Greater efforts to save margins, fearless investment in technological innovation and new products, e-commerce selling, increasing of stakeholder engagement processes, potential double digit growth in the US. Luigi Lazzareschi, chief executive of the Sofidel Group, looks ahead for TWM.
By Helen Morris, Tissue World magazine senior editor
TWM/1: How are the Italian and European economic conditions impacting your business and the tissue market generally in Italy?
“The slow economic recovery and a lack of consumer confidence, which is also related to political uncertainty, have impacted the Italian tissue market, although it still remains on the whole a steady growth market.
“In general terms, over the last years the big retailers have been affected by a decrease of consumption and currently the consumption trends have not yet stabilised. In this context, we have seen the further strengthening of the Italian private-label (PL) segment, whose products are increasingly building their position as “premium” brands. The growth of hard discounters and a much greater effort needed to save margins have been the other two major trends. The recent decrease in value of the Euro against the USD is also impacting our virgin pulp supplying as costs are getting higher.”
TWM/2: Are you still seeing much growth in the Italian tissue market? Which sectors in particular have potential to grow further and why?
“The Italian tissue market, like other European markets, is considered a mature market and over the years there has been a production overcapacity. Yet I think that there is still room for growth driven by product and technological innovation. I really believe that success comes with being willing to anticipate market conditions and being unafraid to diversify and invest in new products and services. Consumer needs are constantly changing and our company must lead these changes. This means that we have to work in order to create added-value for all our stakeholders along the entire process of value creation. In other words, we have to decommoditise the tissue paper products.”
TWM/3: What are the main opportunities for Sofidel over the next five years?
“In Europe, our current strategy is to focus on increasing production at our existing sites. Our facilities all have the potential to expand. We are making significant investments in cutting-edge technologies, that include NNT paper machines as well as the Constellation converting equipment and highlyautomated finished-product warehouses to allow us to deliver on this vision for organic growth.
“At the same time we are deeply committed to defining the products of the future in order to meet changing consumer demands as well as new standards in sustainability and hygiene. We are also investing in new forms of direct interaction with our end consumers. For example, in Italy we have launched an e-commerce platform, Sofidel Shop (www.sofidelshop.it), where our consumers can directly order their favourite products, take advantage of our subscription supply and have products delivered to their home.”
TWM/4: And the main challenges?
“Being capable to grow as an even more sustainable company which is able to focus on innovation and meet new people’s needs, as well as increasingly involving our stakeholder in engagement processes. With regards to this last point, we have been very satisfied with the Sofidel Suppliers Sustainability Award created to encourage and spread best practice and improvement activity in the area of environmental and social sustainability. In its first edition, the award has involved more than 300 of our global suppliers.”
TWM/5: How do plans for Sofidel’s European tissue business compare with your presence in America, are you looking to grow further here and also in the USA?
“The US market could generate significant growth for Sofidel over the next few years. This is because the PL sector is less well established than in Europe. I think of a single digit growth in Europe and of a double-digit growth in the US. As for Europe, in addition to the organic growth and the implementation of investments in state-of-the-art technologies, we aim also to create added-value for the retailers we work with and to strengthen the positioning of our brands. In particular, we are working to achieve a greater penetration of the Spanish – where we are about to launch the Regina brand – the Polish and the UK markets.”