Alberto Cappellini: Kimberly-Clark’s new mission

The company invented the toilet roll, feminine pads, kitchen towels. And it has just introduced a revolutionary anti-virus facial tissue. We have met with the company’s number one for Italy, who revealed to us the group’s new goals.

Maria Cristina Alfieri – TRADE BUSINESS

Many are the bright ideas that Alberto Cappellini, number one of the Italian branch of Kimberly-Clark and new European President of the Family Care Division, has had in the course of his career. But when asked which was the most genial, he answers with a slight smile on his face that it was the invention of the space-saving roll. “I was in America, when I happened to see a military truck loading toilet rolls for the soldiers. In order to load as many packages as possible, they would press one against the other. So it dawned on me: why not propose consumers rolls that have already been “pressed”? These would allow substantial space savings and also advantages in transport and warehousing.” And so the space-saver was launched, consumers have appreciated it and since its debut in 1993, the product has conquered a 10% market share. “The success of the product also proved that you don’t necessarily need millions of dollars to make an innovation. Sometimes all you need is a good idea that answers the needs of consumers.”

And speaking of good ideas, Kimberly-Clark still proudly remembers the inventions the company has made that have changed the world of consumer products. “We have invented five of the categories we are presently involved in: toilet paper in roll form in 1890, kitchen towels in 1907, boxed facial tissue in 1924, feminine pads in 1920, disposable training pants for toddlers in 1989. And, of course, there’s no stopping us.”

HOW MUCH ARE YOU INVESTING IN RESEARCH AND WHAT ARE THE PRODUCT NOVELTIES YOU ARE WORKING ON TODAY? We invest 2% of our global sales turnover, 300 million dollars worldwide. The mission we have set for ourselves for the upcoming years is to contribute to the improvement of people’s health, hygiene and well-being by focussing on totally innovative products. We do not want to grow by dint of acquisitions, but rather through the development of categories where we are already operating and the creation of new market segments.

An example? In America we have just launched a facial tissue designed to kill viruses that cause colds and the flu: it is enjoying great success. A small revolution in the facial tissue segment.

AND IN ITALY? For the “little ones”, we have just launched the disposable training pant, an intermediate product between the classical baby diaper and the training pants which, as I mentioned before, we invented ourselves. Then we introduced a new Scottex paper made using a revolutionary technology. Instead of extracting water through the use of pressure, we make it evaporate, allowing us to obtain a uniquely soft product. But innovation for us also means intervening on the pack with graphics, such as those tied to particular moments of the year like Christmas, for example.

WHAT ECONOMIC RESULTS HAVE YOU ATTAINED IN ITALY IN 2004? We have closed the year with a 500 million euro turnover, 350 in the tissue segment and 150 in the personal care segment, consolidating market shares and turnover with respect to the previous year.

In personal care, we have a share of 24%, on baby diapers we have reached about a 20% share and are still growing. This is a European context where our reference markets are undergoing a slight decline in value and are growing only in volume.

WHAT ARE YOUR OBJECTIVES FOR THE FUTURE? Our mission on a global level is to be first or second in every market in which we operate, through innovation, through focussing on new technologies and working on human resources. We have just established an ambitious work plan on company culture and leadership that will see the implementation of a very special training program in every branch worldwide. Periodically, every department head is assessed by his/her colleagues, by the members of his/her office and direct supervisors. Their comments, together with a self-assessment form, are examined by an assessment team who will then suggest any modification to be brought about in the way the manager relates to others. From now on, this process – which at first only concerned first-level management – will be applied also to the second level.

CAN THIS PROCESS LEAD TO THE REPLACEMENT OF PERSONS WHO SHOULD BE FOUND INADEQUATE FOR LEADERSHIP? Theoretically, yes. This process must be made operational, even though its main objective is not the elimination of people. Rather, it aims at making them grow, in the best way possible.

HOW MUCH HAVE YOU INVESTED IN THIS HUMAN RESOURCES GROWTH PLAN? Several million dollars on a global level.

LET’S GO BACK TO THE MARKETS IN WHICH YOU OPERATE: WHAT IS YOUR OPINION OF THE WORLD OF RETAILING IN ITALY? From the point of view of dialogue and partnership with the industry, I would say Italian retailing is positioned rather well. The problem is that there is still a lot of work to do on category management: in my opinion, we should arrive to the point where it is the managers who control also the category’s economic account, without stopping at the margins of first and second level. When we compare ourselves to managers abroad who are also working with the category’s economic account, we find that they have a wider vision that goes beyond the margins and allows higher-level collaboration with producers.

There is also the problem of the listing fee, which no longer exists abroad, and it’s funny that we should use an English word to define a totally Italian phenomenon. Here, too, problems created by the listing fee could be eliminated by re-thinking the category process in a wider and more articulated way.

WHAT IS YOUR PRICE AND SPECIAL OFFER POLICY? I feel that, in the long run, a strong special offer policy makes the offers lose their efficacy. The result is that daily price cuts create loyalty to the offers themselves, and not to the brands. Of course, it is not easy to operate in a hyperactive market which is also affected by a decrease in consumption, but we have to avoid the boomerang effects that an excessively aggressive price policy could generate.

WHAT IS YOUR OPINION ON THE GOVERNMENT’S PRICE-BLOCKING POLICY? My opinion is that we should not block prices but rather develop consumption. Packaged consumption articles have never been an inflation driver. The problem is that the price of consumption items is blocked but all the real generators of inflation are not under control. In Italy, the cost of electricity has increased by 41% since the year 2000, twice as much as in France, 62% more than in England, and 57% more than in Poland. The government asks us to contain prices and then increases electricity costs – which is the second most important cost for a paper mill after cellulose – by 41%. The famous “protected consumption items” such as transport, energy, gas are not kept in check at all, advertising costs increase by 5.8%, and the Italian fiscal system is the most costly in Europe. In this scenario, it is evident that the price block is a palliative that does not cure the malady at the source.

YOU HAVE CITED THE INCREASE IN ADVERTISING COSTS: HOW MUCH DO YOU INVEST IN COMMUNICATION? 3% of our turnover. We invest above all in TV, but we also carry out other instore activities and explore alternative channels. Now, for example, we are experimenting the sale of toilet rolls in bookstores: we discovered that those who purchase our Scottonelle rolls belong to the upper socio-economic segment, so we launched a product promotion in bookstores, together with a CD of relaxing music. We are also testing other channels such as cinemas, stadiums, ski resorts. To demonstrate once again that we can be truly innovative. •

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