlands by multinational companies and their production lines are in places where it is cost effective. It is for this reason that we will have to base our decision on whether Malta will be a competitive location to operate from or not.”
The company already has requests from foreign governments to set up production facilities outside Malta. “In the medium term, we might move to other production facilities when the Maltese plants reach full capacity.”
Magro Brothers, which produces an extensive range of canned and bottled food products in consumer sizes under the brand names of Mayor, Three Hills, Pomidoro, Super Taste and American Style, started exporting five years ago after moving their manufacturing activities to a new, purposely built factory in Xewkija, with a total covered area of 27,000 square metres.
Over the past five years the company has managed to double the value of its exports each year and was given “the most consistent export performer” award by Metco recently.
“Unless something dramatic happens, we will double sales this year,” Mr Magro said.
Their first client was in Saudi Arabia. Now, the company exports to all Gulf States and North Africa.
The company has also managed to penetrate the EU market. “We are now exporting to Greece, Italy, the Netherlands, the UK and Ireland on a regular basis.” Mr Magro said the largest market is the UK.
“We aimed for the largest retail chains and have been able to persuade these large companies to buy from us. To do this we have had to improve our quality standards and conform to the British Retail Consortium technical standards.”
The company produces tomato sauces under the supermarket’s own brands. “We are in three of the top five supermarkets in the UK including ASDA (now under Wal Mart) and Sainsbury. He said the company has proved it can be a trustworthy and reliable partner.
The breakthrough came when Magro Brothers started to supply tomato sauce to McDonald’s. The sauce for the largest food chain is made according to their own recipes in the Gozo plant.
“The production for McDonald’s has brought with it quality standards which are expected by this chain. It has built a new culture within our company,” he said.
“To enter the UK market we needed certification for our factory because we are producing sauces under their own label.”
The second largest market for the company is the Netherlands and the latest acquisition is Taiwan. In all the company exports to 20 different countries on a regular basis but there is room for enormous growth.
Participation in international food fairs is essential. “It is very expensive to participate but it is a must. We also join METCO on trade missions but we are aware that we can do much more as a company,” Mr Magro said.
Business is obviously affected when there are problems at the Malta Freeport.
“We have been hit twice in three years and have had to pay penalties due to strikes at the Malta Freeport. When we sell we guarantee that the produce will be delivered to their distribution centres on time. Our product is a weight product and cannot be transported by air or land.”
The company also imports tomato concentrates from all over the world. “If the local produce was in line with world-market prices, then we would use local produce. Moreover, we have also created a market for local production because we buy local produce for the local market. For international markets we source international concentrate,” he said.
Mr Magro said that the company wanted to use Maltese tomatoes for the pasta sauces it wanted to produce but these have to cost the same as in the EU if the company wants to compete in EU supermarket chains. “These give us more added value,” he said.
Magro Brothers have also invested a lot recently in staff training, machinery and Information Technology. “Our company wants to grow in a big way. We are going for aggressive growth in the next five years. Our strategy is to retain our position in the local market and grow further by increasing our exports.” Magro Brothers was founded in 1934 by three brothers to produce tomato paste from locally grown fresh tomatoes. Today, the companies within the group are still family owned private companies, and production of tomato based products is still its core business.