A true citizen of the world, there are many places he has called home. Mohammad Abu-Ghazaleh grew up in Palestine after his family emigrated there in 1948, before going to school in England and studying Economics and Political Science at American University in Cairo. He then moved to Kuwait to join the family agricultural import business, which his father started in the 1950s. As the business expanded first into South America and then into North America and Europe, he also moved around the globe, living in Dubai, the U.K., Chile, Florida, and Jordan, the latter of which he now considers his main home.
The businessman acquired Fresh Del Monte Produce in the mid-90s using a mix of cash and bank loans, and in the years since he has overseen a dramatic transformation and development of the business. The company is a separate entity to Del Monte Foods, the processed business of the former Del Monte Corporation which split off at the same time as the fresh business in 1989. Traditionally focused on bananas and pineapples, Fresh Del Monte has built up a vast array of other fresh and fresh-cut fruit and vegetables, which was expanded even further in 2018 with the acquisition of fresh vegetable supplier Mann Packing. Abu-Ghazaleh is the only one of his family with an executive position in the company, with his son Ahmad and brother Amir sitting on the board.
It is clear Abu-Ghazaleh is a man who is comfortable in his own skin. He exudes a warm confidence with a gentle smile, and despite running one of the world’s most formidable produce companies, undoubtedly has a soft side to him. We discuss his experience acquiring Fresh Del Monte and turning around its performance, the “laser focus” needed to address soaring costs, and his vision for the future of the produce industry.
The following interview has been edited for clarity and brevity.
Looking back, what is the main thing you learned from growing up with your family agricultural business?
How the world has changed and evolved. When I started in the business we were using telegram correspondence, so when we were negotiating a transaction, it could take days or maybe two weeks. Then came the telex machine. It was incredible for me to see that, and to be able to correspond with someone instantly. And then came the fax machine, another revolution in terms of communication and being able to correspond so quickly and so fast with other parties around the world. And then of course came the internet, and the world has changed. I have seen it all.
Why did you first decide you wanted to acquire Fresh Del Monte?
I always say that you should have a dream in your life. My dream was to acquire one of the produce multinationals. But there weren’t many in the industry. You had Dole, you had United Fruit, which is now Chiquita, and then you had Del Monte, and they were all out of reach for anyone at that time in the 80s. Back then Del Monte was owned by [former U.S. conglomerate] RJR Nabisco, which in the late 80s was subject to a hostile takeover by [U.S. investment company] KKR, as told in the book and film Barbarians at the Gate. After the takeover, RJR Nabisco was split into many parts, one being Fresh Del Monte. To summarize, Del Monte was then sold twice to two different parties, and both of them failed. I kept looking at the company and dreaming that one day I would be able to acquire it. In 1996, I was lucky enough to be able to achieve that dream. And from that time on, Fresh Del Monte became a pioneer in the produce industry, in my opinion.
What kind of state was the company in when you acquired it, and how did you turn the performance around?
The company was in the red, it had been losing money for several years. During my due diligence period, I could see all the faults and shortcomings, all the areas where it needed to be improved, and where I needed to eliminate the fat and the waste. When I acquired it, the first thing I did was to implement all the actions that were needed to address the inefficiencies and weaknesses and to strengthen the business, and really take Fresh Del Monte to a new horizon. In the first quarter of our ownership we turned the company from a loss of almost $30 million into a profit of $30 million. In the middle of that year we were approached by an investment banker and he suggested we take it public, which we did in October 1997. That was a record for a company to be listed so quickly that had been in the red and then became a profitable company.
So, when we took over the company it was generating $1 billion dollars in revenues, and today it is generating $4.5 billion dollars. We invested more than $2 billion over the years in assets, logistics, farming and agriculture across the world.
It sounds like you had quite a busy year with little sleep after acquiring the company…
That’s the story of my life. It never ends.
Why do you think that you were able to succeed so quickly with this company where others had failed?
I come from the business. I understand the business very well. I am not trying to say I am smarter than anyone else, that’s not the case. I just knew the business better. I knew where we should invest and where we should focus, and how to get customer satisfaction as well. That’s the most important part of it —delivering consistency, quality and freshness. Perishables is the most difficult business in the world. It’s not like consumer packaged goods, with perishables you generally have two or three weeks at the most. With some other items you might have a week or ten days. So, it’s a very dynamic, very agile and very dangerous business to be in, but you need to know how to do it, especially with a business on the scale of Fresh Del Monte that is around the world with all kinds of complications in terms of shipping, delivery and cold chain. You need to have the knowledge, the resources and the right people to perform such tasks.
