P.Cutajar Sales and Marketing Director Denis Zammit Cutajar speaks to David Darmanin about a firm approaching its 150th year of operation, family ties and new wine market threats and opportunities his ancestors would have never dreamt of facing
Now into its fifth generation of directors, P.Cutajar has been around for 143 years. Any family-run business that old, would generally be split into some twenty companies each run by a different family director. When business goes down into generations that far, new heirs would at times find themselves working with distant cousins whom they would have at best met once or twice at family weddings. If sharing ancestors may still be regarded as family, then every business in Malta must be family-run. But fascinatingly, P.Cutajar is still run by a mere three executive family directors.
“The company was founded by my great-great uncle, Paolo Cutajar, who was an importer of wood, wine and coal. The market was completely different at the time – so everything was imported in bulk. The wine for example, was imported in barrels. It was not common to find packaged goods those days,” Denis Zammit Cutajar started.
Paolo Cutajar never married. His sister married an architect by the name of Francesco Zammit, and together they had a son named Arturo, who inherited Paolo’s business.
“Now this is why my surname is Zammit Cutajar. Arturo had three sons and two of them – Alfred and Francis, entered the family business. Alfred’s son, Tony, is our CEO. I am Francis’ son. The third executive director on the board is Sarah Portelli, Tony’s daughter – so we have now entered into the fifth generation directors. Sarah is in charge of Retail Operations along with the Kodak and Solaris brands.
“Since my grand uncle did not have any children, and the second generation consisted only of one member, and the third only of four, the family was kept very small,” he said.
Not only has P.Cutajar kept very small in terms of directors, but it has also done very little to diversify since 1865. But Zammit Cutajar qualified this perception by pointing out that the food and beverage industry is so extensive that it is possible to grow within the sector.
“We may have started with wines, but we now also import and distribute spirits, chocolate, water, nuts and coffee, among other things,” he said.
“Our involvement in photography takes us back to 1937 with Kodak. The recent technological developments within this sector however stunted our growth in this field. Digital photography is a reality we cannot escape from. Whereas we had extensive business in development of photography in the past, it is now much smaller. The photography business is nowadays hardware oriented. Although it must be said that the Canon brand is doing very well.”
Although Canon cameras are very popular among amateur and professional photographers, their success has not yet made up to cushion the loss of business sustained when the film development business decreased. So P.Cutajar have now decided to go into sunglasses – representing Solaris, yet another trophy brand.
As market dynamics change and develop, longstanding corporations often end up facing threats to which they have to respond fast and effectively. Over the past four years, with import markets opening after levies on wine were lifted – the phenomenon of parallel importation left a great deal of casualties, and a significant number of importers are now limping. Zammit Cutajar had decided to take pre-emptive measures against this situation.
“We prepared for this before we joined the EU. We had managed to negotiate deals with our suppliers, especially Italian ones, to ensure harmonisation of prices with Sicily. I would say, to a very large extent, we managed to be successful.”
Wines imported by P.Cutajar are in fact branded locally. Each wine bottle, whoever its vintner, features a P.Cutajar sticker label at the back. It is unlikely to purchase a Pasqua or a J.P. Chenet bottle without this mark, and this signals that parallel importation of P.Cutajar’s star brands has in fact been kept at bay. That said, parallel importers still manage to slash down costs one way or another. Some have also started to benefit from the advantages of economies of scale, importing large quantities. Better still, many of them keep their distribution and sales services as cheap as possible. How does Zammit Cutajar manage to keep afloat in this scenario?
“We believe in offering top quality products and top quality service. It is the service factor which makes the entire difference. Our sales team, delivery service, re-seller support and credit terms in particular help us gain edge over new competitors. One of our key advantages is that we are trustworthy. We try to be as dynamic as possible, and with clear values. At the end of the day, I think it boils down to trying to do business in a serious way,” he said, hinting that parallel importers do not always abide by his same value set.
More directly, Zammit Cutajar went on to express his opinion on these new players in the market: “We buy directly from factories. The parallel importation issue comes into play when wholesalers go up to Sicily and purchase products at a better price than here. What we had to make sure of was that our prices remain competitive in the face of these new market dynamics. Parallel importers are not in any particular line of business – whatever presents an opportunity for profit - they will take.”
But has he not been affected at all? Hasn’t he tried to cut down distribution costs to increase competitiveness?
“Obviously, the challenges of today’s environment apply to us as well. However, we as executive directors are here every day and stay very much on top of the situation. We use our experience and skills to eliminate any possible wastage of resources. For example, we invested heavily in ICT. Our sales team is equipped with PDAs - which synch in to a network ensuring efficiency in taking orders and keeping track of things,” he said.
