Sofidel: the tissue giant

Sofidel is now a multinational company which has retained its responsiveness, flexibility, intuition and desire to innovate and is eyeing new records.

Lucia Maffei

An industrial group with years of established experience, led by two families (Lazzareschi and Stefani) who devote their lives to the group and lead from within; a wealth of experience on the part of employees; a level of immediacy and a decision-making capacity that are unusual in a multinational company: these are the characteristics which set Sofidel apart from other leading tissue groups in Europe.

Sofidel is quick to react, which gives the impression that other groups are “forced” to attempt to keep up with it, not only in terms of quantity, but above all in product innovation, quality and the constantly changing characteristics which meet the needs of consumers and the market so well.

Today, Sofidel is one of the main European manufacturers and converters of tissue. The giant posted consolidated turnover of 530m euros in 2003 and has more than 1760 employees in seven paper mills. The mills contain 11 paper machines, of which four are 5.40m wide. These produce a huge range of products thanks to over 55 converting lines located in various European countries. It is the second-largest tissue producer in Italy with 253,000 tons a year, and the Regina brand occupies the second spot in the Italian toilet paper, kitchen towel and paper napkin sector; in particular, Regina leads the market among Italian toilet rolls.

Angelo Del Carlo, head of the Sofidel group and a right-hand-man of the Lazzareschi and Stefani families since the start, talks about the secrets, the history and the future of the company.

WHAT IS SOFIDEL TODAY AND WHAT FUNCTIONS AND SERVICES DOES IT PROVIDE TO THE UNITS? Sofidel was in fact created in 1988 as a service provider to support the other companies. In December 2001 it became the group's holding company and now owns all the shares in its subsidiaries. This allows it to provide better transparency to the financial world and the market in general.


Sofidel is responsible for training, co-ordinating logistics and transport (which are managed centrally for the whole group), consultancy, financial advice, investment controls and representation of the group as an economic entity on the financial markets. In the human resources sector, a particular feature of our companies is the career development of staff internally, with only negligible proportion of our executives being recruited from outside. There are strong links between the companies, thanks to a series of people who play a cross-company role and thus form a sort of internal consultancy network to support the strong growth and increase in the number of units over the last ten years. All these people form part of Sofidel and are the first port of call for all the group's companies, each person for their own sector. Personally, I feel that creating a sense of belonging to the group is an integral part of the training programme for our employees. This is achieved by teaching them about the group's history, the large and small “everyday” details which have made us the fifth-largest group in Europe today.

YOU HAVE BEEN PRESIDENT OF THE ITALIAN TISSUE PRODUCERS’ ASSOCIATION FOR TWO YEARS NOW. COULD YOU GIVE US YOUR IMPRESSIONS OF THE FUTURE PROSPECTS FOR THE SECTOR? Production in Italy during 2003 remained more or less unchanged, only one 2.7 m paper machine entered production, nor do we expect major investments in 2004. On the other hand, the new technological investments which Italian companies are making abroad, due to the need to cut significant costs such as transport, have led to a kind of over-production on the Italian market. Obviously this over-production cannot be entirely avoided or absorbed within the Italian market, which is recording growth in annual consumption of between 2% and 5% depending on the product.

WHAT IS THE OUTLOOK FOR ITALIAN PRODUCERS, THEN? There are two main fronts. Italy is the largest European tissue exporter, with more than 50% of production, and the start up of Italian plants abroad will inevitably lead to even greater efforts to obtain new orders, especially in the emerging markets, and particularly those in Eastern and Southern Europe. Per capita consumer spending in these countries is very low, however, and quality is unfortunately also very poor, in contrast to the cellulose products that the Italian producers have for many years been used to offering. On the Italian front, everyone will be seeking to attract new consumers, and I would like to think that that will happen on the back of innovations and quality products, rather than through a fight for a new market share solely based on price, senseless promotional activities and product deterioration.

