Calvo Group: How a Family-owned Canning Company in Spain Established a Global Presence
After more than half a century and three generations at the helm of the company, the Calvo family continues to own about 80% of Calvo Group, the business founded by Luis Calvo Sanz in 1940. Before it emerged as one of the leading canning companies in Spain, the little company from Galicia got started by canning beef and pork. In its eagerness to differentiate itself from the competition and become a global company, Calvo Group introduced yellow fin tuna to Spain and was the first company to package it in round cans, a format most other companies in the sector later copied. Manuel Calvo, chief executive of Calvo Group, talked with Universia-Knowledge@Wharton about the company’s history; the obstacles its third generation of owners is overcoming, and expansion plans in Latin America.
Universia-Knowledge@Wharton: When you were a child, what did it mean for you to be part of a family of business people? From the time you were little, were you educated to take over the business?
Manuel Calvo: For better and for worse, Calvo is a company that has never been managed ad hoc. In other words, it is a “family owned multinational,” not just when it comes to its balance sheet. In good years, the profits were reinvested and we all lived like other people. And in the bad years… well, there simply wasn’t anything to reinvest. Everyone in my family lived in a very normal way.
On the other hand, it is true that from your childhood you learn about many aspects of the business in your own house and you interiorize the values that sustain it. More than other people, you witness first-hand the complete dedication of your family to the business. After some years of working in the world of advertising, I began to work for Calvo Group, at first managing the unloading of fish at the age of 26. Three years later, I took over the management of the company’s fishing fleet. Later, I moved to El Salvador where I was responsible for setting up the business and the factory in 2002. During that period, I acquired a broad vision and knowledge of the company. Then, in 2006, I went to Brazil. There, after the acquisition of Gomes da Costa, the country’s leading brand, I became responsible for operations in the Americas.
UK@W: What business lessons did you learn from your parents during your childhood?
M.C.: The Group was established in 1940 by my grandfather, Luis Calvo Sanz. He was tremendously entrepreneurial and, without doubt, he created the spirit and the philosophy of the company, in which everything would revolve around quality.
Years later, my father and my uncles both brought great success to the company in their different realms. They were audacious, often risking everything. One clear example was during the 1970s when the company made an innovative commitment to advertising with its famous campaign highlighted by two Spanish actors, Jesús Puente and Juanjo Mendez, focused on “Yellow Fin Tuna.” As a result of that campaign, the company went from being ranked 300th to the top-ranked company in the business, and our level of brand recognition reached 98%.
This commitment to innovation has always been a feature of our company. At times, we have even been too innovative, getting ahead of the needs of the market and not getting the results we anticipated as a result. Nevertheless, we have always viewed our failures as opportunities to learn.
Work, unity and humility are the values that have been transmitted from generation to generation. That’s what our company is like: It remains united when times are hard; it has worked – and continues to work -- very hard to strengthen its leadership at a national [Spanish] and international level, while increasing its competitiveness within the global market.
UK@W: How did the Calvo Group get started?
M.C.: Calvo [Group] was established in 1940 in the town of Carballo, in the La Coruña region of Spain when my grandfather, Luis Calvo Sanz, began to make canned meat in a small factory on his property. Later, he went into canning pork and, finally, also into fish. The first canning of fish took place in 1942. Years later, Calvo decided to introduce yellow fin tuna into Spain and to can it in an innovative way – a round can. His goal was to provide an individual portion within the reach of anyone. Until that time, tuna was marketed in oval cans. Nowadays, practically all cans that are sold are round, and about 80% of the tuna eaten in Spain is yellow fin.
In 1978, under the second generation [of family management], Calvo began to produce yellow fin in the format that is now the most popular in Spain, a three-pack of cans that weigh 80 grams each. At the time, the company also decided to establish its own fishing fleet, acquiring its first fishing boat (“Montecelo”), through its Calvo Pesca division. At this stage, the company’s characteristic willingness to invest in advertising played a decisive role [in its success].
Later, the Calvo Group of companies opened new factories; first, in Guanta [Venezuela] in 1981 and then in another town in La Coruña [Spain] called Esteiro in 1986. In 1993, Calvo Group purchased an Italian brand called Nostromo, which is now ranked second in the Italian market. In 1999, the catering division began to market products in a flexible aluminum bag, making us pioneers in that area. This is a more hygienic, manageable and profitable way to deal with professional customers (hotels, restaurants, caterers, etc.), and it is the best way to conserve the product. In 2003, Calvo opened its tuna plant in El Salvador. A year later, the company bought Gomes da Costa, a Brazilian company, which made Calvo one of the five largest canning companies in the world.
These days, we’re talking about a global company that has a more than a 60-year tradition and a presence in more than 40 countries, serving both family consumers and professional caterers. We have a great brand and we have everything we need to continue to make progress. Our strategy continues to be what it was from the outset; it is based on excellence. We want to strengthen the current business – tuna canning – and at the same time diversify into new product categories.
UK@W: Why did Calvo decide to move into Latin America? And what criteria did you use when it was time to choose a country?
M.C.: Whenever we decide whether or not to be in a specific country, we do an extensive analysis of a wide range of variables: geographical proximity to fishing grounds; the country’s tax and legal frameworks, and local labor conditions. After considering all of those factors, we decided in 2002 to focus our efforts on El Salvador and in 2004 on Brazil, supplying different markets within Latin America.
Our company invested 32 million euros in our factory in El Salvador, where the average number of workers is 800. In 2003, we used that platform to supply the entire market of Central America, Mexico and the United States. In the U.S., Calvo Group has established Calvo North America, which will be our platform for introducing and developing in the U.S. market.