P.Cutajar import a wide range of wines, especially from France, Italy and the New World. Serious restaurateurs would resist featuring the same wines we find at the supermarket on their wine lists. Because of the extent of their portfolio, P.Cutajar prefer keeping their wines divided in two sectors – one selling exclusively to restaurants and the other mostly targeting retail sales – where they are strongest.
“Pasqua, one of our trophy brands, has managed to secure leadership in both areas. The main advantage with this is that when such a brand is so popular in retail it is inevitably recognised when consumed at a restaurant. It helps familiarisation with the product,” Zammit Cutajar commented.
But wine consumers in Malta are becoming increasingly discerning, and wine-drinkers choosing a supermarket wine while having dinner at an elegant restaurant are decreasing by the minute. Pasqua seem to have a solution.
“Pasqua’s Amarone della Valpolicella is not an everyday wine, clearly. Apart from the cost, it is a heavy wine that goes with heavy meals – so one can safely say that the Amarone is a wine for special occasions.”
An Amarone? By Pasqua? To many in the wine business, that is equivalent to a super-car produced by FIAT. Pasqua is known for its mass-produced wines for export, and is a market leader in UK supermarkets. They are best known for price advantage. So would this mean that with a more exclusive wine such as the Amarone, Pasqua can compete in price with say, Allegrini?
“I don’t think the product is particularly price sensitive. Not when you get to that level, not when you spend €23 for a bottle of wine,” he said. And yes, it is cheaper than the award-winning Allegrini.
But Zammit Cutajar rightly mentions that price leadership may be more effective when it comes to choosing between the lower end wines. Once you exceed a certain threshold, whether an Amarone costs €23 or €30, it will not have much bearing on the consumer. So why choose Pasqua over another brand?
“The name in itself is an endorsement – a guarantee if you like. The brand is reputable enough for it to be synonymous to a certain standard and quality. It comes from the commitment and passion there is in the organisation. Like P.Cutajar, Pasqua has kept very strong family roots. They are now in their third generation. The Pasqua family is extremely passionate about what it does, and we experienced this at first hand. We have just come back from the Pasqua headquarters in Italy recently, and when you take a walk with the CEO in his vineyards - the bond between the ownership and the product is instantly recognisable.
“Pasqua is not some multinational where the workers have no idea who the owners are. They are completely hands-on. The Valpolicella they grow for the Amarone is not bought-in, they grow it themselves in the hectares of land they own. As any Amarone process entails, they dry the grapes before they are pressed – and this is why the wine produces such a high alcoholic content. When you take into account that you need complex storage conditions and that the yield is much lower for the type of wine produced – the price is immediately justified.”
One wouldn’t expect the Amarone to be a best-seller though. How does Christmas help?
“Let’s not kid ourselves. €23 for a bottle of wine already indicates that it is not a run-of-the-mill wine. But yes. Christmas is a good time for Amarone sales.”
Vintners around the world will have to choose a path at some point. They either produce low-yield, high-quality wines at a considerable price or else opt for high-yield, cost-advantageous ones. Pasqua seems to have chosen both. But will its reputation of being so popular in the UK, where there is no wine culture, defeat its quality perception?
“That Pasqua is popular in the UK is a good indicator. When you are popular in a country where they consume wines but do not produce it, you cater for a completely unprejudiced audience. Inevitably, they will go for value for money. So to be successful in a country like the UK you really have to have a good product,” he said.
P.Cutajar’s relationship with Pasqua goes back to 1982, when one of the vintners, named Natale Pasqua (Italian for Christmas Easter), had befriended Francis Zammit Cutajar, Denis’ father.
“Maybe it was because of his name, but I remember Natale as being very jovial. He had met my father while holidaying in Malta and they had got on like a house on fire. Although we were already importing a brand from Veneto at the time, we decided to switch to Pasqua because of the connection that had developed between the families. Since then, I dealt with Natale’s nephew, Carlo. We also deal with Carlo’s daughter now, whose name is Carlotta. As you see, this family has a thing for names,” he said.
P.Cutajar is now planning on strengthening its position in restaurant wine lists, as the tastes of Maltese consumers seem to be getting finer by the minute.
“We believe we can do this because of two main factors: we import directly from the producer, and we have very strict control on delivery. This is why we make sure to put a P.Cutajar sticker on every wine bottle we import. As risky as it may be, we are so proud of the product that we boast of being the importer. We see it as a stamp of reliability and trustworthiness. In doing so, we are putting our reputation at stake, because if the consumer does not enjoy the product they can blame us. But we are more than ready to take this risk because we believe so much in our products,” he said.
But fascinatingly, P.Cutajar is still run by a mere three executive family directors.