What is it like to be the CEO and chairman of one of the world’s biggest multinational produce companies?
It’s just doing your job. That’s all. In person I am a very low-profile kind of a guy. I don’t have an ivory tower where I sit and look over everyone. I am always on the ground. I meet with our people in the fields everywhere we go. I am very involved in the business. I believe in a hands-on kind of management – not micromanagement, but being able to have a sense of what is going on on the ground with our operations. You can’t make the right decisions if you are not familiar with what is going on on the ground. It’s a management style that takes a lot of time, a lot of effort and energy, but I believe that is the only way you can run a produce business.
Do you ever find it hard to keep up with so many operations around the world?
It’s always challenging. Every morning you wake up and there is a new challenge. We are dealing with nature, with strikes, with labor unions as well as customers’ needs, so it is very dynamic. And when you are dealing with nature you have to be friendly with it, you cannot oppose it. You have to always find a way to coexist.
How is Fresh Del Monte addressing the current supply chain crisis and the huge increase in costs?
The only way we can address this is unfortunately to pass some of these costs back to the retailers and subsequently to the consumer. But in many cases we are absorbing most of these costs, which is really affecting our bottom lines and our margins, which I hope we can overcome over time by being more efficient. We try to find ways to improve and maximize our potential in many areas, be it on the farming or packaging level, or throughout the supply chain. This is the only way we can do it.
We try to work with our buyers and particularly foodservice operators to absorb some of these additional costs, and of course, nobody could have foreseen at the beginning of the year that we were going to have so much added to the cost of fuel, or paper or fertilizers. This is something that is part of our business and we deal with it.
What advice do you have for other executives on how to address the soaring costs?
You have to have a very sharp look at your operations. During good times, people forget about how much fertilizer they apply, how much paper they use, all kinds of inputs that they use, and then they become lax over the years. You have to look back at your operations in detail. Look at the efficiencies, look at the yields. For example, the supplier’s label may say germination is 95 percent guaranteed, but people don’t check this and you may only have 70 percent germination, so you are actually losing more than 20 percent of your seed. These are things we took for granted in the past, because things were much easier. Now, you need to be much more focused on your costs, your yields and the use of these inputs. Using a small, excess amount of inputs on a daily basis can cost you millions of dollars in additional costs at the end of the year. There are very small things that you need to look at – you need to start laser focusing on your business.
How much resistance has there been from retailers and their customers in accepting higher prices?
There is a lot of resistance all the time, be it bad times or good times. Regarding bananas, it’s unfortunate that retailers over the years have put prices at a very low level. If you go to the supermarket today, they’re the cheapest fruit on the shelf. If you look anywhere in the store you wouldn’t find anything cheaper than bananas. This is also affecting our ability to work with the growers in the producing countries because there are always social issues there which we need to address. It’s a very touchy subject, but these retailers are some of the largest retailers in the country, and they need to rethink the pricing of bananas so they can pay more to the people like ourselves, importers and distributors. We need to address this together rather than just everyone playing their own game.
That sounds like a tough situation to be in…
It’s a very difficult task, trust me, to be able to address this together. It would impact everybody. It would impact us as growers and suppliers and sellers, as well as the people in the different countries. We cannot pay more, because we cannot get a higher price. It’s a vicious circle.
What does the future hold for your pineapple business?
Around the world we are the leaders of fresh pineapples. We are proud to say that we are the ones who came out with the new variety, the gold pineapple, 25 years ago, which is the one that you consume today. And also for the last almost two years have started marketing the pink pineapple. We are very involved in developing new types of pineapple and new varieties, and we have more in the pipeline. The pineapple business is a lot more stable than the banana business, firstly because it’s not easy to grow pineapples, and secondly because it’s very intensive in terms of capital investment, and the cycle to plant and grow pineapples is much longer than for bananas. So it is a steady business for us, the retailer, as well as the consumer.
From your perspective, where do you see the produce market moving in the mid to long term?
I have been saying for many years that technology will become a very important part of our business. We should recognize that technology, in all its facets – be it drones, be it using different technologies – will improve and professionalize and optimize your business. And everyone has to add an AI component to their business.
Where do you see AI being most beneficial?
I see it as being able to predict not just how much to grow, but how much the market will require, and what the price point will be. That’s very important for you to be able to make decisions going forward in order to match supply and demand and have a more consistent business. I use my experience of being in this business for such a long time and the conditions I see around me to make the best guess I can in terms of what the season will be like, how the market will be and how the weather will be this year compared to the previous years. But that’s not good enough, that’s not going to be the future. The future will be more technology-driven. And I have this ability, but somebody else might not. So, I am not going to be there forever, I need people to not be dependent on guessing, to use a more scientific approach.
