Issue #6 : 103 Year Old Sicilian Family Business 🍊

Misitano & Stracuzzi SPA / Alico Inc / Articles

Dear Readers,

For this issue I thought I would share with you my research notes on an Italian microcap I came across a few months ago. Plus Alico Inc, and some articles I have recently enjoyed reading.

Table of contents:

1) Mistitano & Stracuzzi Spa - 

Introduction
Business Overview
Customers
Competitive Advantages
Financials
Growth Opportunities
Management
Risks
Valuation
Conclusion

2) Alico Inc
3) 3 Interesting Articles

Misitano & Stracuzzi SPA (MS) 🇮🇹

Now Sicilian oranges are some of the tastiest and juiciest oranges you can eat on planet Earth - especially the distinctive blood orange varieties. Grown in the nutrient-rich volcanic soil surrounding Mount Etna, oranges in this part of the world thrive in a unique microclimate that enhances their flavor and characteristics. Sicilians are proud of their oranges.

In 1922 two Sicilian men, both named Franscesco, hatched a plan to harness the rich natural resources of Sicily to produce exceptional citrus products. This sowed the seeds of the business which eventually became Misitano & Stracuzzi SPA.

Over 100 years later the company is still doing the same thing, and amazingly is now being managed by the fifth generation of the Stracuzzi family.

The fifth generation of the Stracuzzi family seem ambitious and are keen to grow the business into a much bigger entity that perhaps will be passed down to the 6th generation.

In November 2022, the shareholders and directors (Antonio, Diego, and Emanuela Stracuzzi) purchased the rest of the shares in the company from the Misitano family, thus becoming the sole owners. In 2024 they decided to take the company public by listing on the Milan Stock Exchange.

The Stracuzzi family now hold roughly 75% of the shares of the company. At time of writing Misitano & Stracuzzi SPA has a market cap of €84 million euros.

Business Overview

The company specialises in producing high-quality essential oils from bergamot, lemon, orange, and grapefruit, which are highly sought after by the food, beverage, perfumery, and cosmetics industries. Citrus oil accounts for roughly 90% of revenue.

Additionally, the company offers natural and concentrated citrus juices from lemons, sweet oranges, and red oranges, both conventional and organic. Orange juice accounts for the remaining 10% of revenue.

Customers

M&S’s primary customers for citrus essences are major international companies in the flavor and fragrance industry, particularly those serving the food, personal care, and home care sectors. Notable examples include Givaudan, Firmenich, and Symrise - firms with which M&S has cultivated long-standing relationships, with some spanning over 25 years.

These partnerships are rooted in M&S’s ability to consistently replicate specific flavor profiles. The company has board members with close ties to companies such as Symrise and Firmenich, which further illustrate M&S’s strong connections in this space.

M&S's top three clients accounted for approximately 45% of its 2023 revenue, with the number one customer accounting for 25% of revenue. This level of customer concentration would normally sound the alarm bells. However, the fact the company has maintained a 25-year partnership with its primary clients, who collectively represent nearly its entire market share suggests M&S could be indispensable to their operations.

Competitive Advantages

A core competitive advantage for M&S lies in its ability to replicate consistent flavours, despite natural variations in raw materials due to seasonal and weather-related factors. This standardisation capability is crucial, as end consumers demand uniform taste experiences. It’s this reliability that strengthens M&S’s role as a trusted supplier to the food and cosmetics industries.

Whether it’s a certain taste or smell, essence needs to be consistent every time for the end consumer. Consumer companies run the risk of losing sales if a certain taste or smell suddenly changes or is different each time they consume the product.

Consistency is key - this capability allows producers like M&S to position themselves as worthy partners that flavour houses can rely on. These relationships are further protected by exclusivity agreements. Long-term contracts are also in place that secure increasing order volumes over multiple years.

Financials

Revenues grew significantly from 2023 to 2024. In 2023, the company's revenue was €59.0 million. In 2024, the revenue reached €72.8 million. This growth was primarily driven by strong volumes and higher orders from key clients.

EBDITA was €13.0 million for 2023, and €15.6 million for 2024, a 20% increase.

Operating margins for the past two years have hovered around 20%. The return on capital employed was around 28% for 2024.

As of December 31 2024, the company reported a materially leveraged balance sheet, with a net debt position of €19.7 million.

This reflects a deterioration from the prior year, when M&S reported net debt of approximately €15.4 million as of December 31, 2023.

The increase in net debt was primarily attributable to capital expenditures for the new plants and accelerated raw material purchases (both of these are discussed in more detail later).

While these investments are expected to support revenue growth, they have temporarily pressured the balance sheet.

