The Széchenyis contributed much to the Hungarian economy, and it is thanks to them that the company Master Good exists today. This may sound somewhat exaggerated but as a matter of fact, the grandfather of the company’s owner, who became the poultry supplier of the noble family exactly 100 years ago, was able to establish the Tiszántúl region’s first hatchery in Békéscsaba in 1931 as a result of the Széchenyis’ enlightened worldviews. When private properties were brought under state control after World War II, the hatchery was no exception, and since it did not fit the mould of Communist plants, it was closed down in 1952. The founder did not live to witness the closing down. His son, who inherited the knowledge and experience he had accumulated, was taken to a Siberian work camp for he was considered an ‘enemy of the people’. Upon his return home, he had to start his career anew in the poultry sector. His extensive expertise proved to be an invaluable asset in the changing political environment of the era and he soon became the manager of the hatchery in Derecske.

Courage, Purposefulness, Commitment

‘During those years, I lived with my parents in the flat that was provided by the hatchery, therefore my interest in poultry breeding came as no surprise,’ recalls Mr Bárány the beginning of his career. ‘I graduated from the Debrecen University of Agriculture, and in 1977 started to work in Kisvárda at a new poultry enterprise, Hunnia Coop, which was owned by a cooperative.’
In the late 1980’s, Mr Bárány sensed the decline of the state-controlled sector, and started his own enterprise. At first, he was an individual entrepreneur, then in 1996, established Baromfi-Coop Kft., a limited liability company that grew from a poultry farm with a few thousand animals to one of the region’s largest poultry integrations in only a few years’ time.
As part of the growth, the Management aimed to carry out all activities relating to poultry farming within the enterprise, including feed growing and mixing, hatching, slaughtering and processing.
Their decision to seek and fill in gaps in the market proved to be an appropriate one. Around the turn of the millennium, the poultry sector was dominated by large companies such as Bábolna and Hajdú-Bét, whose financial strength could not be matched by the family-owned enterprise. Mr Bárány’s decision to look for a product whose competitiveness is ensured in the European Union, too, led him to free-range poultry farming.

A Clever Person Learns at His Own Cost, Too, But Fast

It was at that time that Mr Bárány’s two sons, László and Péter, graduated from the Debrecen University of Agriculture and became the fourth generation of the family to be involved in the poultry sector. They started to work for the company when several new enterprises, and thus new activities, were added to it. The growth led to the foundation of Master Good Kft. in 2001, which carried out commercial activities and food processing. Three years later, the family purchased the bankrupt Hajdú-Bét’s broiler raising, feed mixing and poultry processing branches, thus completing the integration.
There is no need to describe the many benefits of a full-scale integration. The real advantage of the system, however, is most obvious in times of hardship, such as the year 2006 was with the avian flu panic.
‘Thanks to the strong foundations of our group and the expertise and diligence of our employees, we got through the difficult year of 2006. In fact, the hardships may have been a blessing in disguise since we were able to activate resources and reserves that otherwise would not have been utilized,’ explains Mr Bárány. ‘In any case, it was a year to learn from, which can be best summarized by altering the well-known saying, ‘a clever person learns at his own cost, too, but fast’’.

The English Relation

Let us not rush ahead in time since in its efforts to survive the difficulties in 2006 the group was aided by a partnership that dated back to three years earlier.
By purchasing Hajdú-Bét’s plant in Kisvárda, the group became a partner to the English company Lakeside Foods. In the beginning, the English partner was cautious and closely followed the growth and tested the Hungarian partner’s view of quality and ability to innovate. As a result of the positive experiences, Lakeside Foods transferred a part of its product development and production capacities in 2006 to Hungary, mostly to Master Good Kft’s state-of-the-art plant in Petneháza, where over 50 different products are developed and made this year.
‘The British market presents many more opportunities than the domestic one. In terms of purchasing power, it is probably second only to Switzerland, but the British market is several times larger than the Swiss,’ describes Mr Bárány the business prospects. ‘Our goal is to supply as great a portion of the British market as possible in cooperation with our partner.’

Brand-building in All Price Categories

Its success in the British market encouraged the group to provide re-processed poultry products to the domestic market, too. In 2007, under the brand name Master Good, several new poultry products and convenience foods were introduced to the market with the easily-discernable cock logo of the group.
Some new products were marketed under the brand name Mester, and new premium-quality products were also launched, such as the Farmstead Ham and the Baby Bite, which are made from the group’s popular farmstead-raised chickens.
‘Our group aims to be present in the market of inexpensive products, too, which was why we have purchased Hajdú-Bét Rt’s well-known brand name, Zóna,’ explains Mr Bárány.
They picked two of the convenience food products they supply to the British market to serve as the basis for their endeavour in the Hungarian market. The boneless whole chickens that are available with two kinds of seasonings are going to be followed by several other products.

In the Market for Ideas

By 2007, the company Master Good did not only become Hungary’s only full-scale poultry integration but also the largest company in the poultry sector in terms of product marketing and sales income. They anticipate a total sales of 25 billion forints in 2007. The size of the enterprise is best described by the following numbers: in the Kisvárda plant, 14 million broilers and 800 thousand free-range chickens and guinea-fowls are slaughtered annually, and over 20 thousand tonnes of poultry are processed every year. The annual output of the plant in Petneháza is 3,000 to 3,500 tonnes of reprocessed poultry.

‘We would like to extend the existing broiler and free-range chicken raising capacities,’ explains Mr Bárány, ‘and also build a new hatchery.’

In April this year, the group published its medium-term strategy. According to that, it aims to find supermarket chains in cooperation with which progress can be made despite occasional, unavoidable, disagreements. According to Mr Bárány, the majority of those chains have already been selected. As he says, ‘The first phase of our expansion in the domestic market has been completed. We have selected our strategic partners with whom we would like to strengthen the relationship during the second phase. Our goal continues to be to communicate our openness to innovation to the supermarket chains. We would like to achieve that when supermarkets have a new idea or discover a new need, it is our group that they first turn to for partnership. It is not only our products but also our innovative skills that are for sale.

Concentration Brings Transparency

The medium-term strategy includes also that the group would like to establish partnership with three to four domestic companies in the poultry industry in compliance with the applicable national regulations. According to Mr Bárány, who has a great insight into the entire poultry sector in his capacity as Chairman of the Poultry Product Council, this is primarily necessitated by the lack of concentration of the existing capacities. The 110 million chickens that are killed in Hungary annually come from 38 slaughter-houses, only a few of which achieve the annual output of 10 million chickens. However, in Italy, Germany and the Netherlands, one cannot find companies even with 20 million chickens/year output because they would be unsustainable due to inefficiency and uncompetitive prices. Therefore, in an increasingly globalised Europe, it will be extremely difficult to maintain the presence and significance of Hungarian products.
‘I discourage everyone from believing that Hungary’s small- and medium-size processing companies know something that Western European companies do not,’ warns Mr Bárány. ‘I would put it this way: a considerable portion of those Hungarian companies are involved in something that Western European ones cannot afford to do: to be involved in the black and grey economy. The envisaged partnership of Hungary’s three to four major poultry companies would eventually lead to the transparency of the sector and encourage cooperation in procurement that would promote the realization of the survival strategy.

László Szalai
Trade Magazine / November 2007 / Volume II, issue 11