Aside from technology, what other big changes do you see taking place in the produce industry over the next decade?
All the time I hear people say there is so much land around the world. It is a misconception. Yes, we do have a lot of land that is not cultivated in different parts of the world, but firstly, so much of this land is not viable for agriculture, and secondly, some of these lands are in countries that are landlocked, and it would be too costly to reach the sea, so it would not be feasible. And thirdly, the most important thing, is the water. Water shortages are around the world — everybody understands if you look at the news. One of the biggest issues the world will face is not having enough irrigation water for irrigated agriculture. So, there are so many factors that I believe are going to influence the produce industry. This is not going to be a five year issue. In my opinion in twenty, thirty, fifty years from now the world is going to be facing a completely different story than what we are seeing today.
Labor issues and shortages are also becoming a very important element of the equation, especially in producing/growing countries. I don’t think things are going to get much better than what we’re seeing now regarding the challenges. What will happen, in my opinion, is that there will be more consolidation within the industry. Small and medium-sized growers and operators will have a tough time surviving in the long term in such an environment — particularly with elevated interest rates. Banks are becoming more risk averse, and liquidity is becoming tighter.
What do you think will be the characteristics of the produce companies that thrive in the future?
I think those will be the companies that are able to supply big retailers across the world with enough volume, and consistency in terms of quality and volumes. The retailers need someone to be able to deliver to them with the volume they need on a weekly basis or even an every-other-day basis. They need it with a price point that can be mutually acceptable to the buyer and seller, as well as taking into consideration the consumers’ acceptance of these prices. So, it’s a combination of things, and I think whoever will be able to do that will survive. For whoever cannot do that, it will be a very difficult journey.
I guess that doesn’t leave much room for the smaller and medium-sized companies, only the larger, vertically integrated ones.
That is true. Actually, this has been the motto of Fresh Del Monte from the very early years of when I acquired the company. That was one of our major targets — how can we vertically integrate the company more? That is exactly why Fresh Del Monte has been able to weather a crisis like the one that we have seen in the last couple of years. Vertical integration in the beginning is very costly – people might ask, ‘why are you wasting your capital by building your assets and investing in things that you can lease in order to have more capital available?’ Yes, at one point that argument was true. Today, I think people might change their minds because the biggest challenges for everyone are logistics, distribution, warehouse and the supply chain, and we are on top of those today.
Has the current supply chain crisis led Fresh Del Monte to make any changes to its shipping fleet?
We have had our fleet since the very beginning, since 1997, but during the last couple of years we have modernized it by buying completely new, pre-containerized ships. We used to have traditional, conventional ships, and now we have it all containerized — all our products are from the farm to the buyers, which creates a much safer and more efficient supply chain. So today, I can say that we have a very modern fleet, especially towards America.
Is there any issue in particular that you feel has not been properly addressed by the industry?
I think one of the issues that the industry hasn’t dealt with is the lack of traceability of the product — from origin to the retailer to the consumer. This is something that will become very critical in the near future. This is especially true for organics.
Looking ahead to the next one or two decades, what excites you the most about what’s to come, and what worries you the most?
I think the future is brighter, at least for Fresh Del Monte. I have seen all the things that we are doing as a company and as a team. There are many exciting things that are coming down the pipeline over the next few years. My biggest worry is climatic change, as well as availability of good agricultural land. The viability of producing something in a country that would not be cost effective. I also worry about the availability of water, and the natural disasters that are increasingly common such as floods. Unless we really take care of our climate and our environment, this will get even worse as we move forward.
What would be your takeaway piece of advice for other industry leaders?
Technology is increasingly becoming a more important part of every industry, particularly the agriculture industry. Our industry is influenced by nature and all its external forces. We, as a company, have been aware of this for several years, and as such, have been using and applying technology wherever we can by innovating to align business with technology. We are investing heavily in technology as it relates to traceability, quality assurance, and precision and smart farming. Technology that helps with better digesting historical data to provide predictive analysis – as well as smart farming and AI – are crucial for the industry as we continue to face environmental challenges. Yet, our industry has been very slow to catch up in terms of technology, lagging behind many other industries. It is just now that we’re starting to see the industry catching up. My advice for the industry is to invest in technology, to streamline and to only focus on products that can retain value. Do not grow for the sake of growing.
