Out of the dark room
Remember when you used to buy rolls of film and store them in the fridge? Remember when you had to take the used films for developing, picking up the finished photos days later? In those days, progress was the one-hour development process. We may...
Remember when you used to buy rolls of film and store them in the fridge? Remember when you had to take the used films for developing, picking up the finished photos days later? In those days, progress was the one-hour development process.
We may smile with nostalgia but for the P. Cutajar Group, it was no laughing matter.
CEO Tony Zammit Cutajar admitted that back in 1974, digital photography was seen as an icon of the future - not the beginning of the end of photography as we know it.
"We got involved in photography in 1937 and it grew to be a substantial part of our business in terms of profit.
"I have been going to Photo Fair since the early 1970s and I remember in 1974 when Kodak, who at that time had showcased digital photography, said it would revolutionise photography. Little did they know that it was going to cause their demise," he said.
"It soon became obvious that you cannot fight technological change, especially one of this nature."
Kodak used to make its money from the consumables associated with photography, such as film, and this market has now dried up completely.
Every business goes through such challenges: How they deal with it is what sorts out the men from the boys. In the case of P. Cutajar, the solution was to look at the situation through rose-tinted glasses... Literally. The group secured the franchise for Solaris sunglasses, part of a massive French group that has some 600 stores in Europe, covering its different brands.
The venture into new territory proved to be a success and the group now has a store in Republic Street, Valletta and another along the Strand in Sliema, which Mr Zammit Cutajar thinks is as many as the makret can sustain. However, the positive experience has encouraged him to think about more franchises, locally and abroad.
"I already tried to get something going overseas but I was not successful. Franchises are the best way to grow. There is no point in reinventing the wheel, as we always tend to do in Malta!" he said.
"Solaris was my first experience with franchising. I was a bit wary as I did not know what it was all about. Initially, one thing stood out: There is no capital outlay (of course, depending on the deal) except for the know-how and setting up the outlets. Everything is set out in a manual.
"But what you realise after a while is that the fee is calculated according to sales. The figure may not sound like much as a percentage but it could represent a third of your profit. People do not realise this."
The next sector to grab the group's interest is organic goods for the local market but he is also looking at overseas opportunities in another sector, which he kept coy about.
"Companies tend to prioritise large markets so Malta would rarely be on their list. But there are other smaller countries in Europe which could be viable for us through joint ventures..." he said.
A cursory glance at the major brands accumulated by P. Cutajar over the years shows how versatile they have been. This has not always been easy to sell to previous generations.
"When I started working, my father ran the show with his brother and the focus was still on shipping. In 1915, we were the largest ship agents in Malta.
"I remember big debates on this with my father but I felt that if there are new opportunities, you have to consider them, even though you should not get involved in things that you don't understand.
"Ten years ago, we never dreamed about sunglasses. And yet, last year, we had the best year in our history! We more than offset the losses from photography," he said.
The group has come to another turning point, albeit a more subtle one. It yesterday launched a rebranding exercise that saw the introduction of a new logo. A rebranding exercise involves a fundamental dilemma: Should you leave a logo alone, as a symbol that has built up recognition over the years - or do you update it to show that the company too is moving with the times?
In this case, the company name is still prominent and the date of establishment is a reminder of its long history.
"The important thing is to retain your corporate philosophy and identity, and for the logo to be a visual representation of them. As long as that is done, then I have no problem with change," he said.
And the changes - at least external ones - are far from over. Over the years, the market for wines and spirits and for chocolates have changed, with dozens of new entrants competing. Mr Zammit Cutajar does not waste time worrying about it.
"When we joined the EU we knew that the market would be totally liberalised. Anyone who wants to is free to compete with P. Cutajar and Co. and if they can offer a better deal to the consumer then that is the rule of the free market. A classic case of this is Lidl, a massive organisation, which has opened supermarkets in Malta. There is an uproar in the trade.
There is also a lot of talk and threats and fear of price wars but it is inevitable. I am waiting for the day that other big retailers open in Malta - and when they do, there is no doubt that they will affect our business," he shrugged.
"You have to ensure that you offer the best in terms of service."
He pointed to the mission statement on his desk, which encapsulates their strategy: It says "building profitable relationships", a concept that the group extends to all stakeholders, from customers and employees to suppliers and the community in general.
"On this point, we are responsible to provide shareholders with an attractive return on their investment. To do this requires an ongoing review of the business, adapting it to meet changing market conditions."
That is not as easy as it sounds when the company is a family one, now in its fifth generation. By this time, most family companies have fragmented but P. Cutajar has avoided this fate. Mr Zammit Cutajar said this was no accident.
