Marketplace Czech cheese producer eats into Italian and world markets
It’s perhaps a surprise that one of the biggest exporters of cheese to Italy is based in the Czech Republic and that the same company is also one of the biggest sellers of cheese in China. The Gran Moravia factory in Litovel is also the single biggest cheese production plant in the world.
The take off of cheese production at the plant in Moravia is an Italo-Czech success story, perhaps its also a model of how some things can go right in the EU. For this story would not have been possible without freedom of movement and investment.
The starting point was the purchase of an already existing small cheese producer in the region by a long established Italian family firm around 15 years ago. The Italian company bought money and generations of know-how and from the Czech side came cheap quality milk and a motivated workforce. The result has been a near 100-fold expansion in production with the Czech produced cheese now sold in more than 50 countries worldwide and the management firmly believing that further expansion is possible.
As well as the cheeses, which are mostly matured in Italy due to the availability of storage space and shipped out for export from there, the Italian company has also launched a network of its own cheese and Italian gastro speciality stores in the Czech Republic and in a few other locations around the world.
“We are the oldest Italian company, cheese company. We come from the Asiago area, a wonderful area in the Venice region. Our family has been carrying out the same work for a long time. We do not know how long but we are sure that our ancestors already in the eighth century were making cheese and we have continuously worked with the same company.”
And the move to the Czech Republic, when did that happen and why?
'The production from the Litovel cheese factory, where half a million litres of milk are processed every day, is the largest in the world at a single plant.'“After a long study, we choose the Czech Republic for the quality of the livestock, the strength of its agriculture and, I have to say, the high professionalism of the staff and the reliability of the country. We love the Czech Republic and its history, culture, art, territory, and population. We are Venetians, we have always had a relationship with Bohemia and Moravia and we were fellow citizens under the Hapsburg Empire. Thanks to your entry into the EU, you could make a big project here with Italian technology and know-how and Czech animal husbandry to compete on world markets. We are very satisfied with our choice.”
But you started the business here in the Czech Republic when exactly?
“It was in 2000. In 2000 we started with a very, very little company. They produced hard cheese but it was not good enough to compete on the international market.”
How small was that company? How many people? And did you know then that you would built this into something a lot bigger?
“The company was created by a Czech woman. She was a romantic entrepreneur, she was Marie Martinů. When we came here, the company processed only 6,000 litres of milk a day. Today, we process around half a million litres of milk a day.”
Why did you choose the Czech Republic? What were the economies and advantages over the situation in Italy? I presume lot of the costs are cheaper and that gives you some advantage?
“The costs of a hard cheese depend for around 80 percent on the price of milk. In Italy, Italy is a deficit country [for milk], the milk is good enough but a lot more expensive, approximately 30 percent more compared with the Czech Republic, where the milk is very good. The milk of the Czech Republic is ideal for the production of our cheeses, of high quality cheeses in the Italian tradition. Then, in general, the whole Czech system is more efficient and less expensive than the Italian, from energy, fuel, to taxes on labour costs. In the end, the cheese cost around 25 percent less than the ones we produce in Italy and taste better, much better “
'In the end, the cheese cost around 25 percent less than the ones we produce in Italy and taste better, much better.'And at the business level what does this mean. The Czech Republic’s local market is not so big, so I presume you export most of your production?
“Only five percent of our production is consumed in the Czech Republic. We have become the largest exporter of cheese from the Czech Republic. Gran Moravia was created from nothing in 2003 and today it is the biggest imported hard cheese into Italy and Italy has the biggest consumption. The production from the Litovel cheese factory, where half a million litres of milk are processed every day, is the largest in the world at a single plant. Even in Italy there is nothing with production so high, Gran Moravia is sold in 54 different countries in the world, although the most important market is Italy.”
And was there any problem, any resistance in Italy to having the name Gran Moravia? Did you have to do quite a lot of marketing to explain this is made in the Czech Republic but its good cheese? And was there any resistance in Italy to the idea of importing Czech cheese?
“Of course, it is quite a revolution but it is also an opportunity based on the big changes over the last 20 years. Our project is very clear and transparent. Gran Moravia means hard cheese coming from Moravia. In Italy there are a lot of happy people because we introduced competition in a market that was very closed.”
When you say a closed market, how closed was it? Were there just one or two other big producers or just one?
“No, more than 40 to 45 percent of Italian milk is used for hard cheese, fantastic cheeses like Grana Padano and Parmigiano Reggiano. But this system is quite closed because it is a duopoly and it is not possible to increase the quantity because there is a natural limitation. So a new player with a higher or comparable quality, sometime better than Italian cheeses, has been a real innovation. So you know, competition is very good for the consumer but it is not so good for your competitor. “
At the moment in the Czech Republic you have your own shops. Is that the same model you use throughout the world? What is the model you use for your sales, is it your own shops, franchising, or do you sell direct to supermarkets or is it a bit of everything?
'Today, Gran Moravia represents around 40 percent of all Chinese imports of hard cheese.'“This chain [in the Czech Republic] is also new for us. We are the only European cheese company with a retail chain. We developed it in the Czech Republic and all our shops are managed directly by us. Our staff are prepared though training courses, in Italy as well. We do not plan to use franchises because we want to deal directly with the quality of service, product selection, and the sales price as well. We want to have a direct relationship with our customers who need to feel at home in our shops. We need their advice to improve and their compliments are precious for our enthusiasm. The buying and selling of our products has to be a party, both for the buyer and the seller. This is our philosophy. Eating is a joy and it must remain so thanks to the quality, thanks to the convenience for the consumer, and the atmosphere in the shops.”
What are your plans for development in the Czech Republic? Have you got as big as big as you can get here given the sourcing of milk and have you got plans to expand here or in the region?
“The Czech Republic has enough milk for increasing [production]. We are in Europe now in a big revolution after the [ending of the milk] quota system. And we are convinced that Italian technology together with Czech milk production could be developed further in the future, step by step, as we are used to doing.”
So that means you will expand your production in the Czech Republic?
“Of course, of course.”
By how much?
“We don’t know…as much as possible. We will follow world demand step by step. We are not under pressure, we will do it naturally as we have done in the last 15 years but the potential of this country is very high for an added value cheese such as hard cheese. We are convinced of that.”
How far does your cheese actually travel? I have heard that China is opening up for cheese products and that the whole of Asia is becoming quite a promising market actually. Does some Czech cheese actually go that far around the world?
“The biggest markets remain Italy and Germany and the USA and France. But we are working also in China. In China we have a little cheese factory and there is also a little formaggeria Gran Moravia in Shanghai, a shop. Through that shop we test the habits of Chinese consumers and we have a lot of information. Today, Gran Moravia represents around 40 percent of all Chinese imports of hard cheese. But, be careful. The import of hard cheese into China is very low.”
But there are a lot of Chinese…
“Yes, there are a lot of Chinese. It is also very important for the culture of the company to learn a lot of things. And also from the long term point of view China is a very important market.”