The Big Interview: Chris Martin, CEO, Musgrave Group

By Donna Ahern
The Big Interview: Chris Martin, CEO, Musgrave Group

On the day that he announced his retirement from the Musgrave Group, CEO Chris Martin also revealed the group’s impressive turnover and profit results - and he spoke to Maev Martin about the retail giant’s ambitious plans for further growth

On 10 May, Musgrave announced results for the financial year ended 29 December 2018, with turnover up by 3.8% to €3.9 billion and profit before tax of €84.5 million, a 5.6% increase on the previous year. Net assets were €410 million, an increase of €79 million on 2017 and the business ended the year with net cash of €16 million.

“Despite very competitive markets, for the fourth year in a row we have reported increased profit, with all our brands performing well and growing,” said Martin.

“Our performance underlines the success of our Growing Good Business strategy, which is three years old and is about where we want Musgrave to be in 2025 and that is about going after the total food market.”

With the island of Ireland population set to grow from 6.3 million to 7 million by 2025, Musgrave anticipates a total food market that will grow from around 30 billion to 37 billion, covering both grocery and foodservice.

ADVERTISEMENT

“We see an opportunity for our brands in that market to go after all shopper missions and eating occasions, so we want to grow our brands around food consumption. Growing Good Business is about growing SuperValu, Centra and Musgrave Marketplace and it is also about growing through new brands such as Frank & Honest."

"For example, we recently launched Caramico Pizza and Moo’d ice cream, and these are also about going after that total food market. We are pleased that our recent acquisitions, La Rousse Foods and Donnybrook Fair, which we acquired in 2018, are performing well. Both of these acquisitions gave us a step into the premium food market.”

Musgrave will continue to explore further acquisition opportunities. “We are geared up for acquisition and we are interested in acquisitions that help us to get as much as possible of the total food market,” says Martin.

“Those acquisitions could be in the premium food space, but they mightn’t necessarily be solely on that side of the market.” But what about plans to expand or innovate with the businesses that they have already acquired? “Donnybrook Fair is very new for us, so it is a case of business as usual,” he says.

“We will expand at some point, but that expansion will be small in the overall context of Musgrave. We are very happy with the La Rousse Foods business as its sits well with our Musgrave Marketplace wholesale and foodservice business, which continues to flourish with sales in 2018 up by 13% to €0.6 billion. Musgrave MarketPlace has evolved from a cash and carry concept into Ireland’s leading wholesale business for retailers and a one-stop shop for the country’s growing hospitality sector.”

ADVERTISEMENT

Health & sustainability

SuperValu and Centra both celebrate their 40th anniversary this year. SuperValu was Ireland’s first supermarket brand and recorded a new retail sales milestone of €2.9 billion across the island of Ireland in 2018.

“SuperValu provides value, great quality Irish produce and a differentiated offer which aligns with the changing expectations that consumers have of grocery retail, particularly in the areas of health and sustainability,” said Martin.

“In 2018 this included the roll-out of dedicated vegetarian/vegan zones across SuperValu stores, the introduction of fully compostable and biodegradable bags, and the piloting of a living herb wall concept, giving shoppers the option to pick their own fresh produce from the plant, while reducing packaging and food waste.

Sustainability goes to the heart of the Musgrave brands – we are working on plastic reduction, plastic bag removal, and we have introduced compostable coffee cups for our Frank & Honest brand. However, sustainability isn’t just fundamental to the group, but to our local independent retailers, as they have to be good neighbours in the community.”

ADVERTISEMENT

Centra also performed strongly in 2018 and Martin says that the brand has “redefined” the convenience market by focusing on “unique food experiences” and fresh, healthy food-to-go products. “The breakfast roll is making way for healthy alternatives like Cold Pressed Turmeric Shots and Paleo Superbowls,” he says. “With retail sales of €1.9 billion in 2018, Centra is now globally recognised as the future of convenience grocery shopping.”

In the symbol market, Musgrave’s Daybreak brand added 17 new stores to its estate in 2018 bringing the total to 237 stores and Martin says that they will add 12 to 13 stores this year.

Daybreak’s new brand format includes the introduction of three new sub-brands – Munch and Co deli; 9 Grams coffee, and Lickety Split ice cream. SuperValu is also expanding its estate throughout the island. Martin says that in 2019 SuperValu will grow its footprint with “one net new store addition and with Centra there will be 22 net new stores”.

