CYPRUS: End of the road for \’halloumi king\’ Pittas Dairy

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Pittas Dairy has essentially ceased production after a proud 80-year history in Cyprus of making halloumi cheese famous around the world.

Two decades of bad luck and misfortune has ultimately led to the demise of the former dairy industry king which put halloumi and Cyprus on the culinary map.

On January 18, staff reporting for work found that they were not able to start the day’s production as there was no milk available to use.

After Pittas’ bank accounts were frozen the company was not in a position to buy the raw materials it needed.

As confirmed to the Financial Mirror by a source with an understanding of the company’s finances, assets were frozen after the temporary appointment of an official liquidator, tasked with drawing up a reorganization plan, had expired.

The halloumi export leader had found itself in grave financial straits in recent months with a liquidator appointed to put the company into administration to see if it could get back on course.

However, after a series of postponements, a meeting between the company’s creditors and liquidators was held two weeks ago with the majority opposing the proposed rescue plan and the company temporarily being handed back to its owners.

Pittas Dairy Industries had an 80-year presence, while at one point the company controlled 48% of the local Halloumi market, with a 35% share of the squeaky cheese’s exports.

At its peak the company had some 200 employees, producing more than 100 dairy products. The Pittas family, owners of the dairy business, had put Cyprus and its national white cheese on the map, with the island’s halloumi exports last year at around EUR 200 mln.

An inside source said one of the company’s largest creditors Cybarco has filed for the dissolution of Pittas with the hearing set to take place in March.

The source said that Pittas’ troubles began 20 years ago when the company had set up a state-of-the-art dairy factory, which was completely destroyed in a fire caused by reasons never made known.

“The fire was the first big blow. The company was to receive state backing for the factory which because of the fire never happened. As if that was not enough, the company’s insurance company, Laiki’s Cypria Life, refused to compensate the company for damages with the case still in the courts to this day,” said the source.

Problems caused by the 1999 fire multiplied as it was a period within which competition was growing, while Pittas had to return to its old facilities with antiquated machinery.

The informed source said that the company’s downfall was delayed for a few years due to the boom in halloumi exports.

“With Pittas being the biggest halloumi exporter of the time, they were able to survive the fire in 1999. However, the company took another blow, when Orphanides supermarkets closed, with Orphanides owing hundreds of millions to creditors, one of them being Pittas.”

Pittas took another body blow with the haircut on deposits in 2013, nobody knows how much money Pittas had actually lost during the bailout crisis.

“What is certain is that there was a belief that if the company was able to survive all of these blows, mainly thanks to the halloumi boom, then the company could thrive again,” the source said.

However, Pittas did not recover, accumulating tens of millions of euros in debt.

“That is one of the reasons why creditors are rejecting the reorganisation plan and not giving the company a fighting chance.”

However, someone could naturally question the motive of creditors as some are also business competitors.

“For example, the Pancyprian Organisation of Cattle Farmers, to which it is true that Pittas owes millions, have a company which produces dairy products. That company has taken on Pittas biggest halloumi client in Australia,” said the source not wanting to blame anyone.

Whatever happens next it looks like the end of the road for Pittas.

“The company’s clients abroad have turned to other providers, which in turn have taken away Pittas’ share of the already limited milk pool. It is virtually impossible for the company to regain their clients’ trust and reclaim the share of the milk pool they once had.”

Meanwhile, the Dairy Producers Association expressed its disappointment over the turn of events and the loss of one of Cyprus’ dairy industry pioneers.

“Pittas put the country on the map laying the ground for halloumi to conquer a series of markets. Their success story can be traced back to the beginning of the 1980s when one of the biggest supermarket chains in Britain decided to stock halloumi. Ever since halloumi sales have taken off,” said Cyprus Dairy Producers Association’s Andreas Andreou.

Andreou said that he speaks on behalf of the whole industry when saying that he really wanted to see Pittas Industries back on their feet, confirming, however, that as things stand today there is little hope of that happening as the market void created with their closure has been filled by other producers.

He took the opportunity to send a message out to other dairy producers, warning them that any openings made should be carefully planned and should always move ahead taking into consideration all possible risks and factors.

“The industry may not be able to cope with another loss,” said Andreou.

Halloumi exports unaffected

Meanwhile, the Ministry of Agriculture said there was no concern over any possible setbacks to halloumi exports caused by Pittas’ closure.

“Although a blow to the industry, this will not affect Cyprus’ halloumi or any other dairy product exports, especially those to the United Kingdom, the squeaky cheese’s number one destination,” the  MOA official told the Financial Mirror.

The official said that competition in the industry has reached its peak over the past few years, with companies battling out for a bigger share of the market pie.

“The remaining dairy producers have invested in expanding their business capacity and are in a position to fill the gap. This has actually already taken place, as halloumi importers abroad have already made agreements with other producers to cover their needs.”