Debt Composition (as of December 31, 2024):

• Total Financial Debt: €44.6 million

• Bank Debt: €44.5 million

• Short-term: €32.5 million

• Long-term: €12.0 million

• Some borrowings are secured by real estate assets.

• Other Financial Debt: €134k, including a loan from SIMEST.

• Cash and Cash Equivalents: €24.0 million

• Non-fixed Financial Assets: €0.45 million

M&S intends to repay its short-term bank debt primarily through cash flow generated from its growing operations, supplemented by its existing liquid assets and its ability to access further financing if required.

Growth Opportunities

One problem with so much of the revenue coming from just a handful of customers is that much of the future growth will be determined by the growth of Givaudan, Firmenich, and Symrise, rather than from being able to grow by gaining lots of new clients.

These companies develop the final aromas used by FMCG (fast-moving consumer goods) producers, like soft drink manufacturers. Selling directly to FMCG companies could strengthen client relationships and improve contract margins, although it could also create competition with existing flavor house clients.

Over the past three years, revenue from its top three clients has grown at a compound annual growth rate (CAGR) of 62%, significantly outpacing the growth from other customers. Management believes this strong momentum can continue, supported by the company’s ability to meet increasing capacity demands.

The group also sees opportunities to expand into adjacent product markets by leveraging its high-quality raw materials and technical expertise. One such area is the organic personal care market, which is projected to grow at a CAGR of 8.4% from 2023 to 2032.

Geographic expansion is another key growth avenue. Currently, around 80% of sales come from Europe and the United States, leaving ample room to grow in underpenetrated regions. Developing markets like India present particularly attractive opportunities for future expansion.

Expanding Production

M&S employs around 60 people, mainly at its two production facilities. One located in the province of Messina which focuses on essential oils. The other production site is in Furci Siculo, which is dedicated to juices and extraction.

In 2023, the group announced plans to invest in two additional factories in the Messina area. Covering about 30,000 square meters, these new facilities are intended to strengthen logistics, boost production capacity, and increase operational efficiency in response to rising product demand. Renovation and adaptation work on the new sites was reported as ongoing as of April 2025.

Logistics and Distribution

M&S has developed three distribution logistics centers in Italy, the United States, and the Netherlands to better serve its global clientele. The subsidiary in the US, Misitano & Stracuzzi USA Corp., established in 2016, facilitates trade with America by shortening delivery times and enabling better market penetration. A warehouse in Rotterdam supports the essence side of the company’s global trade.

Management

As previously mentioned the company is now being managed by the fifth generation of the Stracuzzi family. Antonio Straccuzzi is the current CEO.

The company has strengthened the board by adding some well connected and experienced people from the essence, flavors and fragrance industries.

This includes former CEO of Treatt PLC, Daemon Reeve, who will help the company with the growth strategy. Reeve was widely regarded as a very effective CEO of Treatt PLC. Under his leadership from 2012 to the end of 2023, the company thrived with a clearly defined strategy that drove consistent increases in profitability. Shareholders saw the share price increase by over 500% in five years.

Key Risks

Customer concentration, a leveraged balance sheet, and a US/EU tariff war are all risks to the business.

Misitano & Stracuzzi also experienced a slight increase in the average collection period for trade receivables in 2024. Management states this is mainly due to significant revenue growth, and claims their trusted relationships with major international clients support reliable payment patterns even if payment arrives at a slightly slower rate.

One giant risk is the growing problem of citrus greening disease.

Citrus greening disease poses a significant challenge to citrus production worldwide. It is a bacterial disease spread by an insect called the Asian citrus psyllid, and infected trees produce green, misshapen, bitter fruit unsuitable for sale or juice production, often dying within a few years. There is currently no known cure for the disease.

The disease is established in major citrus-growing regions, including Brazil and the United States. Brazil, the world's largest orange producer, saw a 56% increase in disease prevalence between 2022 and 2023, leading to an estimated 24% year-on-year decline in the 2024 harvest. Florida's orange production has decreased by a staggering 92% since the 2003 due to the disease and natural disasters.

The disease is present in Sicily but has not yet caused widespread devastation. However, the impact of citrus greening disease does directly affect operations by contributing to low orange supply, declining citrus quality, and also causing significant increases in raw material prices.

The price of oranges has tripled over the past three years. It’s an environment that raises the potential of increased market shortages for raw materials.

M&S acknowledges its exposure to this risk, but the impact is considered well-managed through several strategies:

1. Proprietary Solutions and Blending Expertise: M&S's technical expertise and R&D capabilities allow it to develop products that replicate the same aroma using a different blend of inputs. This means they can use different citrus varieties or source from fruits not affected by shortages, adapting their raw material mix to overcome supply issues.