Our commitment to Latin America was reaffirmed in 2004, when the Group spent 38 million euros to acquire an 80% ownership in Gomes da Costa, a Brazilian company that has the top market share in the Southern Cone of countries. Gomes da Costa specializes in canning fish, basically sardines and tuna. The average size of its staff is 1,400. In Brazil, a country that has a population of about 180 million, consumption of tuna is clearly growing; the annual growth rate is about 15%. In addition, Brazil is a suitable platform for access to the remaining countries of the Southern Cone [including Chile, Argentina, Uruguay and Paraguay.] Together, those countries represent a total market potential of more than 250 million people.
UK@W: Could you provide us with a brief assessment of the canned fish sector in Latin America?
M.C.: Generally speaking, the market in Latin America has a low level of penetration when it comes to canned tuna and it has a high potential for growth. The per capita consumption figures vary widely [from country to country]. In Brazil, annual tuna consumption is 0.13 kilograms per person. In Chile, consumption is 1.4 kilograms per person; in Argentina, 0.4 kilograms; in Mexico, 0.3 kilograms; and in the United States it is 0.9 kilograms per person. In Europe, average per capita consumption is 1.45 kilograms. The highest levels are in Italy (2 kilograms) and Spain (2.15 kilograms).
UK@W: Have you thought much about moving into new markets in the Americas? If so, where? What’s behind your reasoning?
M.C.: At Calvo, we view globalization as a gradual process in which the first step involves exporting to those areas that reflect the strategic goals of the Group and, as a result, provide good reason for us to make a greater commitment.
Currently, the structure of our global presence is very appropriate: We are near our raw materials; we use the modest modern technology in our plants, and our locations permit us target those countries that we also consider strategic. We have invested a lot and, for the moment, we are quite satisfied.
UK@W: In the case of Calvo, how did the succession process take place?
M.C.: In our case, events involving the sale or non-sale of the company precipitated the decision, at least to some degree. We wanted to know how much our company was worth in order to use that knowledge to think about the different possibilities that were opening up for us. Nevertheless, the future of our company -- a subject that should have been discussed only among close family members – wound up being a topic of public discussion because of various reasons. At that time, we decided that we did not want to be the object of attention in the mass media. We made the decision that we had always been preparing for; to move on to the third generation. (I believe that this is something that we would have done, in any case.) So in October 2006, we brought four new family members onto our board of directors, and I was named the chief executive officer.
UK@W: Do you have a formal agreement within the family? If so, what does it consist of?
M.C.: In 2003, we signed a family agreement whose guiding principles are giving preference to corporate interests over those of the family; promoting professional management of the company, and the equality of the various branches within the family. As you might expect, this agreement also defines the administrative organs of the corporation -- rules for transferring shares and so forth. In other words, this is a comprehensive family agreement. It was created, developed and adapted for our family by professionals.
UK@W: Is there a family council within Calvo?
M.C.: There is, and it is defined in the agreement as a forum where the members of the family jointly deal with appropriate questions related to the business and the family. This assembly has an informal character. There isn’t any hierarchy since its functions are merely consultative and informative, not executive.
UK@W: What relationship does the family have with the company?
M.C.: The Calvo family owns 77.8% of the business. Some years ago, we also took on shareholders from Caixanova, Caja Castilla la Mancha and Caja Burgos. They have supported us throughout, and we thank them for their confidence.
The members of the Group’s administrative council are José Luis, Maria Dolores, Maria Luisa, Herminia and Luciano, all of whom belong to the second generation. A little more than a year ago, four other members of the third generation joined the council: Luis Calvo, Luis Rios, Jose Martinez, and me. Jose Martinez, Marta Calvo, Fernando Calvo and I, who was named chief executive office, also have executive positions within the company itself.
UK@W: Is the next generation prepared to play a role in the company? How many generations of the family are currently in the company?
M.C.: Currently there are two generations working in and taking part in the Group. At this moment, the next generation, which would be the fourth, is far from working age. My uncle José Luis, president of the Group, and my uncle Luciano, are both members of the second generation who continue to be involved in managing the business. Aunt Maria Dolores is also involved in some day to day questions.
UK@W:As a family-owned company, what moments do you remember as the most difficult? How did you overcome them?
M.C.: We’ve been in business for so many years that we must have had quite a few very difficult moments. As you would expect, I don’t know about many of those moments, especially in the early days when my grandfather set up the business. In those cases, what I know I’ve learned from my uncles, who say that the early days were very hard for my father. For me, my memory of the hardest moment is possibly the crisis in Spain concerning rapeseed oil in spring 1981. [Thousands of people were poisoned in Spain after consuming an adulterated form of this oil.] I was barely 12 years old but I remember very vividly that the entire family was very concerned. After having spent quite a lot on advertising two years earlier and throwing caution to the winds about those expenses, [Calvo Group’s] sales plummeted by practically 80% within the course of days. Thank God, this situation lasted for only a short time and things rapidly returned to normal. In fact, only months later, things wound up being even better than ever because consumers identified our brand as the “brand you can trust” in times of uncertainty. Sales grew to record levels that were not anticipated. Even though a lot of time has passed, we still remember those very difficult and anxious moments.
UK@W: Have you made any plans for one day having a chief executive who is not a member of the Calvo family?
M.C.: In our case, yes, and I think that is also a good thing. Javier Lazcoz, our managing director, is someone who has broad experience in the food and distribution sectors. Without doubt, he brings us a complementary vision that adds a great deal of value. Along with him, practically 90% of all executive positions in the company – such as the director of marketing, chief financial officer, sales director and so forth – are held by people from outside the family.