Thursday, Jul 19, 2018
Industry & Trade | Europe | Malta

Celebrating Malta’s progress in the face of adversity and Farsons Group’s vision of expansion

4 years ago

Louis Farrugia, Chairman of Farsons Group of Companies
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Louis Farrugia

Chairman of Farsons Group of Companies

The Upper Reach Team interviewed Louis Farrugia, Chairman of Farsons Group of Companies, and asked him about the country’s economic growth in recent years and the challenges and opportunities his company is now facing. He also explained the benefits Malta has enjoyed because of its diverse economy and how his business in particular has developed and continues to grow into new markets. Mr. Farrugia gave his opinion on what traits and traditions make the Maltese people so special.

In a time of global economic recession, Malta is one of the few growing economies in Europe; in fact, its GDP has doubled in the last year. So, what is the recipe for success?

I think, essentially, the main reason for our success is that we have a diversified economy. I think if we compare ourselves to other islands in the Mediterranean – and usually they belong to a larger country – their economy is centered on tourism and/or agriculture. Whereas we have more of a diversified economy: our mix is that of manufacturing as well as financial services; we also have a maritime industry due to our strategic position and of course tourism which is fundamental to our whole economy. I think that this mix allows us to have a more robust economy, which doesn’t just depend upon a summer proposition like some of the areas in Italy such as the Amalfi Coast where you will find a very busy summer season followed by a quiet winter when business comes to a halt.

Our membership in the European Union has also increased our accessibility through the introduction of low cost airlines and allowed us to break down trade barriers to create a more competitive environment which in turn has allowed us to attract more business. Added to this mix is our rich history and culture which has made us an attractive destination to visit and do business.

Of course being a small island has its disadvantages as well though the fundamental ingredient to success remains our human capital. Having been a British colony we have inherited a British educational system and knowledge of the English language which is an essential ingredient for young people to connect with the rest of the world in a more meaningful way than perhaps, fifty years ago. I remember a time when Malta was much more inward looking.

You were mentioning how diverse Malta’s economy is. Regarding your manufacturing sector, which normally brings wealth to the medium classes, how would you describe this sector here in Malta?

Our manufacturing industry really started in the sixties when some international companies set up some factory operations in Malta, essentially they were light manufacturing units such as textile factories or seal manufacturing for the motor car industry. These companies found the Maltese workforce flexible and trainable so that good productivity was possible at a reduced cost. As manufacturing took off, the education system adapted itself to the necessities of such industries and today we boast of having a fully-fledged technical college system that teaches important skills for these industries.

Our own brewery and beverage business was started in 1928 by my father whose idea it was to venture into brewing and who naturally sought some sort of protection at the initial stages of the investment, but by the seventies when I started working here the result was that we had become very introverted to the point that our profits depended on whether we could get a price increase or not and not much had to do with our competitiveness.

What has happened is that since we joined the European Union, competitive activity has increased and we are now much more creative. We have invested heavily to reduce our operating costs. Following our investment in a new brew house, we have now approved and are building a 27 million euro beer packaging facility, which will be equipped to compete on both the local and international market. We are now confident that our brand will be able to enter other European markets in its own right so from an introverted stage, we now have an export oriented strategy with ambitions to triple our exports within the next five years.

Apart from the core manufacturing arm of the company, you also own a number of other companies. In the near future, which one of these businesses has more potential for growth?

We have aspirations to become regional players within the food and beverage business. I think we have the necessary experience, capabilities and resources in place and I see no reason why we can’t make our brands better known. It’s a question of broadening our horizons, raising the standards and our ambitions and following through with a smart marketing strategy.

One of the titles we were thinking of using for our report is “Proud to be Maltese”. And this sentence means something very different for everyone. In your opinion, what does it mean to you to be Maltese?

We are a proud nation that places a lot of importance on family values; family is the backbone of Maltese society and we have a reputation for being warm and hospitable as a people. We also have strong work ethics and are a peaceful and safe nation and don’t like violence. We are all very proud of our history and past achievements and of course our capital city of Valletta which we need to look after. 

You are a family business as well as a public listed company. How do you manage family and public interests and what do you think about the takeover of the next generation in coming years?

I think we have a good formula within our family, where all the family members sit on the boards of our holding companies and have a say in deciding whether to invest in A or B. At the same time we employ professional managers who run the businesses and if members of the family want to be part of management, they have to be qualified and work their way up within the management structures as a non-family member would normally do. 

I still come in every day so I know what’s going on but I think a lot of families make mistakes when they do not recognize that they should distinguish between operational experience and the right to a dividend.  Being a shareholder should not give one the automatic right to manage. 

We also understand that you are now planning on converting your old brewery into a mixed use development. Could you expand on your plans in this area?

Over the last 10 years we have moved our brewery and bottling operation to the south of the site into modern state of the art facilities, in the process vacating the old brewery which was also built and designed by my father in post war Malta. Completed in 1950, the brewery is today an iconic and listed industrial building and very symbolic of the Farsons brand and entrepreneurial spirit that has driven our business over the years. Given its national status and family emotional ties, we are being extremely sensitive to its redevelopment and have recently completed a master plan for the site with Ian Ritchie British firm of Architects who were selected following a competitive international tender. In line with Malta’s vision to become a regional hub of excellence, our plan is to build and enhance the value and prestige of the old brewery and convert it into a very high quality mixed use business park which caters for the future needs of local and international tenants. Our wider long term vision is to take an active role in the regeneration of the surrounding Mriehel industrial area by working with all stakeholders to create what we are referring to as the ‘Canary Wharf’ of Malta.




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