"This is something very close to my heart. For many years, I pushed hard for good succession planning. I realise that unless you run a family without emotions, it will not remain a business," he said.
The key - or at least one of them - is a code of practice, approved by all the 12 shareholders (there will be 30 by the next generation). The code sets out clearly that any family member who joins the company or who provides services to the company, regardless of their level of responsibility, should set an example to all the other employees. It lays down that owners and managers should not enjoy special privileges as family members.
"With regards to recruitment, we recognise that the company has an interest in recruiting qualified family members to ensure succession. There is therefore no restriction against possible applicants for employment who have a family member acting as a director for the company.
"But, for example, my daughter Sarah Portelli is director of retail operations but she is subject to the same employment terms as anyone else."
The group also has a healthy balance between family and non-family members. Of the eight people in the management team, only three are family.
The board has two non-family members and is chaired by Helga Ellul, who is also not part of the family.
"It works really well and many other family businesses view our model with some envy," he admitted.
With sound financial fund-amentals and good corporate governance, surely the company must be ripe for a public equity offering? The stab in the dark turns out to have been not too far off the mark.
He admitted that it was discussed at board level some years ago but excluded because it was not felt that the time was right.
This was not a casual mention: The group even had the auditors report on whether the company was ready and suitable for listing. It was.
"The issue is not to raise capital at this point. But has there been a IPO of a family company of this nature? Would the Maltese be prepared to invest in a family company? Are family companies still considered to be run as a closed shop without corporate governance?" he mused.
"Perhaps this is why more family companies should list. It is very interesting..."
P. Cutajar: A brief history
Paul Cutajar was just 17 when he started his own business in Valletta in 1861, importing wheat and cereals.
Things moved quickly:
He was active in the coal trade and bought a steamer for its transportation.
By 1865, he founded P. Cutajar and Co. which started taking on distributorship agreements, the first of which was Martini and Rossi in 1880, a partnership that has survived till today.
By the early 20th century, the main focus of the company was ship agency and in 1913, it handled 323 ships.
By then the company had moved into the hands of Paul's nephew Arthur, who in turn left it in the hands of his sons Alfred, Francis and George.
The company was made into a limited liability one in 1958.
Other leading brands were taken on, the latest being the Solaris franchise.
After 75 years in Valletta, the group had outgrown its premises and moved to Mrieħel in 1986, where its headquarters remain.
We may smile with nostalgia but for the P. Cutajar Group, it was no laughing matter.
CEO Tony Zammit Cutajar admitted that back in 1974, digital photography was seen as an icon of the future - not the beginning of the end of photography as we know it.
"We got involved in photography in 1937 and it grew to be a substantial part of our business in terms of profit.
"I have been going to Photo Fair since the early 1970s and I remember in 1974 when Kodak, who at that time had showcased digital photography, said it would revolutionise photography. Little did they know that it was going to cause their demise," he said.
"It soon became obvious that you cannot fight technological change, especially one of this nature."
Kodak used to make its money from the consumables associated with photography, such as film, and this market has now dried up completely.
Every business goes through such challenges: How they deal with it is what sorts out the men from the boys. In the case of P. Cutajar, the solution was to look at the situation through rose-tinted glasses... Literally. The group secured the franchise for Solaris sunglasses, part of a massive French group that has some 600 stores in Europe, covering its different brands.
The venture into new territory proved to be a success and the group now has a store in Republic Street, Valletta and another along the Strand in Sliema, which Mr Zammit Cutajar thinks is as many as the makret can sustain. However, the positive experience has encouraged him to think about more franchises, locally and abroad.
"I already tried to get something going overseas but I was not successful. Franchises are the best way to grow. There is no point in reinventing the wheel, as we always tend to do in Malta!" he said.
"Solaris was my first experience with franchising. I was a bit wary as I did not know what it was all about. Initially, one thing stood out: There is no capital outlay (of course, depending on the deal) except for the know-how and setting up the outlets. Everything is set out in a manual.
"But what you realise after a while is that the fee is calculated according to sales. The figure may not sound like much as a percentage but it could represent a third of your profit. People do not realise this."
The next sector to grab the group's interest is organic goods for the local market but he is also looking at overseas opportunities in another sector, which he kept coy about.
"Companies tend to prioritise large markets so Malta would rarely be on their list. But there are other smaller countries in Europe which could be viable for us through joint ventures..." he said.
A cursory glance at the major brands accumulated by P. Cutajar over the years shows how versatile they have been. This has not always been easy to sell to previous generations.
