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Food for thought

Melanie Stern is Section Editor of Families in Business magazine.

Van Eeghen International has survived centuries of war, economic crisis and political reform yet, through astute diversification and investment in niche markets, they remain the only Dutch family with a revered place in the hall of Henokiens

Not many companies today can claim to be almost as old as their country of origin. Nor can many say they have survived centuries of war, economic crisis and political reform – all the while remaining family run. Talking with Van Eeghen International's 14th generation director, Willem van Eeghen, the ravages of time do not seem evident.

Read further into the colourful and engaging history of this 341 year old company and member of the exclusive Henokiens (a club of companies over 200 years old, currently made up of 30 names), and you will discover why; the Van Eeghens maintain their stronghold today on a proven family formula of measured risk-taking, pioneering niche markets and never resting on one's laurels. This family has made its living on dealing effectively with constant change, translating in Willem as a quiet confidence.

Headquartered in one of Amsterdam's elegant town-houses alongside the canal Herengracht, food ingredients processor, trader and distributor Van Eeghen International serves some 60 countries across the globe in two key markets: dehydrated vegetables, involving herbs, spices, soy derivates and customised blends; functional ingredients and nutraceuticals. In latter years the firm has promoted itself as a provider of 'creative solutions' – maximising the potential of its client base by providing ready-made and bespoke products. The Van Eeghen mantra is to "shift horizons beyond short-term benefit to long-term value creation", and to create customer loyalty by providing uncompromising levels of service. A more cynical businessperson might balk at what could sound like sales spiel, but the facts speak for themselves.

Promising beginnings
Cloth merchant Christiaen Van Eeghen brought his family to the Flemish border town of Aardenburg in 1632, spurred on by a climate of religious persecution in his native Flanders. Thirty years later his son Jacob and second wife Maria Boxhoorn moved to Amsterdam, a growing port that only officially came into being 326 years previously, to lead the flourishing business. Van Eeghen imported linen and linseed from England, Flanders and Germany; wine and salt (required in Amsterdam by the huge gutted herring trade) from France and Portugal ; and wood products from the Baltic – while exporting linen and linseed to the West Indies and France, and salt back out to the Baltic.

Around 1672 Jacob decided that he wanted to facilitate the growth of his shipping business, but without the cost of buying whole vessels and the risk of them being lost at sea. He took to investing in several shipping syndicates, or partenrederij, in which 1/64th of a ship was owned by each member. This was an astute move, as these syndicates often returned as much as 400% profit when they sailed back safely.

The company was soon competing with the infamous trader coalition, the Dutch East India Company ('Verenigde Oostindische Compagnie' or VOC), set up in 1602 to promote Dutch-Indian trade and bestowed with unique governmental powers to aid this national interest – even the permission to produce coinage. Despite a war with England that nearly drove Amsterdam to bankruptcy, battle with the Danes against Sweden and Norway, and war between the Dutch Republic and France in 1672, Van Eeghen's business grew just as fast as the VOC's – without the governmental graces.

Van Eeghen might not have remained 100% family controlled had it not been for some of the family's wives. Perhaps it was fate, considering that men in this region of the world do not live to be very old, that some Van Eeghen sons married capable women who at more than one point in the family's history, had to take over running the company and sustain it in extremely challenging times. In 1697 Jacob died and his 25-year old son Balthasar took over in the midst of Amsterdam's Golden Age, but just seven years later Balthasar's wife Suzanne Block was widowed and left to run the company, and raise two young sons, alone. Once again the firm prospered for nearly four decades and by 1736 Block's sons, Christiaen and Jacob, had succeeded their mother in joint directorship of the family business. The brothers demonstrated a knack for entrepreneurial business and were quick to move from shipping syndicates towards fuller ownership, particularly with West Indian vessels that brought cargoes of tobacco, cocoa and animal hides to Amsterdam. Van Eeghen began using 'bottomry' contracts, whereby the company would receive a sum equivalent to the value of a ship and its cargo as a loan, and would keep it if the ship sunk but pay it back with interest if it arrived in Amsterdam safely. Christiaen and Jacob soon found themselves acting as administrators for these various arrangements. Some years later, Christiaen's son Jan succeeded him and carried on the pioneering spirit of the previous generations, increasing full ownership. Van Eeghen became one of the major underwriters on the Amsterdam Exchange under Jan's leadership, who died in 1760 leaving his 31-year old wife Cornelia de Clerq to sustain the business while bringing up four children. While a period of civil unrest under the French Revolution raged through Amsterdam, de Clerq guided the firm through two credit crises at the Exchange in a single decade. De Clerq was careful to preserve the business but, true to the Van Eeghen family style, was not averse to taking the high road. She even ordered a frigate to be built and part owned by the firm at the height of the first crunch. Meanwhile the VOC fell into bankruptcy and Van Eeghen moved quickly to fill its role. In 1778 Cornelia's sons Pieter and Christiaen, then partners in a firm called Julion & Rullfs, bought their associates out and joined forces with Cornelia to form new the entity, Pieter & Christiaen van Eeghen.

