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Simonds Farsons Cisk will be 80 next year but as explained by SFC Group Chairman, Louis Farrugia, the business has the same core although it is adapting to market trends constantly.
Your family has been involved with the brewery for a long time and developed it into one of the leading companies in Malta, is this a burden or an inspiration ?
 Our family has been involved in the brewing industry since 1928. It was my father who ventured into this business and obviously in the twenties Malta was a very different place, so obviously it was an act of courage. He was, however, a visionary businessman and he persuaded his father to diversify from a flour mill into something completely different. He bought a second hand brewery plant from Italy, and he was also the architect for the first premises in Hamrun, where we started. He also designed the curent brewery. The name Farsons derives from Farrugia and Sons, so we also branded the whole enterprise. So our connection goes back a long time, and we made the mergers with Simonds and Cisk. On my father’s death in 1956, my cousin Antony Miceli-Farrugia took over the reins until 1980 when I took over, but he remained my Chairman for some 15 years. The family have been very involved, but it is a public company, and we act and conduct ourselves as a public company, and although the family is connected., all our managers are professional managers. There may be some family members here and there but the Board is all professional in their own right as well as having two directors from the public. So it is a good mix, and on the board we have lawyers and financial experts and succesful marketing busness leaders.
Do you find your profession as a Chartered Accountant therefore in corporate governance, an asset in leading the company ?
Yes, my training as a Chartered Accountant has been a big help. I worked for a number of international auditors in UK and Italy which was a very good introduction into the world of business. So the bottom line is that with the opportunities I enjoyed regarding the business, I was lucky that the profession I took up was so useful to the business interests. I think we have a good mixture of family representation and professional management. We try to be very strategic in our planning rather than too much family emotion, although family presence is a good thing.
Do you agree with the recent UK survey which found that family businesses which became public companies performed comparatively well ?
There is no question that if you have the family history to defend and to continue, and that there is a personal stake, even though it may be diminished, that is a motivator. The Italians say “lociu di padrone” – “ the proprietor’s eye” – is always important, because he cares more than just a professional interest. So it is a good mixture.
The brewery is very small compared with international businesses, is this an advantage or not ?
World brewing consists of enormous entities and they are getting bigger. The Budweisers, the Heinekens, South African Breweries are all millions and millions with many very strong brands, and they are battling every day, we read about mergers every day.
We are different, we are a public company, wholly owned by Maltese, principally with Maltese brands such as Cisk and Kinnie as the prime profit maker. With a mixture of international brands so we know how to relate to multinationals like Carlsberg, Budweiser, Pepsi; we deal with these people on a daily basis. Plus also brands like Danone, Bacardi dealt with by subsidiaries. So although Maltese owned we are by no means insular.
During this current year we have been making strong efforts in the Italian market with our beer, firm orders from Australia, firm orders from USA, you will Cisk in a number of cash and carry operations in UK, you will find Cisk in pubs in Syracuse, Palermo, Catania, Bari and it is spreading North slowly but surely. You will find Kinnie in Italy and Libya and on websites, so we are making good progress in internationalising our two main brands, which are also our leading brands here. It is easy to say “export” but when you have been locally orientated and protected and are thrown into intense competition, defending your market, it is a challenge. You are like a boxer who must defend with one hand and attack with the other, and that is exactly what we are doing now. We are defending our local market and trying to move out into a huge but very tough market. I believe our strategy is correct because we seek out niche oportunities with a very active and good export team , and we are earning a reputation as a good brewery to deal with, especially in Italy. The Americans are interested in some of our beers, not just Cisk, but ales such as Lacto, which we have even exported to Australia . One of our characteristics is thet we are a Maltese company with a UK influence and background regarding production of ales such as Blue Lable, Lacto and Hopleaf. We have a strong ale we sell in Italy and also a strong, high alcohol Cisk which we hardly sell in Malta . So you can see that we adapt to each niche market.
So although we are very small by the international market standards, we can develope some of the niche markets.
How important is the fact you have good products, and ongoing research ?
