TW: WEPA has been very active in acquiring mills around Europe. Can you explain
the strategy?
Krengel: The Krengel families see the independence of the family owned company
and its marketability as the most important aims. Some years ago we dealt intensively
with the future orientation of the company and with the help of complex analyses
and discussions with our managers we defined the WEPA strategy as "growing
instead of going". The steadily changing market and customer attitudes
build the background for our strategy. To remain competitive in this capital
intensive sector which sees increasing concentration of suppliers and buyers,
a company like ours, which is mainly producing private labels, must have an
economical dimension. This, we feel, is the only way in which we can accompany
the German trade expansion within Europe and serve, for example, the French
or Polish trading companies as well.
TW: How many production sites does WEPA have now? How has turnover grown
in recent years?
Krengel: WEPA now has 12 production facilities in Germany, Italy, France,
Poland and Spain. We produce about 600,000 tons/yr of toilet paper, kitchen
towels, handkerchiefs, facial tissue, serviettes, industrial rolls and towel
paper on 17 paper machines and 70 converting facilities. Thanks to the recent
purchase of the production plants of KartoGroup we will be able to increase
our turnover to more than €950 million, especially through the assured deliveries
to the recent Kartogroup customers. In comparison to the turnover of 2001 of
about €230 million, we have quadrupled our turnover.
TW: What was the driving force for the KartoGroup acquisition?
Krengel: KartoGroup's sites fit very well into our business. With the takeover
of the activities of Wepa Lucca we can direct the former Kartogroup sites in
Lucca and Casino, Italy; Lille, France (at first through a contract of lease);
and Leuna, Germany (at first through a manufacturing contract) under a uniform
WEPA management and increase our orientation towards Europe.
The new production facilities complement our existing WEPA sites in Arnsberg-Müschede,
Marsberg-Giershagen, Kriebethal/Sachsen, Mainz (all in Germany), Piechowice
(Poland), Ejea (GCWEPA, Spain) and Altopascio (WEPA Italy) with respect to
their geographical position, client structure and the production program in
an ideal way. As WEPA was mainly operating on the German, Scandinavian and
East European markets in former times and the KartoGroup was mostly on the
Italian, French, Spanish and Benelux markets, these companies harmonized very
well in terms of markets and organization. The takeover has taken us up to
the position as fifth largest supplier for hygienic paper in Europe.
TW: What about Spain? How is the Goma Camps JV working and are you happy
with the project? Is a new PM going to be built or is the market too crowded
now?
Krengel: The joint venture on the Spanish market is operating well. We have
had very good cooperation between our two family owned companies. However,
due to the takeover of KartoGroup, the PM project that was being considered
was delayed. We will take a joint decision at a later date.
TW: Regarding FPP in Poland, how are the mill and the market developing there?
Has it been a successful investment?
Krengel: The takeover of FPP in Poland was a successful step towards the
European orientation. From this production site we deliver to our Polish customers
such as for example Biedronka or Tesco with its Polish subsidiaries. Poland
belongs to the East European markets which will offer the largest opportunities
for growth. The paper usage per capita was here 6.2 kg/yr, compared to Germany
with 16.2 kg per habitant per year, so we see a high potential for development.
The Poland site also offers us the possibility to deliver to other East European
countries.
The WEPA group has especially developed itself further in the professional
or away-from-home sector within the last year. The Piechowice site is very
important for us in terms of products made of crêped paper as we are able to
produce high quality products made of crêped paper at a lower price level here.
TW: Is WEPA still entirely private label tissue? Is PL still growing as strong
as ever or has it leveled off?
Krengel: Today WEPA is the second largest private label manufacturer in Europe
and we have arranged our total strategy towards trademarks. Private labels
have reached a market share of over 80 % and thus brands represent a very small
factor. We can see further development potential for private labels as quality
has constantly improved over recent years and today trademarks are seen as
innovation drivers and not the brands themselves. Especially trademarks will
define the retailer's position and define their position in the market with
the help of quality in the private label sector. We can see a high development
potential especially in the West European countries.
TW: What are the biggest challenges for the future?
Krengel: The biggest challenge for us is to continue to advance our necessary
internationalization in a systematic manner, as private labels are steadily
becoming more and more important. The key is to be able to provide the necessary
aspects for private labels: quality, delivery service, innovation and cost
leadership.
Process engineering for efficiency and productivity increases are among the
most important innovation aspects which contribute to cost leadership. Product
innovations with respect to softness and strength, as well as absorbency for
kitchen rolls and toweling paper, are also important aspects.
TW: What about energy and environment issues?
Krengel: As the tissue sector is very energy-intensive, today all companies
are engaged in reducing energy consumption and in assuring the optimal purchasing
structure for energy supply contracts. We believe that it is very important
to get away from the big energy providers and create your own energy and steam
producing possibilities, such as for example our co-generation facility (for
generation of steam and electricity) in our plant in Marsberg-Giershagen.
The environment plays an important role in our company. Not only as we are
producing environmentally-friendly products - for example our recycled products
- but also through our overall process engineering. Therefore the environmental
aspect bears an important meaning and our production facilities are certified
according to DIN ISO 14001. We are highly geared to the ecolabel RAL as well
as to the European ecolabels.
TW: What are the most important quality issues for you and your customers
today?
Krengel: The market is becoming more and more difficult for many of our customers,
the German and European food retailers. The concentration and economic power
of the very biggest retailers continues to increase. At the same time the discounters
are still advancing. So it is important to provide our customers with high
quality and individual solutions, so they can distinguish themselves from the
competition. Retailer brands with a unique selling proposition (USP) will become
more important and we, as a private label specialist, can ideally meet the
market's requirements. WEPA's business is built on offering a customized concept
for the individual requirements of trade and consumers for features such as
perfumes, colours, imprinting, decorations and packing sizes.
TW: How do you think environmental issues such as carbon footprint will impact
tissue in the near future?
Krengel: We think that general rules need to be introduced for them. As many
aspects influence the appraisal, an objective system is urgently needed. We
also feel that this topic will be relevant in the future for influencing purchasing
decisions.
TW: Mr Krengel, thank you. TW
