18 Jul 2017 | 02.28 pm
Interview: Chris Martin, Chief Executive, Musgrave
Operating profit in 2016 increased by 55%
18 Jul 2017 | 02.28 pm
Grocery giant Musgrave has announced that turnover in 2016 grew by 3% to €3.7bn, with the group’s operating profit increasing by 55% to €95m. The company had year-end cash of €121m and shareholder funds in December 2016 were €249m.
Musgrave employs 35,000 people in Ireland through its retail brands SuperValu, Centra and Daybreak, and its wholesale brand, MarketPlace. The company’s annual results statement for 2016 shows that SuperValu consolidated its position as Ireland’s leading grocery retailer with sales of nearly €2.7bn for 2016, an increase of 2.4%. Musgrave plans to invest €35m in SuperValu store revamps, as well as open two new stores, in 2017. Centra achieved revenue of €1.6bn in 2016, a 3% increase on the previous year’s performance, and is also slated for a €20m investment programme through 2017.
In this Q&A, Musgrave chief executive Chris Martin (pictured) provides further insight into how the group is performing:
Musgrave recently introduced a new brand identity. What’s the thinking behind this move?
We were delighted to unveil our new brand identity in celebration of the anniversary of brothers Thomas and Stuart Musgrave who founded the business just over 140 years ago. Our new logo, now rolled out across the entire Musgrave business, is based on the signature of the Musgrave chairman in 1902. This new brand identity is a symbol of Musgrave’s heritage and the pride we share in being a sixth-generation Irish family business. As we continue to evolve and grow into the future, this new identity will support our ethos of Growing Good Business as we expand our retail, wholesale and export offering.
SuperValu is market leader in the grocery market, according to the latest Kantar data. What factors are keeping your retail partners ahead of the competition?
We are encouraged by the latest Kantar data which comes in the wake of a strong performance by SuperValu in 2016, reaching a new sales milestone of €2.67 billion. There’s no doubt, however, that the grocery market remains highly competitive so the focus for us is on continuing to strengthen our reputation for fresh food leadership.
We have developed a tailored, local offer in every store, which means that our customers can find products on our shelves that won’t be found in our competitors. Through Food Academy, a unique initiative with Bord Bia and the Local Enterprise Offices, SuperValu has now helped over 700 small Irish food producers to secure a retail listing, supporting over 1,300 jobs and delivering retail sales of €25 million as a result. Another key factor of our strategy is the relaunch of our Real Rewards loyalty scheme, which we aim to grow into the number one loyalty programme in the country.
Major investment is currently underway at Marketplace facilities in Dublin. What’s the strategy here and where do you see the opportunity for growth?
The business of food and drink is constantly evolving and as a business, we need to ensure that we continue to respond to growing trends that impact our customers’ needs. Musgrave MarketPlace continues to innovate by re-inventing ‘cash and carry’ with more fresh ranges, locally-sourced products and new partnerships with small, local suppliers through our Foodservice Academy.
MarketPlace is the largest and fastest growing wholesale supplier to retail, foodservice and SME businesses across the island of Ireland. In 2016 MarketPlace launched a new concept in Cash and Carry of the future with the successful introduction of Food Emporium offering hundreds of new and local products as well as specialist fresh meat, fish and cheese.
In December 2016, we launched our redeveloped MarketPlace Ballymun outlet to much acclaim from foodservice professionals. This includes a state-of-the- art culinary theatre hosting tailored classes run by expert chefs, aimed at creating menu solutions for customers and positioning MarketPlace as a ‘one-stop-shop’ for all food industry needs. Following the successful renovation of our Ballymun store, we plan to invest a further €3.5 million to upgrade our stores in Clondalkin and Duncrue, further strengthening our commitment to providing our customers with carry stores of the future.
The new partnership with Alibaba. Can you explain what this entails and the possible upside in China for Irish food and drink producers?
Musgrave is using Alibaba’s Tmall global ecommerce platform to sell SuperValu products directly to Chinese consumers. This initiative is at a very early stage, but forms part of our Growing Good Business strategy to develop new ventures to help the company succeed in an ever more competitive world.
We currently offer 40 own-brand products for sale and may expand our range over the coming months. In time, there will be a huge opportunity for Irish suppliers given the size of the market and the evolving palate of the Chinese consumer. The key factors in this respect is the growing middle class in China and the international reputation Ireland has for food.
Closer to home, we also launched the new foodservice franchise brand called Chipmongers – a modern take on the traditional fish and chipper. Chipmongers outlets are owned and operated by local entrepreneurs, consistent with our strategy of supporting entrepreneurs operating businesses in their local community.
Brexit and sterling devaluation is already presenting challenges for Musgrave retail partners in border counties. How can you assist them?
Like many businesses we are concerned about the economic impact of Brexit and are working through potential implications of the referendum result for our business. While we are still waiting to see what form Brexit may take and whether the EU and the UK can even come to an agreement, there are still a variety of impacts that it may have. Whilst sterling has stabilised of late, we need to be mindful of future fluctuations and adapt in a quick fashion, particularly when there is the opportunity to pass on savings to consumers.
From a supply chain perspective, we are very concerned that Brexit could add cost and further complexity to our business. Potential border delays while transporting goods, particularly perishable items, would increase our transport costs and add another layer of bureaucracy. Retailers and suppliers need to work together to minimise the impact.
While optimism has been tempered by the recent political and economic uncertainty, the grocery market across the Island of Ireland and Spain is still growing and we also see further opportunity for growth in the foodservice market. The decisions taken during the recession to both invest in our brands and restructure and transform our business means that we are well positioned to deliver long-term sustainable growth.