parma The family business Mutti was “overwhelmed” by inflation this year, as company boss Francesco Mutti describes it – especially with natural gas. Compared to the previous year, the costs for this have increased twelvefold. “A year ago we had a gas bill of around three and a half million euros, this year it’s over 40 million, that’s unimaginable,” says the 54-year-old in his office in Parma with a view of the plant.
Natural gas is usually relatively cheap in the summer. “This year, the absolute price peak was in August,” explains Mutti. As a result, the raw material, which accounts for only one and a half percent of the product costs in normal years, has led to a “real price explosion”.
At the same time, there has been an increase in packaging costs that the industry has not seen so much even in the 1980s. Even before the Ukraine war, in autumn 2021, the prices for aluminium, glass and paper rose to new heights.
“The cost of an average product has risen by around 60 percent this year,” emphasizes Mutti. He couldn’t avoid price increases. “But they don’t cover our cost increases by a long shot.” Mutti didn’t want to pass everything on to customers so as not to risk sales.
Top jobs of the day
Find the best jobs now and
be notified by email.
The result: the CEO had to save elsewhere, scale back projects, postpone new hires. He cut the investment budget for the coming year.
>> Also read: Inflation hits Italy particularly hard – one region in particular is suffering
The fact that a sum of around 15 million euros is still flowing into growth and innovations is a sign of years of strength: within five years, the turnover of Italy’s largest tomato producer has doubled. In 2021 it was 484 million euros, an increase of 13 percent compared to the corona year 2020. Profit before taxes (Ebitda) was 48 million euros. This year, sales are expected to break the half-billion-euro mark for the first time.
800 farmers harvest by machine for mom
Up until the 1990s, Mutti was best known for its tomato paste in a tube. In 1951, it was the first food in the world to be sold in an aluminum tube. Another product now dominates: the “polpa”, tomatoes in pieces. During harvest time, 2.2 million of the 400 gram cans are filled every day. There are also tomato passata and sauces, as well as vegetable ragout and ready-made soups.
Mutti gets his most important raw material 100% from Italy. 800 farmers deliver, but nobody works exclusively for the company, which runs three plants in the country. All farmers only harvest by machine – a basic requirement for becoming a mom supplier. The tomatoes should not be exposed to the sun or rain for too long.
The energy crisis has hit many companies in the agricultural sector hard. If you increase the prices too much, you will quickly be left with the products. Food chemist Elvira Mavric-Scholze
“In general, the trend is towards mechanical processing because it is simply more efficient and sensitive fruits such as tomatoes are better protected,” explains food chemist Elvira Mavric-Scholze. Before becoming a professor at the Anhalt University of Applied Sciences, she herself worked in the dairy industry. “The energy crisis has hit many companies in the agricultural sector hard. Anyone who raises prices too much will quickly be left with the products.”
The company processed 685,000 tons of Italian tomatoes in 2021 – more than any other competitor. Francesco Mutti has been at the helm since 1994, making the company the leader at home. Today the market share here is 34 percent.
He has been leading the tomato producer since 1994.
(Photo: ANSA / Max Cavallari)
The company, which was founded in 1899, makes more than half of its sales outside of Italy and is represented in more than 100 countries. In France, Denmark and the Scandinavian countries, mom comes first. “Russia was not a particularly important market for us, and luckily neither was Ukraine,” says Mutti. The company is “more or less out of both countries”.
The market in Germany is growing strongly
After Italy, France is the largest market. “But Germany has a very good chance of overtaking France in the next few years,” says Mutti. Mutti has been around in Germany’s supermarkets for a long time. But it was only four years ago that the company started investing in marketing, hiring local staff, and has just opened an office in Hamburg. “Today we are the second brand in Germany with double-digit growth,” says Mutti.
In four years, the market share has grown from 1.5 to ten percent. The competition is fierce and sales are not easy. Nevertheless, Mutti still sees a lot of potential: “Today, German consumers value quality more than they used to,” he is convinced.
Around 1100 seasonal workers are added during the 70 days of harvest time.
(Photo: ANSA / Max Cavallari)
Producer prices for agricultural products have also risen sharply in Germany. According to the Federal Statistical Office, they were around 39 percent higher in September than in the previous year. Recently, the development has accelerated further: from August to September 2022 alone, the producer prices for tomatoes rose by more than 16 percent.
Italy is Europe’s largest tomato producer, ahead of Spain and Portugal. With more than six million tons, the country only ranks sixth worldwide. The world market leader is China by a long way, where the production volume in 2020 was almost 65 million tons. India, Turkey, the USA and Egypt are also ahead of Italy in terms of numbers.
Asia is still a niche market for mom’s tomato products, but that too could change. Nevertheless, the business is not endlessly scalable. “We can’t increase our production exponentially because we have to raise the level of farmers to have the raw material available.”
>> Also read: Threatened by climate change – Andrea Illy calls for aid funds for coffee farmers
Mutti, who currently has 465 employees and lives on the company premises, is concerned about climate change in his own country. “In the coming years we will have to pay close attention to the problem of drought,” he warns. Italy is already in a “very critical situation”. There is less snowfall, so the groundwater level does not recover. At the same time, the glacier masses continued to recede.
In late summer, a long-lasting drought caused crop failures, and rice farmers in northern Italy suffered from this in particular. In Spain, the tomato farmers also recorded large losses: Instead of the usual three million tons, only two million tons could be harvested this year.
More: How Europe redirects its gas flows – and becomes independent of Russia