CELLULOSE IS A COMMODITY THAT IS DEPENDENT ON A MARKET WITH MANY VARIABLES: HOW DOES THIS AFFECT PRICES, PRODUCTS AND STRATEGIES IN THE MEDIUM TERM? Cellulose has gone through a series of ups and downs over the last two years: in the first part of the year prices rocket, subsequently falling back in the second half. The cause of this phenomenon is, however, most likely to be found upstream of the paper mill’s production process, perhaps in internal problems of cellulose production companies, and in the economies of the major countries using this commodity. In the early months of 2004, for the third successive year we have seen this rising price trend. Our tissue sector tends to show very positive trends in the first months of the year, but accounts for only 5% of the paper market as a whole and therefore cannot possibly be responsible for boosting the price of the raw material.

IN LIGHT OF THE MARKET TRENDS AND PERFORMANCE FORECASTS, WHAT TYPE OF INVESTMENTS COULD BE MADE IN THE NEAR FUTURE? Well, in light of the current market trend, I frankly believe that right now, when everyone is working with the same raw material and everyone has efficient paper machines, the only real innovation or distinguishing factor will be how paper is converted. There is an influx of technological innovations that leads to invest in the converting field, and at rather substantial costs. Today - in contrast with the situation some years ago - it is much more expensive to invest in technology and innovation for a new converting plant than to found a traditional paper mill. In short, for an equal amount of product, today more is invested in converting than in paper manufacturing!

INTERTISSUE IN CARDIFF IS ONE OF THE MOST RECENT FOREIGN OFFSHOOTS OF THE SOFIDEL GROUP. HOW DOES IT DEFINE ITSELF AND WHAT GOALS HAVE BEEN SET FOR THIS NEW UK COMPANY? This is currently just a converting plant based in rented premises in Cardiff, Wales, but it is planning to expand to become an integrated production and converting business with a traditional 5.40m paper machine which is specially adapted for producing particularly soft, high-bulk tissue, as required by the UK market. The investment will follow roughly the same lines as Delipapier, with special attention being paid to certain products for the UK market, such as paper handkerchiefs in boxes of particular sizes.

WILL YOU PUT ONE OF YOUR OWN BRANDS ON THE UK MARKET, OR PRODUCE TISSUE FOR THIRD PARTIES? Initially, the focus will be on private label production, as in all the countries in which we operate: we enter the market by producing Retail Brand items, and market our own brands only at a later stage where conditions allow.

WHAT TOOLS AND STRATEGIES HAVE YOU USED TO APPROACH THE MARKETS IN THE EAST? When we moved into Poland, we did not use only our sales organisation as we had traditionally done in France, Germany, Belgium, the Netherlands and other European countries.

We decided instead to purchase a small local converting plant, which already sold its own products on the Polish market. This allowed us to gain a better understanding of the market dynamics.

Unfortunately, these products did not meet the quality standards of those we are accustomed to producing, with the exception of facial tissue and table napkins, which were already produced using imported paper. The kitchen roll and toilet paper, were extremely poor quality products manufactured from crêpe paper and sometimes actually packaged by hand!

WHAT WERE THE SIGNS AND ECONOMIC INDICATORS THAT LED YOU TO CHOOSE POLAND? We certainly didn’t go into Poland to continue to manufacture according to their previous standards. We were very aware that the Polish market was undergoing change. Big foreign distributors were also entering the country and there was a need for companies that could match them in terms of quality, quantity, and service. For these reasons we are now present with both private label products and our own Regina brand throughout the Polish market.

DO YOU SELL THE SOFF BRAND AS WELL AS THE REGINA BRAND ON THIS MARKET? Soff Cartacamomilla is an Italian brand that we were already marketing in various European countries as our “small” brand. Soff Cartacamomilla was a second product line in Italy for a long time. It used two-ply high-grammage embossed paper. In 2002 we “upgraded” it, changing the brand name from Soff to Regina Cartacamomilla, and launching a new segment in Italy, that of four-ply product with a high number of sheets (250). This four-ply specially embossed product gives the customer a great sense of security, as well as emphasising the health-related aspect, thanks to the presence of camomile, through links with the concepts of well-being and body care. The same process is now taking place in all the countries where Soff Cartacamomilla is marketed, including Poland.

