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£9.3m new plant to almost double output

Article - November 18, 2014

Mexican detergent producer Sasil plans to increase production by 120,000 tonnes, doubling its powdered detergent output and boosting its export capacity

Supermarket shelves south of the border groan under the weight of products that boast of being “100 per cent Mexican”, but not all of them can claim to be “100 per cent successful”. That is emphatically not the case with Detergentes y Jabones Sasil, the 100 per cent Mexican cleaning products and detergent maker, which is set to cap years of double-digit growth by increasing its manufacturing capacity and foreign market penetration.

With a line of household and industrial strength powdered, liquid and bar format soaps and detergents, plus a range of fabric softeners and multi-purpose household cleaning products, Sasil is approaching the quarter-century anniversary of its founding with a plan for doubling its share of the market, establishing brand presence in new countries and implementing further upgrades to technology.    

Asked to what exactly it was that Sasil has got right, the company’s Director General, Bruno Aviña Núñez, acknowledges that, to a large extent, Sasil owes the £745 million annual turnover reflected on its balance sheet to the fact that Mexico is at its most favourable macroeconomic moment in years.

“The government has given everyone, not just Mexican business leaders but foreign ones as well, the confidence to keep investing,” says Mr Aviña, through its sweeping reforms of the energy sector and  the tax code. “Those are the cutting edge of reforms,” he says confidently.   

Another positive factor is that families’ need to clean the house and wash their clothes is a constant, a demand vector relatively unaffected by bumps in the economic road. And unlike its multinational competition, Sasil specialises in a single product category, so the revenue it generates does not get spread around the balance sheet to palliate possible losses or imbalances in other areas and can be reinvested in the core business.

In the current climate of  promising fundamentals, Sasil is putting £9.3 million into a new plant for powdered detergent that will nearly double its current annual output of 135 million tonnes in that format. Much of the new production will be destined for export to the markets Sasil  has consoldiated in Central and South America.

Foreign countries take 25-30 per cent of Sasil’s output, consolidating a base of loyal customers in countries such as Costa Rica and Peru. But not everyone realises that Sasil’s brands are also on sale in the United States.  

“Latino consumers are very receptive to Sasil products,” says Mr Aviña. “It’s what we call the nostalgia niche, where people who have emigrated from Mexico choose our products over the competition because of where they’re coming from, because it reminds them of home. Of course, they are not about to forego considerations of quality and value for the money. Maybe they aren’t better than the other products available, but our fellow Mexicans oftentimes opt for ours because on an emotional level, it reminds them of who they are.”   

Getting shelf exposure in the big US discount houses for brands like Arcoiris, Paloma and Suavisol was a challenge made easier when Mexican retail chains expanded into the United States and the Sasil brands went with them, thereby gaining access to a market with an estimated 30 million Latino consumers. “Being associated with these chains adds to our prestige at home and has served as our ticket of entry into other countries. We rely on SAP software that is fully compatible with the systems used by all the larger companies. We are ISO-certified down the line and have plenty of hands-on experience as an exporter. All of these things open doors for us,” Mr Aviña notes.

Clearly there could be no more opportune time for Sasil to undertake a major expansion programme. By the end of the year, the new powdered detergent facility in the central state of Guanajuato should be operational: liquid detergents and cleaners are already being produced in that state. Guanajuato was chosen because of its strategic proximity to Sasil’s most important markets in Central and South America, as well as serving a bridge to the increasingly significant segment it has carved for itself in the United States and Canada.     

Another plant located on the outskirts of the Mexican capital produces bar laundry soap, an important product for Mexican families that do not have access to washing machines. According to Mr Aviña, Sasil has always aimed its products at working-class/borderline middle-class consumers and small business concerns that have been mostly neglected by multinationals like Henkel, Colgate and Procter & Gamble. “We put a lot of effort into reaching out to them and have been very well received. Of course, you run into a good many difficulties, but at the same time it gives you a lot of room to grow.”

Sasil’s original production facility and corporate headquaters are in the state of Nuevo León, where its precursor company, Jabones Guzmán, was founded in 1960. After the company was taken over by the Mexican government and in 1990, returned to private hands – Mr Aviña’s among them – it stayed and grew, prospered and created jobs. The way he sees it, this is what is meant by “creating wealth” – jobs, not just money.   

“There’s a lot going on in Nuevo León, and as far as I’m concerned it is the very model of what a state should be,” Mr Aviña says, and points to the fact that US President Barack Obama and his Chinese counterpart, Xi Jinping, have toured Nuevo León, in addition to repeat visits by Mexico’s reform-minded current president, Enrique Peña Nieto. “I believe that Nuevo León will continue to be a groundbreaker state, and a model for industrial development on the national level.

Cutting-edge technology and a comprehensive programme of pro-active  measures for the protection of the environment are an important component of Sasil’s short-term expansion plans. Much of the industrial infrastructure, including a state-of-the-art sulfination plant, are models of up-to-date automated technology.
“All of our products are bio-degradable,” says Mr Aviña. “Every last one of them.”

“We have been adhering strictly to a series of clear-cut rules regarding protection of the environment,” he adds. “All our factories have the most modern equipment available. We control our waste products and recycle them.”  

“You know what’s really incredible? Despite being a factory that produces tonnes and tonnes of  powder,  we do not pollute. We were allowed to build in urban or suburban areas close by communities that go about their business with no problems, because there is zero risk for them,” Sasil’s director general is proud to note.