Claudio Alfonsi, CEO of Fedrigoni Group, affirms that from the purchase of the historic Fabriano paper mill in 2002 to the latest acquisition of GPA (Gummed Papers of America) in 2015, the Fedrigoni Group is consolidating and expanding on its leading position in the high-end paper services worldwide.
The global paper industry experienced stable growth during the last five years and is expected to continue its growth momentum, reaching approx. $256 billion in 2017. Challenges are posed by the use of electronic media, more stringent environmental regulations, and price volatility of raw materials. What is your personal opinion on those trends that will be at the core of the future development of the paper industry?
Paper consumption will remain stable around the world except for Europe. In Europe paper sales have decreased by 1.3 million tons mainly because of the internet. In fact many companies working in this business in Europe have closed and trends show a similar tendency in Italy as well.
What is the position of Fedrigoni Group in the global market?
Although market trends are not particularly favorable, Fedrigoni Group’s performance in the paper industry is very positive. Fedrigoni Group’s revenues reached €977 million in 2015, up from €873 million in 2014. In Italy many printers have closed their businesses. We were able to anticipate the trend by pursuing a growth strategy based on national and international acquisitions. We started by buying Fabriano in 2002, which allowed us to acquire new product lines in paper for banknotes and holograms.
Then, we understood that the real growth opportunity came from across the ocean, not even Europe. In 2015, we made two crucial acquisitions in Brazil and USA with a total investment of €130 million. 67% of our revenues come from outside Italy, of which 29% come out of Europe. We have now 13 international subsidiaries in Europe, China, and Brazil, with an annual production capacity of 500,000 tons.
The secret of our success is that we are able to do things that our competitors are not able to deliver. We have enthusiastic managers who are not scared of working hard. We are leaders in the luxury packaging business. Furthermore, we are the world’s leader in the digital printing business. For this reason we have bought Gummed Papers of America (GPA) in Illinois. We are leaders also in the production of luxury labels with the acquisition of Manter in Barcelona that specializes in adhesive and anti-adhesive films and paper. The most famous champagne producers in France are our clients.
What’s the role of the American market in Fedrigoni’s future growth strategy?
Fedrigoni is growing consistently all around the world. We are looking at the American market as a concrete chance of growth, as their GDP grows steadily and I think Obama has done an excellent job. We are gaining a remarkable share of the wine packaging market in California with our production with Manter. When we gain a market share big enough to invest even more considerably, we aim at build our own factory on site in California, near Los Angeles.
The American market represents a great opportunity for Italian companies. We’ve just seen it with Fiat and the successful acquisition of Chrysler. However, I have to say that we are the Ferrari of our industry, thanks to our enthusiasm, determination and also the new technologies that we have discovered. For example, for the luxury labels, we developed a special technology that keeps the label fixed on the bottle of champagne even after you put it in the Champagne chiller.
We recognize the significant potential of the American market for Fedrigoni. Thanks to the acquisition of GPA, we have reinforced our sales network in the United States.
How would you describe your career path with Fedrigoni and the evolution of the company?
I started as technical director of the Varone Paper Mill. There I met the president, Alessandro Fedrigoni, who trusted my business skills that I had developed by working in four different paper mills. In a very short time, I was able to set things right and eventually I became the main technical director of the company.
Subsequently we acquired Arconvert, which was a good idea because we started the business of adhesive labels. In 1993, we acquired Manter, which turned out to be an amazing business opportunity. We built a new and completely automated production plant; a precious jewel that every company around the world working in this business envies us for having it.
Looking at our future perspective, thanks to our extremely valid and skilled managers, I do believe that by 2018 we will be able to reach a turnover of €1.2 billion. We are a very meritocratic company. We do believe that our most important asset is our human capital. So good technicians and managers have great opportunities to grow and be paid for their excellent work. And this of course reflects in our sales.
Fedrigoni is the only company in Italy that produces banknotes paper. Can you tell us more about this business segment?
This is another segment of this industry where we are leaders worldwide. When we acquired Fabriano, Banca d’Italia was our only customer with a business volume of approximately 700 tons per year. Now we have customers all over the world—India, China, Indonesia.
Moreover, with the acquisition of Arjo Wiggins and its Salto factory in Brazil, the only Latin American producer of banknotes and security papers, Fedrigoni rightly became the world’s leader in this segment.
Our leadership is not only about our figures but mainly because we are the specialists in what we do. We know how to invest our money and we benefit from our strategies. All the technological innovations that we use were designed and created within the company. Special products require special equipment. We design the project and we call the supplier. The secret is to avoid imitating others.
You’ve recently been awarded an honorary Master’s degree in Business Administration…
I was awarded this honorary degree in Urbino, close to my birthplace. It was a great honor to receive it and the main reason why they gave me this acknowledgment is because of the successful resetting of the Fabriano historic paper mil—which was about to be shut down—thanks to the investment strategy we pursued. Fabriano is part of the history of this industry. I lived few miles away from it. Its history is very important but at a certain point it was sold to an English firm.
In 1935 Mussolini decided to expropriate it because he believed that the firm in charge of producing banknotes for Banca d’Italia couldn’t be private. The paper factory was managed by the state until it was sold. We participated in the public bid and we made the highest offer. I knew this factory very well and I knew exactly what to do with it. We invested in innovative technology and reduced the workforce from 940 to 640. We shifted from a situation where the state needed to intervene to pay the firm’s debts to a situation where we actually pay taxes on the profits it produced.
How would you describe the contribution of Fedrigoni Group to the Made in Italy brand worldwide?
We are the example of Italian excellence. Italy is going through an important transitional period. We want to show the world that Italian entrepreneurs and businessmen are extremely capable and able to compete at global level.