Who are the Musgraves?

The media-shy family behind SuperValu, Centra and (for a few more months) Superquinn have no senior executive role in the business, but they collectively earn millions in dividends every year

Clockwise from top left: Musgrave co-founder Thomas Musgrave; Centra; the Metropole Hotel and sweet factory, Cork; current CEO Chris Martin; SuperValu; co-founder Stuart Musgrave; chairman Seamus Scally; family member and former chairman Hugh MacKeown. Illustration: Irish Times Premedia

Clockwise from top left: Musgrave co-founder Thomas Musgrave; Centra; the Metropole Hotel and sweet factory, Cork; current CEO Chris Martin; SuperValu; co-founder Stuart Musgrave; chairman Seamus Scally; family member and former chairman Hugh MacKeown. Illustration: Irish Times Premedia

 

The Musgrave Group’s decision last week to ditch the Superquinn brand that it acquired in 2011 put the spotlight on the Cork-based wholesaler. From February 2014 Superquinn’s 24 stores will be rebranded as SuperValu, a move that will give that brand a significant foothold in Dublin for the first time. It will also allow SuperValu to overtake Dunnes Stores as the country’s second-biggest retailer, behind Tesco, with a 25 per cent market share.

But who are the Musgraves, and what’s the secret to their long-running success?

This wealthy merchant family is intensely private and media-shy. None of them was prepared to be interviewed for this article.

The Musgrave company is essentially a wholesaler that supplies groceries to a network of franchisees who run its retail brands. These brands range from SuperValu and Centra in Ireland to Budgens and Londis in the UK and Dialprix in Spain. It dates back to 1876, when Thomas and Stuart Musgrave, brothers from Leitrim, set up a trading company in Cork. Over the years it has been involved in many sectors, including tea, sweets and hotels, before settling on running cash-and-carrys and supplying the grocery trade.

Although it bears the family name, the company has no Musgraves working in senior roles. The Trinity-educated “Dublin cousin” Hugh MacKeown was the last family member to run the business, but he stepped down as chairman in January 2011. He was managing director, chief executive and chairman during a 40-year stint dating from 1971. MacKeown is credited with modernising the business by building a chain of top-notch cash-and-carry outlets, establishing the SuperValu and Centra retail brands in the Republic, and expanding the business into Britain and Northern Ireland.

Musgrave is now run by Chris Martin, its English chief executive, and Seamus Scally, its chairman. Neither is related to the family. The group has annual sales of €4.9 billion, and more than 60,000 staff are employed by the company or its independent retailers.

“Although the family is not directly involved in the day-to-day running of the business, their influence plays a big part in defining who we are and how we do business,” said a statement from the company.

The family influence is exercised at board level. It underpins the company’s values as a community-based, ethically run business. One of the core values drummed into staff is that “we are not greedy”. This is credited to the family’s Methodist religion.

One experienced executive at a leading Irish-owned supplier says Musgrave is one of the best companies to deal with. “They’re tough negotiators, but when they strike a deal they stick to it. They don’t try to change terms midcontract, unlike some other retailers here,” he says.

Three branches of the family are represented on the board. MacKeown’s eldest son, Philip, who is 47, Switzerland-based Peter Musgrave, who is 61, and Stuart Musgrave, whose great-grandfather of the same name cofounded the initial trading company in 1876. All three were executives in the company before pursuing their own careers. Peter had an export business. Stuart, who ran his own tea business until a few years ago, will be 65 next month, an age that under the family constitution requires him to step down as a nonexecutive director.

He will be replaced by his first cousin Christopher, who runs a number of farms in England.

Stuart and his brother Nicky both have holiday homes in Baltimore, in west Cork. Sailing and messing around with boats are said to be part of the family DNA. Other family members live or socialise in Kinsale; some are based abroad, in Australia, the Caribbean and parts of Europe.

About 60 family shareholders between them own 78 per cent of the business. The balance is owned by staff or tied up in a profit-sharing scheme. This makes the family members the main beneficiaries of the €16 million dividend that the company pays out each year.

The company also had shareholders’ funds of €461.6 million at the end of 2012. The family share amounted to €360 million.

In early 2000 a Musgrave family shareholders’ conference was instituted to update the disparate strands of the family on the company’s performance and to put a bit of structure on their engagement with the group. It’s a one-day affair that allows the family members to catch up with each other and involves management making detailed presentations about the business.

“There’s a very structured way in which the company deals with the family,” says one informed source. “If there’s a problem, it’s brought to the shareholder committee and sorted out there.”

The conference is held every three years. The next one will take place next month in Cork city. “Don’t bother turning up – the media aren’t welcome,” says a source close to the family.

In a book published in 2001, A History of Musgrave: The First 125 Years, Hugh MacKeown said it was sad that no family members were employed in the business. “It is very difficult to integrate family members into a company of this size,” he added.

In many ways it is easier for the family to employ professional managers to run the business. “What happens if a family member didn’t work out?” says one former Musgrave executive. “How would you get rid of them without spilling a lot of bad blood? It’s tricky.”

Younger members of the family are encouraged to work in the business to get a feel for the company, and it is understood that the Musgrave Group is working on establishing a one-year internship programme for family members. “It would be like a gap year,” says a source close to the business. “It’s good for the company to have them around the business, and customers and suppliers like it.”

This would give the younger generation a taste for the business, but they would be expected to develop their careers elsewhere before staking a claim for a senior role at Musgrave.

Over the years there has been much speculation about the future of the Musgrave Group. It was often tipped for a stock-market flotation in the Celtic Tiger years. The family-owned Roches Stores cashed out in the boom by selling to Debenhams, and Feargal Quinn and his family pocketed €420 million by selling Superquinn to a consortium of property speculators in 2005.

The Musgraves resisted such temptations, instead backing management’s plans to expand by acquisition in the UK and Ireland. Ironically, it rescued Superquinn from receivership in 2011 by paying €229 million.

“The family’s stated aim is for the company to remain private for as long as possible,” says a family source. “That’s not likely to change anytime soon.”

From the beginning: Expansion of a family business

1876: Founded by 25-year-old Thomas and 18-year-old Stuart Musgrave, brothers from Leitrim, at 103 North Main Street in Cork city.

1908: Thomas’s son John L Musgrave becomes managing director and runs the company for the next four decades. He hands over to his son Jack in 1955. By 1960 Musgrave has signed up 150 retailers to its group trading system and established the VG franchise model.

1971: Family member Hugh MacKeown becomes managing director.

1972: An ambitious expansion begins with the opening of Robinhood, the first Dublin cash-and-carry.

1972: The company sells its tea business.

1973: Musgrave Brothers becomes Musgrave.

1977: Musgrave sells the Metropole Hotel and adjoining sweet factory in Cork.

1979: 47 SuperValu and Centra stores come into existence.

1994: Musgrave acquires the Spanish grocery company Dialsur.

1997: Non-family member Seamus Scally takes over as group managing director.

2000: Musgrave purchases 43 per cent of the British food retailer Budgens. It acquires 100 per cent control of Budgens in 2002 and buys the Londis brand in the UK in 2004.

2011: Pays €229 million for Superquinn’s 24 stores.

2012: Generates operating profit of €82 million from revenues of €4.9 billion.