THE REGINA BRAND IN ITALY NOW HAS THE ROTOLONI, ASCIUGONI AND CARTACAMOMILLA VERSIONS. WHAT IS THE THEME THAT LINKS THESE PRODUCTS AND WHAT ARE THE BROAD MARKETING TECHNIQUES? On the Italian market, the Regina Cartacamomilla brand stands for length/quantity. Today it is taken for granted that tissue products must be soft, strong and absorbent, and the additional guarantee we offer to consumers is that our products last longer.

Rotoloni Regina have 500 sheets per roll, while Regina Cartacamomilla has 250 sheets but is four-ply. In fact, the amount of paper in each roll is almost identical. In addition, Regina Cartacamomilla gives that extra sense of security.

The Asciugoni Regina kitchen towels, with 100 sheets per roll, are the longest rolls present on the Italian market.

However, Regina is not only toilet paper and kitchen towels: the range also includes handkerchiefs and napkins. The Disney characters which decorate not just the boxes and pocket-size packs but also the individual handkerchief are a particularly appealing feature, especially to young consumers.

The “Aromaterapia” line is repeating the success of Cartacamomilla. In napkins, we offer an extensive range in terms of size, decoration, colour and embossing, and again occupy second place in this segment of the Italian market.

IN AN INTERVIEW, EMI STEFANI SPOKE OF THE IMPORTANCE OF WORKING TOGETHER WITH LEADING TECHNOLOGY COMPANIES ON RESEARCH AND INTEGRATED DEVELOPMENT OF NEW PRODUCTS, AS WELL AS ON IMPROVING PRODUCTION CAPACITY. WHAT PART DOES THIS PHILOSOPHY PLAY IN YOUR SUCCESS? Our development sector consists of a group of people who have grown with the group, a team who has been involved in the world of tissue for more than twenty-five years and who has acquired knowledge and experience of all the related trends and phenomena. Our technology research and the development of converting innovations are based on one of our greatest strengths, a unique and distinctive trait which provides precious added value: the long-standing service and loyalty of the people who work with us. Thanks to their twenty-five years of experience, we have a broad knowledge of the markets, trends and consumer preferences which make it possible to identify the innovations that will bring about the best results. This was exactly what led us to create a formidable synergy with the R&D Division of Fabio Perini S.p.A. We have been working with it for a long time to ensure that state-of-the-art technological solutions are available for developing products which will tally with future trends and consumer needs in the various European markets. Our history is very similar to that of Fabio Perini S.p.A. and indeed you could say that we grew up together.

TO ALL INTENTS AND PURPOSES, YOU ARE A MULTINATIONAL COMPANY, BUT THE “FAMILY COMPANY” ASPECT STILL BLENDS PERFECTLY WITH THE INTERNATIONAL ASPECT. WHAT IS YOUR SECRET? The secret probably lies in the daily operational presence of representatives of the owners within the group and within the individual units. I am obviously referring to Luigi Lazzareschi and the Cavaliere Emi Stefani, who have always been present, involved and available to their employees on a day-to-day basis. This provides a great advantage in terms of speed and flexibility: some decisions are in fact taken very quickly or virtually immediately. It is not necessary to take part in lengthy training and discussion courses in order to develop and realise a new idea, and this ensures swift reactions from the group, which, over time, has attained the dimensions of a multinational company.

Emi Stefani has always said that we must retain the character of a “light assault squad” as this is the only way of avoiding the risk of becoming “too” multinational.

Multinational companies are often compared to elephants, and it is difficult to be a multinational “hare”: it is almost a contradiction in terms. However, as long as these conditions exist, and as long as we can maintain the delicate balance between an ever-increasing size and continued operational flexibility, we can continue to grow and thus succeed in being “like a hare”.

It is undoubtedly becoming ever more difficult, particularly considering that we have expanded at a rate of one company every two years, but I have great faith in the young people within the company, and I am personally convinced that they are picking up our continuous, tireless “desire to win the race”. •

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