Cork Supply: ‘it is not enough to think only in the short term’

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Jochen Michalski, Chairman of Harv 81 Group, formerly Cork Supply Group, speaks to db to invest for the future in the face of today’s challenges.

It has been a difficult and uncertain year for the industry, first with Covid 19, and more recently with the war in Ukraine, but Jochen Michalski, chairman of Portugal’s second largest cork group, Cork Supply, says he not enough to think only of the short term.

The German native, who grew up in Portugal and later moved to California, where he founded Cork Supply in 1981, has his eyes firmly on the future, ensuring the business is sustainable both environmental and economic.

“We’re fortunate that the wine industry appears to be a relatively recession-proof industry, and the high-end market is even more resilient,” he says. “I can’t say the same for many other industries that have been more affected by recent global challenges.”

Demand, he says, has continued to grow despite Covid-19, recent increases in fuel costs and inflation, and the impact on commodity prices, but despite these challenges the company has been able to follow its business plan and continually invest in new facilities for growth and technologies.

“Despite all the global challenges, in 2021 and 2022 we experienced double-digit growth and were able to maintain our overall business plans,” he explains.

The company has invested between €6m (£5.35m) and €8m (£7.42m) each year for the past five years and expects to continue this growth over the of the next two years.

Construction of the new state-of-the-art Talis bartop production facility, spanning over 2,000 m², has just begun and, when completed next spring, will triple the company’s current production capacity. A new extension of the technical cork production unit of 2,000 m² has also just been completed, enabling the growth of sales of the Vinc line. Meanwhile, the finishing plant in the US market is also being renovated to install new equipment, technology and processes, and will be completed next year.

Although growth has always been organic, the company has recently made strategic acquisitions, to which are added: the French company Bouchons Abel, which completes and markets natural and technical closures in France, Spain, Switzerland and Germany ; and Legnokaps, a Portuguese company specializing in wooden caps for spirits bartops.

The acquisition of a traditional cork business strengthens Cork Supply’s presence in France’s still and sparkling wine and champagne market, says Michalski, a market he admits has been difficult to break into, while the acquisition of Legnokaps will increase Cork Supply’s share of the spirits market.

“Both companies have growth potential and we’re going to have the market share that we would really like to have within three to five years,” he explains.

The shift to spirits closures began 10 years ago, after the team realized the huge potential of bartops. Since the company could easily produce cork rods – both natural and engineered – thus adding more value to the raw material they purchased, this was a logical next step.

“As we started to grow, we realized the demand was really increasing for cork with a wooden top,” says Michalski. “There were quite a few manufacturers already in place, and more openness due to demand, but demand was always greater than supply, which created big supply issues.

“Our business was growing but we couldn’t grow any faster because of the timber supply, so earlier this year we had the opportunity to buy one of our suppliers, which strengthens our position in the market.”

Consequently, the company is now self-sufficient in its wood supply. “We have our own cork – whether it’s natural cork or engineered granulated cork which we use the most – so having our own source of wood means we can deliver much faster and grow faster,” he says.

And Michalski is confident that spirits sales will continue to grow, especially in the premium segment of the market. The company has focused on two key markets – the US and the UK – and has seen growth, but is also eyeing other key spirits markets which have the potential to provide huge opportunities.

While there is growth and opportunity, that doesn’t mean there aren’t challenges – and energy is key. However, fortuitously, the company had already begun to largely replace gas with biomass in its factories, profiting from the by-product of its technical cork production.

“We are also installing photovoltaic panels in all our Portuguese production units, which will reduce our energy consumption by 25%,” says Michalski. “We didn’t do it because we anticipated gas or energy price increases, we did it from a sustainability perspective.”

Basic concept

Sustainability is a core concept that Michalski says the company has been investing in for more than 25 years – “before it was even called sustainability.”

And it’s not just about energy, it’s about people and it extends to product development as well. “Today, our Harvesting for the Future sustainability strategy focuses on the three Ps: planet, people and product, and what we, as a global company, can do to contribute to these three areas. keys,” he says.

Cork Supply has recently added two new products to its successful Vinc line – a premium micro-agglomerated cork line with individual TCA guarantees: Vinc natura which uses a bio-based binder; and Vinc Reserve, for wines intended to age longer in the bottle.

It also recently introduced Bloom, a bartop capsule material made from bio-based polymers and cork granules. This, according to the company, provides a solution for those who are concerned about the environmental footprint of their products and packaging, but which is economically viable.

“We say it’s consciously designed,” says Monika Michalski, global brand manager. “Because most of the durable solutions that appear on the market tend to be quite expensive. When people start counting all the extra pennies that go into their package, they may end up drifting away from these types of options due to price. We were therefore interested in developing a product that does not fall into this category and offers a realistic solution for today. We see that there is common ground on which we have to meet people.

It is also highly customizable which makes it ideal for customers to stand out in the market. Jochen Michalski adds: “The beauty of this tool is that we can add flavors, we can have different colors, it can be fluorescent, we can make different shapes, emboss or deboss it, hot stamping – all sorts of things .”

As Michalski concludes, it’s about providing the customer with solutions that literally won’t cost the earth. “We look at all industries, wherever we can have a positive impact on the world,” he says. “It is a rewarding and enjoyable task to be able to contribute positively.”

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