11 May Interview with László Bárány, CEO of Master Good, Hungary
BF: The poultry meat processing industry in Hungary is valued at €2.2bn, is ranked seventh in Europe, and is the 41st largest industry in Hungary according to IBISWorld. However, recent bird flu outbreaks can reduce the industry figures for 2023. Could you give us a general overview of the industry, its key strengths, its key competitive advantages as well as the biggest challenges it faces right now?
László Bárány: The Hungarian poultry industry is looking back on a 60-year history. Hungary was one of the first countries in the world to start exporting its poultry products. Actually, in the 1970s, Hungary was the third largest poultry exporter. Since then there has been a change and many countries have improved their production. But based on our rich heritage, Hungary is still a strong player in this industry. The Hungarian poultry sector exports to many countries. Master Good, for example, exports to 47 countries, including in North America, Africa, Asia and Europe. The Hungarian poultry sector is famous for its quality. We are one of the key players in Europe in the waterfowls, duck, and goose sector. In the chicken sector, our strength is that we are completely non genetically modified in our production.
Every industry has its own challenges. Looking back, we can say that the last decade was a very lucky and prosperous one. This decade unfortunately started with the pandemic, and immediately after came the economic effects, and then the war in Ukraine broke out, which has created huge challenges. So, we can say generally we are living in challenging times. Our industry has a special problem: the avian flu, which comes every year. Yet we have to learn to live with it because it will obviously stay here forever. The avian flu is a bird flu. It’s not harmful for humans but can cause serious economic problems and damage for every country which experiences it, whether that be the U.S. or Europe.
Last year, we had near record inflation, which is still an ongoing thing. In many industries this inflation will prevail, however I believe that we will see a deflation in food and agriculture this year, which will come from the decreasing grain prices and will create lower feed costs. I believe in the second half of this year, a deflation period will start. These are rapidly changing times and an industry leader like Master Good has to be very focused because we have to react quickly to these changing conditions in the environment.
BF: Master Good has engaged in poultry breeding for 114 years, and is currently in its fourth generation, making the company the oldest poultry dynasty in Hungary. Almost 75% of your products are exported to 40 countries. Can you give us an overview of the company, with a couple of key facts and figures to highlight its importance and contribution to Hungary’s poultry industry?
László Bárány: In 2021, Master Good has a turnover of a little over €220 million, while the group’s total turnover was of €500 million. Last year, in 2022, our turnover was over €700 million at the group level. Master Good is a family-owned company operating as a vertically integrated group, which means that we integrate the grain production. We do not own the land, but we organize the production and the contract with the farmers. We have feed mills, we have breeding, we have hatcheries, we have broiler farms, and we also contract the farmers to produce chickens for us.
We have the largest capacity slaughterhouse in the world. Some companies have more slaughterhouses but none of them can slaughter with a speed up to 16,300 birds per hour, which means almost five chickens per second, and we are very proud that we have the most modern factory in our industry in the world. We have other processing plants where we produce convenient products, breaded cooked products, and sausages and hams. We also have a pet food factory, and we operate it because this vertical integration gives us the opportunity to operate with a fully circular ecology. We are also processing and collecting the manure which we collect from the farms. Then we give it back to the farmers for producing the grain for us, and they can replace the chemical fertilizers with these natural fertilizers, which also are very good to the soil. We really believe in this environmentally conscious production. This is why we have many solar powered plants which can cover 34% of our annual usage. With this, we are one of the greenest companies in our industry. We have very ambitious plans to go carbon neutral by 2030. Our position in Hungary is absolutely as a market leader in our region.
BF: What would you say has been the impact of the current crises and challenges, from the war in Ukraine to disruptions in the food supply chain to the high inflation rates, on Master Good’s performance and development in 2022?
László Bárány: 2022 has been a very difficult year. Q1 was very challenging because before the war, the energy crisis had already started, and the grain and feed cost had really increased our cost environment. As soon as the war started in early March, the grain prices exploded globally because Ukraine was an important country for Europe in terms of grain. Then that exacerbated the food prices, not only in Europe but globally. It was difficult to plan one day to the next because the cost was volatile and to forward this to the customers wasn’t easy. In Q2 and Q3 we could do that, and it brought us to a better situation. All in all, we still managed to close a very successful year thanks to those efficiency improving investments that we have done in the previous years.
Globally, customers accepted these abnormal cost increases. The profit rate decreased slightly compared to 2021, but, because of inflation, the profit volume increased compared to 2021.