At the end of the century the shipping industry was blighted by war, and the brothers wasted no time in offloading most of their investment in it. Identifying a need from their peers for bulk storage, the Van Eeghens set themselves up to provide this much less risky service. This part of the Van Eeghen's history echoes the companies' current stance. As a result of the US raising their domestic tariffs on imported steel to protect its own steel industry some months ago, the European Union plans to take retaliatory measures on their own tariffs, according to Willem, and these blacklisted several products Van Eeghen buys from the US. The company has been at pains to protect its customer care philosophy from the potential damage this could do. "The new EU tariffs would really hit us if they were brought into action," the director says. "In order not to endanger deliveries to our customers we have been importing well ahead of schedule and calculating the needs of our customers so they won't be disrupted by any measures taken. This is costly for us but shows consistency and continuity towards our customers."

Investing in the New World
As a member of a trader coalition named the 'Club of Six', the Van Eeghen brothers were among the first people to buy American bond issues at the end of the 18th century, offered for resale to the Dutch public. To manage their increasing financial concerns they hired the family's first outside executive, Henrik Sye, in 1792. The Van Eeghens bought shares in American banks and developers, as well as American real estate that they were bound by the US government to develop. The Club would then sell the land on to the Dutch public. As a result, the Van Eeghens set up the Holland Land Company in 1795. The business was short-lived as few shares were sold, and the brothers eventually closed it in 1858 – albeit with a small profit. The financial side of Van Eeghen's businesses, however, propped it up against yet more war at the end of the 18th century, as trade deteriorated to a trickle. Christiaen passed away in 1798, and some 40 years later Pieter left Hendrik Sye to lead the business with his sons Abraham, Jan and Pieter II, forming Van Eeghen & Co. The firm moved to take further advantage of the now burgeoning American shipping business, as European trade was crippled under sanctions imposed by Napoleon.

The change to being a player in Amsterdam's financial markets allowed the brothers to fund a revival of trade with the East. Van Eeghen & Co set up the Netherlands Trading Company and began exporting copper sheets and nails for sale in Indonesia, importing Java rice back from their partners B Kopersmit & Co in the port of Batavia. Later Kopersmit employed a former Van Eeghen trainee, B Heldring, who reported to his former bosses the opportunities for cotton trade there. In 1860 the firm, then managed by Pieter II, his son Pieter Christiaan and nephew Jan III, invested in one of the earliest power looms for a Dutch factory to make textiles from cotton grown in Europe, for export to Indonesia. Frustrated that they could not locate efficient Dutch ships, they began building their own fleet, ending up with seven ships in 1869. No sooner did this venture look set to run, than Amsterdam's first railway station opened in 1889. Van Eeghen & Co had to admit defeat, selling off all but two of their ships (the remaining two were lost at sea), and scaling down their finance and insurance role for the industry to a minimum – perhaps only maintaining it because it was Pieter Christiaan's favourite pastime up until the end of his reign in that year.

