Cork Chamber of Commerce has presented its Outstanding Achievement in Business award to Hugh Mackeown, one of the shareholders in Musgrave Group, the owner of the SuperValu business.

In his acceptance speech, Mackeown (pictured with award) said:

“When I joined the company it was already 90 years in business, with a first class reputation in Munster and a national tea brand. You will be aware of the turmoil of the first half of the 20th century – first two World Wars and all the disruption they caused, second, and even more traumatic, the war of independence and the civil war.

“These were very difficult times, when survival and struggle were paramount, not growth and profits. Recently I read a most interesting and disturbing book called The Year of Disappearances. It describes what happened in Cork during those years of major conflict, both with England, and between Irishmen. It set me wondering what must life have been like at that time for my grandparents, one side Methodists trying to run Musgrave, and my Mackeown grandfather a Presbyterian minister who worked in Cork all his life.

“To give just one factual illustration of what must have been a harsh reality, between the census of 1911 and the census of 1926, the non-Catholic population of Cork was cut in half – from 9,000 to 4,400 in 15 years! Next year is the centenary of 1916, and I believe most people, including an audience such as this, recognise that it is now time for open discussion about a very difficult and conflicted period, something that Protestants have been very slow to do.

In Association with

Disruption

“In the 1930s the great depression caused serious disruption, not least to Musgrave Brothers, as it was then known. Following the Second World War, the 1950s in Ireland saw stagnation and emigration which drove our population below 3 million.

“That brings me up to 1961 when I first worked in Musgrave for several months, in Cornmarket Street, or the coal quay if you prefer. My opportunity for this career resulted from my mother being a Musgrave, and an invitation from her brother jack, the MD, to join the company. The business consisted of ambient food wholesaling – such as tea, sugar, biscuits, canned fruit and veg. Shortly after I started full-time work in 1965 my uncle sent me to a seminar, at which the guru from America made it perfectly clear that wholesaling was on the way out, what we would now call a rust-belt, smoke-stack industry.

“There is no denying that he had a point. Trade for us in the 60s and 70s, despite our adoption of innovations such as voluntary group trading for independent grocers (such as VG, Mace and Spar) and cash and carry, was extremely difficult. We were growing, but not nearly as fast as the supermarket chains such as Dunnes, Quinnsworth, H. Williams and the rest.

Achievement

I would need to bring you back to 1980, to be able to give you the clearest idea possible as to the kernel of the Musgrave achievement. At that time, no knowledgeable trade commentator, including ourselves, would have even entertained the idea that by 2015 Musgrave would be the largest food distributor in the country. In fact, we were meant to fade away.

“Make no mistake, we are now the largest – SuperValu on its own matches Tesco, but to that must be added Centra, Daybreak and Marketplace, which gives us a clear lead, at about 30% of the market.

“To the best of my knowledge no traditional wholesaler in any western developed economy has been able to re-invent themselves and achieve anything approaching that. There has been no shortage of overseas competition – from Canada, from Britain, from Germany – and you might wonder how this has looked from a small business in a small city, at the southern edge of an Atlantic Island.

“I think another area of important achievement has been our long-term policy towards those who work with us. In times past we were ahead of the unions and our competitors in introducing benefits like holiday pay, sickness pay and pension schemes – items now taken for granted, but not 50 or 60 years ago. Where possible we introduced bonus schemes for productivity, which were of great benefit to employees as well as the company.

Share Ownership

“Another benefit, introduced in the 1980s, and as far as I know still unique in any major Irish private company, is our share ownership scheme, which is open to all employees. Everyone, including family, has the same class of share. In effect, the family has given away a quarter of the company. I do not think any company can match Musgrave’s record of employment in Cork, going back 140 years.

“Speaking of longevity, another Musgrave achievement is to have lasted and thrived so long as a family business. Most family businesses do not get beyond the 3rd generation. In our existence we had four family leaders of the business, which came to an end when I retired as chairman five years ago. Our tax system militates strongly against long lasting and substantial family enterprises, to a greater extent than our neighbours in the UK.

“Many will probably ask ‘does that matter?’ It most certainly does matter, particularly when you think of the present political drive to boost our economy by encouraging entrepreneurship amongst smaller undertakings and startups.

Between SuperValu and Centra we have over 600 customers, 95% of them family owned, and most of them in towns and villages in rural areas. Many such rural towns are struggling to maintain viability. Which type of retail outlet is going to do most to help – a family owned SuperValu or Centra outlet, or a foreign chain? The evidence is clear that a local owner is of most benefit to both the local community, and also nationally.

“Most local owners will reinvest their profits locally, and we see that time and time again, with significant benefit to these under-stress towns. As far as foreign owned chains are concerned, their profits have the advantage of the 12.5% corporation tax, and are then distributed to shareholders outside Ireland, where the rates of personal tax are probably lower because of higher corporation tax.

“Typically, no local surplus is re-invested locally, and none of the foreign chain’s profit is subject to the high Irish rate of personal taxation, so the overall Irish tax return is 12.5%. The communities are losing and the state is losing, for evermore.

Unthinking Obsession

“At times I get the impression that politicians and media have an unthinking obsession with overseas investment, to the detriment of Irish-owned enterprises. Of course we need both, only a fool would think otherwise, but in recent plans for recovery it has emerged there is a strong need for Irish-based innovation and developments.

“To effectively achieve this a shift is needed in the basic assumptions of government and media as to the desired balance of promotion between native and overseas enterprises. As a recent example, what kind of a message does it send to Irish businesses when our minister of finance goes to Shannon to meet Mr. Trump, who plans to invest in an existing golf club? No Musgrave CEO has been met by a politician off a plane, or anything else, in 140 years!

“I always regarded myself as a professional manager rather than as a family member, and believed strongly in creating the conditions in which my reports had the autonomy to do a good job without me trying to do their job for them. Very often this worked well, and when it did not action was quickly taken.

“With that kind of treatment people are much more highly motivated than with restrictive supervision. For me the levels of commitment and dedication that existed in Musgrave right through the organisation were a constant inspiration – indeed there were times they kept me going rather than the other way around.

“And I should say here that this was particularly apparent in Cork, which has always been our headquarters. Together we grew the business from about £7 million in 1965 to just shy of €5 billion in 2007, before everything shifted a gear. In a world that would quickly turn anyone into a cynic, my overall experience of the people I worked with in Musgrave ensured that has not happened to me.

“Again I want to thank you, President, and the Cork Chamber for honouring me with this award. We all have to make our own way as individuals and as companies, but it is reassuring to occasionally learn that it’s not happening in a vacuum.”

Blackrock Revamp

Meanwhile, SuperValu has refreshed its store in Blackrock, Co. Dublin, adding more of a gourmet feel to what was formerly the flagship for the Superquinn chain.

The new look includes a Vegetable Juice Bar, where Ethan the expert advises customers on which of the six vegetable or fruit juices will suit them best. The meat counter features Irish Hereford Dry aged beef, tomahawk steaks and grass-fed Wexford Lamb exclusive to the store.

The expanded Fresh Ready Meals counter sells a range of home cooked meals from beef and stout casserole to Thai Coconut Chicken Curry. A new Dipping Bar offers a range of oils and the large Tapas area has been redesigned as well. The store now also boasts a Chocolatier, featuring  a range of 25 handmade chocolates by Carol Kinsella.