Leading the way in hygienic disposables Ontex

LEADING THE

WAY IN HYGIENIC DISPOSABLES

Under its new leadership, Ontex is expanding its skills base, its geographical presence and its branded products business while continuing an ambitious programme to reduce its environmental impact. Peter Mercer talks to its new CEO.

IN January of this year Ontex, a European market leader in hygienic disposable products for baby, feminine and adult care, acquired a new CEO. Charles Bouaziz took over the leadership of the Belgium headquartered group from Michael Teacher, who had been CEO since 2006.

Welcoming the new CEO, Ontex Chairman, Adrian Bellamy, emphasised how important his role would be in continuing the successful track record of the business and the expansion into new geographies and new growth areas that had been achieved by Michael Teacher and CFO Chris Parratt over the past six years. “Charles Bouaziz’ focus will be to use his extensive experience in fast-moving consumer goods to continue strengthening the Group’s performance,” he said.

In fact, Mr Bouaziz has spent most of his career in the consumer goods industry, including five years in marketing with P&G and nearly 20 years at PepsiCo, where he was appointed as the president of PepsiCo Western Europe in 2008. He was subsequently CEO of Monoprix before joining French private equity company PAI in 2011.

Beginning as a family company in Zele, Belgium, Ontex has grown into a global operation with sales of more than €1.4 billion and around 5200 employees across the globe. It

currently operates 15 manufacturing facilities in 11 countries. Ontex has built up its position as a European market leader in hygienic disposables through a determined focus on retailer brands. Its strategically located manufacturing plants enable it to optimise logistics and deliver products to customers with maximum efficiency and timeliness. In recent years, Ontex has also grown its own brands, especially in emerging markets and in the healthcare sector. In fact, production now breaks down into a 60/40 ratio between retail and own brands.

The company’s Retail Division is primarily concerned with the development, production and sale of baby care, feminine care and adult incontinence products to retailers across Europe. Ontex also produces and sells its own branded products under names such as Helen Harper, Moltex and Babycharm. The Healthcare division similarly focuses on the development, production and sale of adult incontinence products to institutional customers in the healthcare market. The main Ontex brands here are Serenity, ID and Euron.

Ontex also has an important operation in Turkey which similarly produces and sells baby care, feminine care and adult incontinence products across Turkey and neighbouring markets. Here the main brands are Canbebe, Helen Harper and Canped.

Expanding branded business

It is this expansion into the production and marketing of its own brands while strengthening the retailer brands that Charles Bouaziz sees as his most immediate priority. “Ontex is a very strong company, with streamlined and highly efficient manufacturing sites and a clear focus on product development and innovation,” he explains. “But as we move from our historic focus on European retailer brands towards more geographical markets and the expansion of our own branded business we need to develop a broader set of skills, specifically in marketing. Carefully balancing retailer brands and own brands will accelerate our growth. We need to be thoroughly professional in this area, especially since in tough economic times consumers tend to go for products with the best price/quality ratio.”

Mr Bouaziz adds that Ontex has fascinating growth opportunities across the world. “In western Europe there is still plenty of room to expand our retail business in baby care and feminine care products, particularly

as other major producers exit the market, and an ageing population means growing demand for our incontinence products. Beyond Europe there are many countries that are experiencing very high growth in birth rates so there is a huge demand for baby care products such as nappies, wipes, pants etc. We need to identify the most promising markets and move into them, initially through sales and marketing and then, if appropriate, with local production lines.

“Sometimes this can most efficiently be achieved through strategic acquisitions. The addition of Lille Healthcare to the Group in 2011, for example, brought us not only a leading French producer of incontinence products but also an extended coverage in Australia. Now we are opening a nappy production plant in Pakistan and growing our business in the North African markets.”

Acquisitions and rationalisations

Ontex’s presence in the branded and incontinence market was strengthened further in February of this year when it agreed to acquire Artsana Sud SpA from the Artsana Group. Artsana Sud is a leading manufacturer and distributor of incontinence products under the Serenity brand in Italy. “Until this year we had a limited presence in Italy but now Serenity has brought us an important manufacturing site, products and people,” explains Charles Bouaziz. “And, of course, Serenity is a wellknown brand so its acquisition has accelerated our move into branded healthcare products. We are investigating the opportunity of marketing the Serenity brand throughout Europe to seize its growth potential.”

Ontex has also announced its intention to regroup its production sites in the north of France. The plan is to concentrate its production sites at Arras and Wasquehal into a new facility to be located halfway between

the two. Ontex has explained to its employee representatives that no jobs will be lost as a result of this project – all workers will simply transfer to the new, state-of-the-art facility.

“Following our acquisition of Lille Healthcare we were operating two sites in northern France within 50km of each other so it made obvious sense to consolidate production,” says Mr Bouaziz. “We will not only improve manufacturing efficiency but also our inventory and logistics operations. We are currently assessing the options for a greenfield or existing manufacturing site but we are confident that a new single facility will strengthen our operating footprint in France and help us prepare for further growth.”

Environmental priorities

Ontex maintains a strong focus on product development and innovation in order to continually improve the comfort and performance of its products. The role of its R&D teams, which are based in each key manufacturing unit as well as at its Zele headquarters, is to enable the group to work on new concepts and product specifications, to validate new raw materials and to optimise the use of current raw materials.

This R&D effort is closely linked to Ontex’s commitment to minimising the impact of its activities on the environment. Its sustainability programme focuses on energy savings, transport efficiency, packaging optimisation and the search for more eco-friendly and lightweight raw materials.

For example, continual product development has enabled the company to drastically reduce the amount of fluff pulp – its main raw material – used in its production processes

and it ensures that all its fluff pulp comes from suppliers that subscribe to responsible sourcing programmes. And every Ontex plant has an action plan to reduce electricity consumption. In fact, Ontex’s Belgian production plants are all run exclusively on renewable energy and its plant at Buggenhout has deployed a large number of solar panels on the roofs of its major warehouses – an initiative other plants are looking to follow. Also at Buggenhout, an energy recuperation unit recycles part of the mixed waste to provide energy to heat the entire site in the winter and cool it in summer.

“It is vitally important that we behave responsibly by reducing energy consumption and raw material volumes as well as minimising waste,” says Charles Bouaziz. “We are also working with our key suppliers on the development of alternative, biodegradable raw materials. But we have to also remember that the primary goal of everything we do is to satisfy our customers and consumers, and the fact is that at the moment most alternative materials cost more and, particularly in the current economic conditions, most consumers don’t want to pay any more. So we have to look to increasing the scale of our operations to get production cost economies that will help to offset the increased costs of these alternative raw materials.

“For Ontex, customers and consumers will always come first and all our operations – in R&D, production, marketing and sales – have to work together to understand their needs and then to satisfy them in ever better ways.” n