There is no doubt that we are good at developing products. In fact we have just launched two, one is an orange flavoured variant of Kinnie – KinnieZest, which is only one calorie, so is very healthy. The other one is CiskExcell which is high alcohol. Two new products which were developed completely in-house which demonstrate the effectiveness of our research department. Last year we introduced flavoured waters which have done well and there are other products in the pipeline, so yes we have a good department and you can imagine with all the experience we have of producing beverages and beers, and with all the international contacts we have, our know-how is considerable.
I saw new a plant under construction on the premises, is this dynamic growth ?
What you saw when you came in was the development we have been explaining to our shareholders which will come on stream in about six months. It is a very big investment, about LM10.6 million, which is a new soft drinks packaging hall and logistics centre, and this will be followed in a couple of years by a new brew house to replace the nice coppers that we have now; these will be preserved. The whole development is to the South of the site, facing South, allowing us to use the road frontage. When you think of our position here, close to MFSA and the two banks operational centres, it can become a financial area. So I believe it has a site potential for a financial business park and that is the business plan we have.
How have you managed to withstand the pressures of joining the EU and the free market ?
There is no doubt that the two brands we have mentioned, and other brands, have taken these pressures head on. Cisk is not the cheapest beer on the market, there are many, many foreign beers that are cheaper, so that is an indicator that the brand is liked. You can say the same for Kinnie which sells at a slight premium over the colas. So that is an achievement.
Do you have any comments on the latest Group results ?
The important thing about the results is not that they were brilliant – they weren’t, we have done better in the past. The important thing they are going in the right direction and that there are other measures being taken currently which will lead to better results. It must be said that we must consider administration costs, productivity, quality and headcount and that is exactly what we are doing.
Are you managing to maintain employment ?
We have laid off no-one, but the new operation which will come on stream next year will require far less labour. What we are doing is to work with casual labour so that no full time employees will feel the pinch when we convert. There will be as many as 60 casuals less, which is not a small percentage on 430 full time employees.
A new brewery and a brewery for sale in Malta, any comment ?
The market is finite in Malta. Some 20% of the market is imported beers, so really we do not look at competitors as local or foreign. Competition is there, there are imported beers which are very, very cheap, so frankly it is going to be very difficult for a second local brewer compete because the Farsons business model is very strong. It is mixed with a whole load of other things.
You are in other businesses, such as catering, how are these going ?
We are in the business of managing brands, so we are really in the highly branded restaurant business, rather than catering. Most of the outlets are profitable, some very profitable, so we don’t have any overall problem in the busines. What we have to get right is the one or two which are not profitable as they harm the rest. We have already closed one unprofitable outlet in Fgura last year so the situation is improving, so there is no doubt that these operations help the group. This is where the resources of one company help the others. All sorts of services are whizzing about the group – whether it’s IT, HR, marketing, PR, finance – that is a great asset. All the reporting is done on a business yield basis, every unit has to make money.
Through sponsorship the Cisk name is synonimous with Malta and especially with Maltese rugby, does this goodwill created help the business ?
I wore the Cisk rugby shirt in Australia along with a whole other group of people and I hope to do the same at this year’s world cup in France. The number of those shirts which are sold at the MIA is phenomenal, and the rugby logo goes round the world. I think you are absolutely right, we work very well with Maltese rugby , it makes sense for the brand and it makes sense for rugby. When we started to support rugby it was in its embryonic state so we should be given the credit for helping it start, but certainly, now it is so much more popular, you can see this in international matches, it pays us back. Obviously it needs more facilities to grow further and this will help us. It is a really good sport for our products to be associated with and I think we shall continue to support it for many years to come.
Are there any big projects in the future ?
When you are running an old established company, and we shall be 80 next year, it is often difficult to get your internal forces to change and we are now transforming the way we operate as our result of our closeness to the market trends. That is our project – to keep in touch with the market place, to carefully watch overseas niches, we shall definitely start the new brewhouse in 2008/09, the utilisation of the front site, plus the freeing up of the Wands site, which is a beautiful 12.000m2 site.
So Farsons Group is transforming itself, looking at the Malta of the future, which will have a growing financial services sector for which we may supply offices. So a very different business from 80 years ago, but with the same core.
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