Merko’s rally plan is to increase exports with the Frigo Pak purchase
(BIST: TOMATO PROCESSOR MERKO MERKO) plans to overcome difficult times with exports as a result of their Frigo Pak purchase made last year. Merko, which made its first export to Japan in 1985 in its core business line, processed tomato, bought 25% of Frigo Pak for USD 8.5m last year. The purchase will enable the company to export canned and frozen fruits and vegetables, carbonated drinks, fruit juice, and canned citrus. “Exporting 97% of its production, the Frigo Pak acquisition is just the beginning for us. We've chosen to grow with exports,” said Alistair Baran Blake, Merko Gida & Frigo Pak Gida Chairman.
The story of the company goes back to Manchester, where Alistair Baran Blake’s Scottish father and Turkish mother met while studying at university. His father, Duncan Blake, came to Turkey in 1976 and was impressed by the sun and fertile soils of Turkey compared to the rainy and dark weather in his home country, Scotland. He quickly entered the food business with two partners. Merko, which they established in 1982, immediately started exporting in 1985.
A CHILDHOOD IN TOMATO FIELDS
The company suffered in later years with the exit of the two partners. The loss of Duncan Blake was the final straw for the company. That was when Alistair Baran Blake, who had spent his childhood in tomato fields, had to take over the business. Blake carried the company to a new phase with the Frigo Pak purchase and wants to make a breakthrough with exports, which he says exists in the DNA of the company.
Merko Gida & Frigo Pak Gida Chairman Alistair Baran Blake was sent to a boarding school in Scotland at the age of eight. Returning to Turkey and working in the family business has always been his goal. He spent the summer holidays here but the summer season was his father’s busiest time. As his father was spending most of his time in the fields, they didn't have much time to talk. Blake also went to university in England and became a food engineer.
“At first, my father started trading agricultural goods with his three partners. They were selling whatever they found, such as onions, leeks, oranges, apricots, strawberries, and cherries, for 12 months. Then, they entered the juice concentrates and tomato paste business. That's when they realized they could start their own production. They then started production and exports,” said Blake.
The company started to sell tomato juice to Japan in 1985, as Japanese people were consuming tomato juice for health. Then Tunisians and Greeks demanded tomato paste, Americans wanted pizza sauce and pasta sauce. With the increased production and exports, the company went public in 1994.
‘BEING A TOMATO PASTE MAKER IS LIKE OWNING A GOLD MINE’
One of the partners left in the early years and the second partner sold his shares to Greek colleagues because he had cancer. As Greek partners withdrew from the company, Blake came to a point of crisis. “I was not proficient in business
Turkish. I did not know what the word for accounting was, or for agriculture. Tomatoes were plentiful and prices had fallen,” he said. “But today there is a global tomato shortage and our production is high. Being a tomato paste maker is like owning a gold mine,” he added.
Blake lost his father seven years ago and had to take care of the business himself. His Greek partners told him that he wouldn't be able to manage the transition and that the company had a management problem. “I'm here until this ship sinks,” he said. The company made a capital increase and purchased Frigo Pak - a bold step. Today, Blake thinks that this saved the company. “Last year, we made an important purchase by purchasing Frigo Pak. We have full confidence in this. I am working to make the company,” he said.
40% OF PRODUCTION IS EXPORTED
There are hundreds of global food giants among Merko's business partners, Blake said. About 60% of the cubed tomatoes, canned tomatoes, and tomato paste they produce are consumed in the domestic market, while 40% are exported. “We sell to countries Korea to Australia, from Africa to Sudan,” said Blake, adding that this export geography will grow faster than ever with the Frigo Pak purchase. “Exports exist in our DNA from day one. We will continue to draw strength from this,” he said. Blake said that the largest tomato producer in the world is the U.S. “California is an important center. Next comes China, Italy and then Turkey. Spain was ahead of us for a few years. Now, we are head-to-head,” he
added. The Merko factories in Karacabey, Kemalpasa, Torbali, Balikesir, and Bergama Merko are critical for industrial tomatoes, according to Blake. These centers process 3,400 tons of tomatoes per day. Up to 180,000 tons of tomatoes are processed in the season.
14 NEW PRODUCTS ARE READY FOR LAUNCH
The company has taken its place among the biggest employers and exporters of Bursa province with the Frigo Pak purchase, Blake noted. Over 2 million tons of tomatoes are processed every year in Turkey and turned into value-added products such as canned tomatoes, tomato paste, and cubed tomatoes. “The contribution of value-added tomatoes to the country’s export income exceeded USD 200m. Our edge is increasing because of the climate crisis. Market-dominant countries like the U.S. are losing standing due to this crisis,” he said.
Blake describes the Frigo Pak acquisition as just the beginning. “Frigo Pak has many important brands, especially in fruit juices, Sunpride is the most known. It exports 97% of its production,” he said.
The company has been investing quite a bit in Frigo Pak since the takeover. There are 14 products they have put into production, which will be launched to the market one by one. The company also has plans to grow in retail. Frigo Pak closed 2020 with a turnover of TRY 107m and in 2021 with a turnover of TRY 160m. “2022 is truly a historic year for us,” said Alistair Baran Blake. He is not just talking about the increase in turnover and profit that will occur with the merger of the forces of the two companies. “We are ambitious,” he said.