2. Pricing Power: Given that flavors are critical for defining taste and aroma in final products (though used in minimal quantities), M&S's customers in the food and beverage industries are often unwilling to compromise on flavor costs or risk production disruptions or brand damage. This provides M&S with pricing power, allowing them to pass on increased raw material costs to clients.

3. Diversified and Long-Standing Supplier Base: M&S maintains a diversified supplier base, with the top 10 suppliers accounting for approximately 50% of COGS, and has multi-year partnerships with some extending over 10 years. This flexibility and solid supplier network provide a competitive advantage, helping to ensure procurement regardless of commodity availability.

4. Strategic Inventory Management: Since 2021, M&S has increased its inventory (mainly essential oils, which are relatively liquid assets with a long shelf life) to counter potential supply chain interruptions and better manage the dynamics of rising raw material prices caused by greening. This strategy requires short-term financing as the company pays suppliers upfront to secure the best fruits and conditions.

5. Product Mix: The company's core business is the production of essential oils, accounting for approximately 90% of revenue. Juice production makes up a smaller share. While rising orange prices impact both, the focus on higher-margin essential oils, where blending expertise is key, helps manage the overall impact.

Valuation

The valuation looks reasonable - M&S currently trades on a trailing P/E of 8, and offers 4.32% dividend yield, which is to be paid in July. Management don’t provide any guidance on future earnings.

You can view what other listed companies in the same industry are valued at in the table below. I will let readers complete the last mile when it comes to a deeper analysis of the valuation.

Conclusion

There’s a lot to like about Misitano & Stracuzzi - high insider ownership, consistent business model, ambitious management, and a timeless product. I can still envisage humans wearing perfume and drinking orange juice in 100 years (unless the robots with their AI brains have killed all us homo-sapiens).

I also have a lot of respect for family companies that have been around for this long, most crash and burn along time before its gets to the second or third generation let alone the fifth.

However, I would like to see the debt and inventory reduced, and the construction of the two new plants completed before contemplating making an investment. For now I have added the company to my watchlist and will be monitoring their progress.

Another write-up on MS has just been published. It’s worth a read as well, just in case I have missed anything 👇

Misitano & Stracuzzi (IT:MS)

---

Alico (ALCO) 🇺🇸

Keeping on the subject of oranges, I didn’t realise how much damage citrus greening disease has done to orange production in Florida. No wonder Alico has decided to close down their orange producing operation and transition to a diversified land management company. The last harvest of oranges will be this year.

Going forward 25% of its land holdings will be set aside for property development, while the rest of their land holdings will be leased to a diverse set of farmers, think soy, corn, cattle etc. in return for rents/royalties.

The market cap of Alico Inc is currently $220 million. Management has estimated their land holdings are worth between $650 to $750 million.

The development plan looks really interesting. I suggest reading this presentation to learn more.

I recently noticed that Gate City Capital have made Alico their biggest position, here’s what they had to say from their Q1 letter…

Alico (ALCO) is the Fund’s largest position and was a notable contributor to performance during the first quarter.

Alico owns over 55,000 acres of land in Florida with nearly 50,000 acres of land that was previously devoted to citrus farming. In Q1, Alico announced that it would be exiting citrus operations following the 2025 harvest. Alico expects to transition 75% of its citrus acres (37,500 acres) to other agricultural purposes and convert the remaining 25% of its citrus acres (12,500 acres) to higher and better uses including residential and commercial developments.

Alico recently filed an application for the development of a master-planned community on the 4,500-acre Corkscrew Grove outside of Fort Myers. Construction at Corkscrew is expected to commence in 2028 or 2029 and should be a key value driver for Alico in the years ahead.

Alico is actively marketing most of the company’s land holdings and has highlighted that it will utilize proceeds from asset sales to repurchase stock. In April, Alico announced a $50 million share repurchase program which we view as a positive sign that the company’s land sale discussions are progressing as planned.

Alico has a market capitalization of $220 million and an enterprise value of $320 million ($5,900/acre). Our price target of $51.00/share suggests nearly 80% upside from current prices.

And here’s two other interesting write-ups on the company that are well worth a read…

Orange Is The New Gold by David Katunarić

Alico - A Land Giant Hiding In Plane Sight by Undervalued-Shares

I think Alico is definitely worthy of further research.

---

Here’s some articles I have enjoyed reading in the past few weeks…

Endurance

My School Banned Phones for the Year. Here's What Happened.

UK interest rates – Opec to the rescue?

Thanks for reading.

Jon Kingston

Please note the information in this report is for informational purposes only and should not be seen as investment advice. Please do your own due diligence before investing in any company mentioned in this article. As of publication the author holds no shares in any companies mentioned in this article.