Building new brands

Musgrave continued to introduce new brands last year, including Moo’d, an ice cream brand that combines Irish dairy and Italian ingredients, and Caramico, a premium pizza range which will be freshly cooked in stone-based ovens in-store at select Centra stores, and Green Kitchen, a new brand that allows customers to create their own salads from a wide selection of fresh ingredients. These will all be hoping to follow in the very successful footsteps of Frank and Honest.

ADVERTISEMENT

The Frank and Honest brand has been a big success story for Musgrave. Now the largest coffee brand in Ireland, Martin reports that it is in over 600 stores and Musgrave are also operating in-store cafes.

By the time this article is published, Musgrave will have likely opened their first standalone Frank and Honest coffee shop in Dunboyne in Co Meath.

“This is a completely new approach for us, but it gives us an opportunity to really develop our barista range and service,” he says. “The coffee market is growing at around 8% in Ireland and we are tapping into that market.”

Digital dynamic

Musgrave have big plans to further develop their online offering. “Regarding SuperValu, our online business is in over 70 stores and grew by 25% last year,” says Martin. “We are also working on our digital presence – the Centra Beat the Queue app is in over 50 stores, so we are really investing in digital.”

There has been much debate over the last couple of years as to the likely share that online will have in the Irish grocery retail market by 2025. Many industry experts believe it could reach 10% or more, while a significant portion of the industry believes that market share will remain in single digits. “We think that by 2025 online will be 8% of the Irish grocery market,” says Martin. “By 2025 brands will be accessed by shoppers who want to shop how, where and when they want, so we will continue to develop our digital footprint.”

International business

Musgrave’s Spanish business is based in the Valencia/Murcia region of Spain and, according to Martin, generates a turnover of about €185 million. In Spain they operate their independent retail brand Dialprix and the Dialsur cash and carry brand. Musgrave’s Spanish business performed well with sales of €190 million in 2018, benefiting from the addition of two new Dialprix stores during the year and the recent opening of a new cash and carry outlet in the south east region of Spain.

“We are expanding and growing in Spain,” he says. “And we continue to see other international opportunities. We are exploring more partnerships similar to our export agreement with Alosra, where we have responded to increasing demand for great quality own brand products. Since November 2018, Stefan Sick has been heading up our export business and we have been working with Alosra in Bahrain who are taking some of our private label products and placing them in Middle Eastern stores and selling them through their retail business.”

Future outlook & retirement

While the Irish economy remains robust, there are a series of international factors, including Brexit, that could have a negative effect on consumer confidence here in Ireland. However, Martin believes that Ireland will still be a strong market in a post-Brexit world.

“We have been systematically planning for Brexit for the last two years in order to minimise the impact on shoppers, support our retailers, and protect our business,” he says.

“We could see tariffs coming in on certain categories of products that we import from the UK and, with the border in place, there could be delays with stock, so we have been looking at our sourcing of products to see if we can source from Europe rather than from the UK. We have also worked closely with UK suppliers to see how we can mitigate tariffs on products coming into the Republic of Ireland.”

After 14 years as CEO of Musgrave Chris Martin announced his retirement from the business on 10 May. “The business is in very good shape and is growing and dynamic,” he says. “Musgrave has been an important part of my life and I have had the privilege of working with exceptional colleagues, world class retailers, and supportive shareholders.

Through our purpose of ‘Growing Good Business’ we have worked together to build brands that are set up for long term sustainable growth and we have created a business that people can be proud of and which contributes significantly to local communities.

My decision to retire from the business was based on my desire to move into the non-executive advisory world, working with companies in both Ireland and the UK. I made the decision after Christmas and informed the board in March and our chairman has commenced a process of looking both internally and externally for my successor. Once my successor is found I will transition out of the business in the next few months.”

Concluding our interview where it started, with Martin outlining Musgrave’s ambition to acquire as much of Ireland’s total food market has possible, he reiterates that the company’s ambition is to become the undisputed number one in grocery retail and wholesale across the island of Ireland. It will be interesting to see who steps into his rather big shoes over the next few months, as the retail giant strives for all Ireland domination.

© 2019 Checkout – your source for the latest Irish retail news. Article by Maev Martin. Click subscribe to sign up for the Checkout print edition. 

Stay Connected With Our Weekly Newsletter

Processing your request...

Thanks! please check your email to confirm your subscription.