The 1900s saw unprecedented technological developments including telegraphic communications and typewriters, of which Van Eeghen's office was one of the first to operate. With the pace of business quickening, the Van Eeghens observed that their role as a merchant house was out of fashion, and shipments direct from producers to foreign clients were the new black. The brothers realised that they would have to seek out new lines and exploit those accordingly, if they were to provide a useful service to their current client base. The brothers decided to work with product refinement and stock delivery of niche requirements – coffee, tea, rubber, quinine and palmoil – and subsequently invested in their own plantations for these products, as well as opening up credit lines for their larger customers. Meanwhile back in Amsterdam, the firm's financial business arm had grown into a stand-alone business, involving 60 managed funds and share broking on the Amsterdam Exchange from 1914 when they were awarded 'merchant house and bankers' status.

By World War II, the Van Eeghens noted once again that niche markets, this time high-value tobacco, hides and rubber, would provide a more stable income to carry them through worldwide crises. This would have been another smart move had it not been for the onset of the Depression in 1929. Despite all their efforts the house were left with only one option – they were condemned to a 'whale's dive reaction', a contraction of blood vessels in order to preserve energy where it counts most, ie the brains and the heart. After some 20 years of global financial ruin which would have killed off scores of other family run businesses – or forced them to sell off – the Van Eeghens wasted no time rediversifying and investing in more niche ventures. In 1949 an import-export office was set up in Tanzania to buy industrial products like building equipment, fertilisers and foodstuffs from East Africa. This venture proved so successful that it attracted the attention of the local government, who later bought 100% of the shares. A sugar cane plantation and factory, Kilombero Sugar Company, co-financed with the World Bank as well as other Dutch and American financiers, was founded. As the firm moved towards the latter end of the 20th century it noted another emerging trend, this time for Chinese and Indonesian cuisine, and took to exporting the raw materials required for this. The family then noticed a trend for convenience foods and became one of the earliest innovators in this field. As for the financial arm, new laws prohibiting the combination of merchant and banking activities forced Van Eeghen to sell these operations. But thanks to the family's work in its core business, ie niche foodstuffs from niche parts of the world, it made little long-term damage. The arm survives today as equity bank Oyens & Van Eeghen (no ties other than the use of the name remain).

Give and take
The Van Eeghen family has found a way to use its international power not only for its own ends, but for the development of colonies and economies from which it procured much of its materials. Throughout the 1980s Amsterdam-based Central Buyers BV and Winchester, UK based Central Procurement Ltd worked with the World Bank, and many third world countries and their governments to finance development projects. These included agriculture, livestock, fishery, irrigation, education and power supply provisions, and many members of the Van Eeghen family were actively engaged in developing these ventures – even to the point of digging the irrigation troughs themselves. "As a family we spent a long time together in East Africa (setting up the sugar cane business), and were in frequent co-operation with the World Bank, United Nations and national government organisations. We carried out a lot of pre-financing and procurement for para-statal projects," Willem recalls with fondness.

"Sometimes I used to hitchhike by private plane and find myself in the Horn of Africa at a fishing project. It was fun and good work. We worked to set up pumps, generators, satellite imagery to locate water and earth moving equipment to build roads. I enjoyed the time I spent there."

Although these projects are no longer active within Van Eeghen, the company still makes a sizeable contribution to the world through donations, and is still involved in international economic and trade affairs. Willem's father set up a family trust within Van Eeghen's holding company where the majority of the shares in the firm are held in 'dead hands' – a way to eliminate the issue of succession of share ownership. The holding company's board of directors and all family members meet annually to discuss what charities they want to direct funds to over the coming 12 months. Beneficiaries for 2003 include Christian relief organisation World Vision, Foundation De Burght for Human Rights and Minority Groups, Foundation Sister Madeleine (fighting poverty and unemployment in India), Institute for the Blind in Nepal and Ronald McDonald Hospital Family Housing. Somewhat unusually the trust also supported a foundation to celebrate 400 years of the Dutch East India Company, started in 2002. The seriousness of the family's commitment to its ideals is evident; previously the trust was used to help draw up new constitutions for a Baltic state during the separation process from the former Soviet Union, and was also involved in negotiations leading to the release of dissidents from the Union. Currently it is in talks regarding third-party intervention in the Palestine-Israeli conflict with representatives from both sides, and Willem's father at the helm.

