Italians serve up healthy profits

Investors and foodies alike find the 'heat-and-eat' ingredients of distributor Donatantonio to their taste, writes Matt Guarente

DONATANTONIO, listed on the London Stock Exchange just over a year ago, is making healthy profits linking the olive groves of Tuscany with the microwaves of British homes.

Since the flotation, the specialist food importer's stock has surged almost 70 per cent while net income has risen by 375 per cent. Husband- and-wife owners Sheila and Vincent Donatantonio have moved the operation to bigger premises on the outskirts of London.

Its recipe for success? It supplies quality products to meet surging demand in the pounds 250m market for chilled "heat and eat" dishes at the supermarket, at the same time as doctors and style pundits are pushing the benefits of a Mediterranean diet as a healthy, fashionable choice.

Nigel Thomas, a director of ABN Amro Asset Management's UK Growth Fund, says: "The chilled food market grew 13 per cent last year, and less than one in five people are currently purchasing these foods, so you'd expect it to expand."

The company, founded a century ago by Vincent's grandfather Luigi in Clerkenwell, which at the time was London's little Italy, turned in maiden net profits of pounds 1.3m on sales of pounds 10.2m. Its shares reached a recent peak of 118.5p after launching at 70p in March 1997.

Donatantonio specialises in troubleshooting for big food retailers as well as importing olive oil, pasta and the staples of the fashionable Mediterranean diet. Its customer roster includes leading food manufacturers such as United Biscuits, Unilever, Geest and Hazlewood Foods, who in turn supply ready meals, salads and snacks to UK food retailers.

When one major UK food producer built a shiny new machine to produce a chilled dish, the pasta they bought to use with it "came out like gunge," said Sheila Donatantonio. She found a different type of pasta for the producer and the problem was solved.

"Big buyers go direct to the Italian supplier and they get burned," said Sheila. "The producers don't care if a British buyer walks in and wants his products a certain way. They have a huge domestic market."

Sainsbury's, the UK's second-largest food retailer, lets the specialists do the job of sniffing out the best ingredients for their range of foods. "The suppliers' role is really key," says Julia Le Good, manager of product development at the supermarket chain. "We use importers that have unique specialities, and we strive to use the most authentic ingredients."

Sainsbury's recently launched a new line of chilled dishes in response to rival Tesco's premium Finest range, as it strives to improve its share of the market.

Ms Le Good declined to say what percentage of her company's sales came from the ready-meals shelf, or how much sales of these products had risen, though she said: "Every retailer will tell you it is outgrowing other grocery sales."

According to the '1997 Chilled and Delicatessen Foods' report by Euromonitor, the market research company, busy professional people are the main buyers of this kind of supermarket dish. They are also the consumer group most likely to be health and style-conscious while demanding high quality.

As he patrols his 60,000-square foot warehouse crammed with specialty imports, Vincent Donatantonio reveals a passion for food matched by a pragmatic approach to business. While he shrugs and smiles when asked about the Californian-bred fad for foods like sun-dried tomatoes - originally nothing more than a way of preserving a tomato crop for the winter - he knows that high demand means he has to stock them.

Walking past 500-pound drums of tomato paste and 23-ton vats of virgin olive oil, Mr Donatantonio stresses that product quality is the key to the success of his business.

"I'm not interested in price on its own," he said. "What I can offer is value for money. You have to have a commercial sense too. Unless a client wants Italian, that might mean I offer Portuguese canned tomatoes or Greek oil. For the price, it might be better."

As an example, he picks up a handful of rice from a pallet full of 20- pound bags. Examining individual grains, he explains how he advised a client creating a new rice dish to avoid the finest grade of risotto rice because it is not suitable for chilling after cooking. "I told them to use Italian parboiled Japonica," he said, and the client listened.

At the Hertfordshire warehouse, Sheila Donatantonio is showing a group of institutional investors round the new premises, while Vincent is in the kitchen tasting and discussing different varieties of bean. It's what you might expect from a chairman who signs off his company reports with "Buon Appetito".

Copyright: IOS & Bloomberg