Diversified agribusiness, food and logistics company, Craig Mostyn Group, has become a dominant player in Western Australian agribusiness since relocating its head office from Sydney to Fremantle last year.
Diversified agribusiness, food and logistics company, Craig Mostyn Group, has become a dominant player in Western Australian agribusiness since relocating its head office from Sydney to Fremantle last year.
After 83 years headquartered on the eastern seaboard, most of the group’s significant assets, and potential growth opportunities, are now located in WA.
The move west was followed shortly after the group’s first major play in this state’s rock lobster industry, with the takeover of MG Kailis Group’s Dongara lobster processing facility, as part of a spate of rationalisation in the industry.
The takeover increased Craig Mostyn’s share of the WA lobster processing industry from 8 per cent – through its Geraldton-based James Bowes operation – to 15 per cent.
The group is also a major player in WA’s pork industry, with its Linley Valley Pork facility in Wooroloo responsible for processing 98 per cent of the state’s pork.
Chief executive David Lock led the senior management exodus from NSW to WA, with a focus on growing its two key divisions.
“We decided the best strategic direction for the company was to recognise that we really were a WA-based company,” Mr Lock told WA Business News.
“We’ve had a very successful year. We’ve achieved what we wanted to achieve through the move and I look back and say it was a good decision to move.”
The move, and subsequent business acquisitions, has raised awareness of the low profile family company both within the industry and among suppliers.
This was a deliberate strategy, according to Mr Lock.
“The group has been relatively private, not just in ownership but also what it’s doing,” he said.
“We found that this limited our opportunities; people don’t know what we do and how well we do it.
“For example, we’ve operated James Bowes for 40 years, but most fishermen, those directly involved and others…look at that company and see a small company, not as part of a $350 million group.”
With the publicity surrounding the Kailis takeover, Mr Lock said the company was then able to negotiate with Kailis & France Holdings to form the Jaybow Australia joint venture with Lobster Australia, creating WA’s largest rock lobster group.
The group’s more public profile also put it on the private investment radar, receiving an offer from a WA-based private equity group at the end of last year for a minor share of the company. Shareholders rejected the offer last month.
The company has gradually moved away from its family business origins. Only one member of the Mostyn family (Andrew) holds a senior management position, with another family member on the board.
This year, the group is looking to pursue further acquisitions, and has expectations of strong organic growth through the expansion of its meat and by-product processing facilities.
The group is also investing heavily into capital works and upgrading its facilities, with the aim of delivering better productivity and higher yields with less environmental impact.
Following the completion of its $6 million poultry facility last month, the board this week committed a further $4 million on capital works to improve efficiencies at its existing pork processing facilities.
Mr Lock said there were major opportunities in developing its niche markets, including exporting meat and associated by-products.
Currently, the group has developed strong fresh meat sales into Singapore, and by-product sales into China, Thailand, South Korea and Taiwan.
There are also growing opportunities to supply the medical market, with demand for blood and heart valves especially strong into the US.
Mr Lock said the group had to become innovative and focus on its strengths in the face of market challenges, particularly the increased consolidation within the grocery sector.
Moving away from the smallgoods market, including selling off its Globe smallgoods business two years ago, the group identified its strength as a fresh meat supplier, which is usually sourced locally due to its shorter shelf life.
“So while [consolidation] has had an impact on one part of our business, we’ve been able to move another part to take advantage of it,” Mr Lock said.
“We’ve been able with all of those supermarkets to develop strong retail presence and to have value-added products, which is what we’re moving towards.”
Mr Lock believes investment in agriculture will remain strong, despite adverse seasonal conditions associated with the drought this year.
He pointed to the Macquarie Bank’s launch of its pastoral fund last month as a sign of the potential for agricultural investments, particularly in livestock, to realise strong returns.
Mr Lock praised the group’s ability to maintain strong returns to growers while growing the company’s returns in the processing sector.
“We’ve been successful in keeping pig farmers in the industry by offering good returns. It’s fundamental to our business,” he said.
“If the processing sector takes all of the profit in the supply chain, the inevitable result is there’ll be less suppliers, and that will have a spiralling effect.”