Being the 14th generation leader of one's family business and its future must be a uniquely burdensome responsibility. What has Willem taken from his family's past that helps him achieve success and continuity? "One thing that follows through the whole family line is the care to create adequate reserves in the company," Willem explains. "You have that bit of fat on your back, if you should ever fall in the canal! That way you can survive through the hard times as well. We've had a sense of continuity going through all the generations and I think it is inherent in our family that you never expose yourself to the full. You want to be here tomorrow."

The balance of risk taking and protecting the family's interests seems particularly fine-tuned in the Van Eeghen's case. The reinvestment in shipping throughout wars and trade sanctions could have been viewed as foolhardy by more conservative family business leaders. It is clear that they have always made provisions for themselves to shelter from tough times and emerge with a viable business. What is Willem's attitude to risk?

"Our markets involve risk, but part of our continuity is to take some risk, so long as you spread those risks and manage to take the right ones. In the early days, for instance, we traded just linen, but soon afterwards the business expanded to salt, herring, wine, spice and business in the Baltic, the UK, France, Italy. The product range has continuously been diversified. I believe although we are niche players, the other side of that coin is that we don't specialise too much." Willem adds that flexibility is crucial. "Flexibility has made us agile and able to change our operations, spreading our risks in more than one market."

Succession issues
Willem's position is made even more challenging by the fact that for the past 10 years he has been the only family member active in the firm. Two brothers take turns to sit on the board of the operating company – one, Henri, is CEO of publishing firm Mercurius – but neither work for the business. One of Willem's nephews recently joined the company's Montreal office to train over the next five years. Sat in the drawing room of the HQ, surrounded by grandiose oil paintings of his forefathers keeping watch, Willem reveals that he is more concerned about the future of the firm as a family controlled entity after him than being a lone ranger. "In the beginning, I didn't care too much about it. Later on you begin to realise that it's not in the company's interest – I could be run down by a tram or something! I think it's good to have more than one member of the family leading the firm." Although succession planning has not taken hold at Van Eeghen yet, Willem shows his quiet confidence once again. "I'm sure someone would jump in. There are a number of family members with knowledge of the business. Moreover, there is very competent management here who could carry the business on in the case of a calamity." Willem does reveal a concern about the shareholding arrangements and their impact on the future leadership. "The potentially negative side to the trust carrying the majority of the shares is that it might create disinterest among the other shareholders and other family members. This will have to be addressed in the future," he concludes.

Neither of Willem's two sons plan to work for the firm at the moment: one has just finished his studies and another works in the treasury department of family run Lombard Odier Bank. Despite that, this seems to bode well for the future if one considers Willem's criteria for family members looking to join the business. As he himself had plenty of work experience before he joined at 33 years of age – with electronics firm Phillips, fragrance company Quest and dairy manufacturer Nestle – Willem feels this is the way forward for prospective successors. "It is a rule with our company that any qualifiable family member build up a 5-year track record with another company in order to gain experience, self esteem, and to see a bit more of the world," the director enthuses, "otherwise, by the time you're 30, you'll hit a second or third puberty and you'll start thinking the world is greener than it actually is!" This sounds logical, but surely Willem's forefathers would not have been so lenient. After all, there is the risk in setting a bird from its cage that it may simply just fly away forever. "There is the risk you may never return to the company for reasons of your own. In this respect, you have to maintain ties with your children and others in the family, especially with those you feel have potential."

Perhaps 2003 is the first time in Van Eeghen's three and a half centuries that it has had the chance to take stock and assess just how monumentally far it has come. Willem's response to this is typically modest. "In my opinion, it is important to understand that you only happen to be a link in the chain, working with assets and goodwill other generations have earned before you." However coy the Van Eeghens are about their place in the history books, readers will note: they remain the only family in Holland's history with a revered place in the hall of Henokiens.

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