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Sofidel plans to expand in the United States

CEO Luigi Lazzareschi discusses the company's international strategy and drive toward sustainability

Sofidel, an Italian tissue paper powerhouse, is looking to conquer the lucrative U.S. market, believing it can leverage its technology to make North America the group’s main growth engine.

“From a production technology point of view, the United States is 20 years behind Europe and our sector is no exception,” CEO Luigi Lazzareschi told fDi Intelligence. “We are introducing innovation with larger and more efficient equipment, which guarantees better quality of the final product.”

Lazzareschi adds that competition for Sofidel America in the private label tissue paper space produced for large retailer brands is scarce, as major players in the U.S., such as Georgia-Pacific or Procter & Gamble, mainly sell their own brand.

Founded by two entrepreneurs in Tuscany in 1966, Sofidel has grown by leveraging greenfield investments, as well as mergers and acquisitions, to become an international group. It employs 7,000 people in 16 tissue paper production and converting facilities in 13 countries in Europe and the United States. Today, the group is the second-largest tissue producer in Europe and the fifth-largest in the world, with a turnover of 3.1 billion euros in 2023.

With the European market expected to grow at single-digit rates in the near future, Lazzareschi is betting on the United States to reinforce the group’s growth trajectory. It made its first foray into the market in 2012 and has already transformed its U.S. operations into a $900 million business, Lazzareschi notes. “Our goal is to generate half of our business in the U.S.,” he says. Currently, that figure is only 30%.

Sofidel’s aggressive growth strategy in the country is central to this goal. The company acquired a paper mill in Minnesota in January for an undisclosed amount. A few months earlier, it set aside $185 million to increase production capacity by 50% at its main U.S. mill in Circleville, Ohio, with plans to make this mill its largest facility worldwide.

In addition to size and efficiency, Lazzareschi believes that the company’s proximity to its end customers is also among its success factors, as is its focus on reducing its carbon footprint.

The pulp production value chain is among the most resource-intensive production processes in any industry. Wood is transformed into pulp and paper through a process that requires a lot of water and energy resources. Earlier this year, Sofidel committed to achieving net zero carbon emissions by 2050, through a combination of interventions at its facilities around energy efficiency, combined heat and power, sustainable forest management and increased use of renewable energy, including green hydrogen schemes.

About the latter, Sofidel is part of a proposed project by Swiss H2 Energy Europe, a company owned by commodities powerhouse Trafigura, to develop a 20-megawatt electrolytic hydrogen production facility on the site of a former refinery in the UK port of Milford Haven. The scheme received support and funding from the UK government in December and will enable Sofidel to replace some of the natural gas it uses to generate thermal power at its neighboring Baglan facility with green hydrogen. Sofidel is also part of another green hydrogen initiative in the East Midlands region of the UK to support its Leicester facility.

“We are doing a number of things, but eventually we will need carbon capture technology, otherwise it will not be possible to achieve net zero,” Lazzareschi concluded.

Source
fDi Intelligence
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