BF: The Master Good Group has changed its innovation strategy with the new leadership. Nowadays, the organization strives for efficiency, quality, increased automation, and sustainability due to the combination of GEA technology and know-how, helping the production to achieve its aims. Why is this technology so significant to your company and what will it help deliver on the company’s value chain?
László Bárány: We are looking for our suppliers and choosing them very carefully. But when we find the right supplier for a problem, we stay with them. We are long-term thinkers, so we are building long-term relationships. These relationships are very similar to a marriage. With these machinery suppliers, we would build factories which are state-of-the-art. We believe in automation, and we try to ease the burden of the workers by reducing the heavy, physical work. These companies supply us with very efficient equipment.
BF: To what extent, are you looking for new partners to team up with for your other exciting and innovation-driven R&D projects that are in the pipeline?
László Bárány: Although we have very good suppliers, we are always open to having more because, as a deeply, vertically-integrated company, we still have a lot of problems to solve. We are always open for anyone who can bring us a good solution. There are a lot of things to optimize in our food industry.
I think the other sector, which in the coming decades we will see serious further automation, will be the animal husbandry industry. That sector improved a lot from the 1960s to the early 2000s. But since then, we haven’t seen any further serious automation, and this is where we are looking for suppliers, to help us to also bring innovation to that area as well.
BF: The organization has a sustainable and high-quality program named “Free-Range Chicken,” which consists of not using any growth promoters or antibiotics and letting the chicken eat the fresh leaves outside. These standards are some of the elements that make the meat so tasteful. What is the strategy to continue high-quality products and, at the same time, develop the group with your diversified product portfolio?
László Bárány: We have two types of chicken: the broilers and the free range. None of our chickens get any growth promoters, anti-virals, or any such thing. We are GM-free, and that is our standard at Master Good. The whole integrated operation is only using non-GM feed. One major difference between the free range and the broilers is that the free range is a different species. It is slow growing, and we let those chickens go outside and run and pick what they find outside. In our whole production, animal welfare has a very important role.
Our portfolio is very diversified: we are present not only in agriculture production, but also in pet food, so that we can reuse everything we possibly can. We make pet food from the byproduct of the primary processing. We reuse everything except the chirping of the chickens. We are environmentally conscious and animal welfare is very important. This is the direction where we are building our company. It must be. We all need the sustainability. That’s a very important driver of all our investments.
BF: In 2020, Kisvárda poultry plant owned by Master Good received an investment of €46.3 million partially supported by the government in order to develop the plant to become the sixth-largest poultry processing facility in Europe. How has this helped support production, revenue, logistics, and poultry development for this project?
László Bárány: Since that investment we have made further investments, and now it’s a fact that our company is the most efficient in the whole world. But the Hungarian government is very supportive of all investors who help to create jobs and are ready to pay taxes. We had this vision to be one of the best in our industry and the government supported us to make that investment. It was mainly on automation in our factories.
BF: You mentioned that you are present in 47 markets, including Canada. What is your strategy for internationalization in the coming years, so not only in terms of export but in terms of building a more international brand partnership with other international players?
László Bárány: We also have a daughter company in Vietnam, and we are active in our neighboring country of Slovakia. We also have an operation there. We would like to grow beyond our Hungarian borders, but the pandemic taught us that, as a family-owned business, we would rather expand into Europe because we see the challenges. We have seen serious challenges right now with our Vietnam company, where we were not able to travel to for two years.
BF: After graduating from the Agricultural University, you joined the family company. Since the beginning, you have been connected to poultry. What is the most valuable lesson you learned throughout your journey that has been relevant and applicable to your leadership role?
László Bárány: I am a very lucky person because I had the greatest example in my life, my father. I had a lucky position because he shared all his experiences with me. If I should highlight the most important thing it is that I have only one face, so I have to be really careful not to lose that. One should never be greedy; I think a long-term player always has good years and bad years, but if someone puts a lot of work into a project and does everything for success, the success will come. This is how we live; this is how we work. I could share my experiences for hours, but I think if I could pass something to the next generation, I would say only say these few words. I would say to always stay optimistic. That is very important and one of my key driving forces.
BF: Do you have a final message for the readers of USA Today?
László Bárány: Hungary is a very friendly country in the middle of Europe, in an excellent geographical position. It has a highly educated labor force and an entrepreneurial friendly government and low taxes. If someone is looking for an entrepreneurial government with highly educated population as employees, then this is the right country for them.