"When I started working, my father ran the show with his brother and the focus was still on shipping. In 1915, we were the largest ship agents in Malta.
"I remember big debates on this with my father but I felt that if there are new opportunities, you have to consider them, even though you should not get involved in things that you don't understand.
"Ten years ago, we never dreamed about sunglasses. And yet, last year, we had the best year in our history! We more than offset the losses from photography," he said.
The group has come to another turning point, albeit a more subtle one. It yesterday launched a rebranding exercise that saw the introduction of a new logo. A rebranding exercise involves a fundamental dilemma: Should you leave a logo alone, as a symbol that has built up recognition over the years - or do you update it to show that the company too is moving with the times?
In this case, the company name is still prominent and the date of establishment is a reminder of its long history.
"The important thing is to retain your corporate philosophy and identity, and for the logo to be a visual representation of them. As long as that is done, then I have no problem with change," he said.
And the changes - at least external ones - are far from over. Over the years, the market for wines and spirits and for chocolates have changed, with dozens of new entrants competing. Mr Zammit Cutajar does not waste time worrying about it.
"When we joined the EU we knew that the market would be totally liberalised. Anyone who wants to is free to compete with P. Cutajar and Co. and if they can offer a better deal to the consumer then that is the rule of the free market. A classic case of this is Lidl, a massive organisation, which has opened supermarkets in Malta. There is an uproar in the trade.
There is also a lot of talk and threats and fear of price wars but it is inevitable. I am waiting for the day that other big retailers open in Malta - and when they do, there is no doubt that they will affect our business," he shrugged.
"You have to ensure that you offer the best in terms of service."
He pointed to the mission statement on his desk, which encapsulates their strategy: It says "building profitable relationships", a concept that the group extends to all stakeholders, from customers and employees to suppliers and the community in general.
"On this point, we are responsible to provide shareholders with an attractive return on their investment. To do this requires an ongoing review of the business, adapting it to meet changing market conditions."
That is not as easy as it sounds when the company is a family one, now in its fifth generation. By this time, most family companies have fragmented but P. Cutajar has avoided this fate. Mr Zammit Cutajar said this was no accident.
"This is something very close to my heart. For many years, I pushed hard for good succession planning. I realise that unless you run a family without emotions, it will not remain a business," he said.
The key - or at least one of them - is a code of practice, approved by all the 12 shareholders (there will be 30 by the next generation). The code sets out clearly that any family member who joins the company or who provides services to the company, regardless of their level of responsibility, should set an example to all the other employees. It lays down that owners and managers should not enjoy special privileges as family members.
"With regards to recruitment, we recognise that the company has an interest in recruiting qualified family members to ensure succession. There is therefore no restriction against possible applicants for employment who have a family member acting as a director for the company.
"But, for example, my daughter Sarah Portelli is director of retail operations but she is subject to the same employment terms as anyone else."
The group also has a healthy balance between family and non-family members. Of the eight people in the management team, only three are family.
The board has two non-family members and is chaired by Helga Ellul, who is also not part of the family.
"It works really well and many other family businesses view our model with some envy," he admitted.
With sound financial fund-amentals and good corporate governance, surely the company must be ripe for a public equity offering? The stab in the dark turns out to have been not too far off the mark.
He admitted that it was discussed at board level some years ago but excluded because it was not felt that the time was right.
This was not a casual mention: The group even had the auditors report on whether the company was ready and suitable for listing. It was.
"The issue is not to raise capital at this point. But has there been a IPO of a family company of this nature? Would the Maltese be prepared to invest in a family company? Are family companies still considered to be run as a closed shop without corporate governance?" he mused.
"Perhaps this is why more family companies should list. It is very interesting..."
P. Cutajar: A brief history
Paul Cutajar was just 17 when he started his own business in Valletta in 1861, importing wheat and cereals.
Things moved quickly:
He was active in the coal trade and bought a steamer for its transportation.
By 1865, he founded P. Cutajar and Co. which started taking on distributorship agreements, the first of which was Martini and Rossi in 1880, a partnership that has survived till today.
By the early 20th century, the main focus of the company was ship agency and in 1913, it handled 323 ships.
By then the company had moved into the hands of Paul's nephew Arthur, who in turn left it in the hands of his sons Alfred, Francis and George.
The company was made into a limited liability one in 1958.
Other leading brands were taken on, the latest being the Solaris franchise.
After 75 years in Valletta, the group had outgrown its premises and moved to Mrieħel in 1986, where its headquarters remain.