Interview - Aerosol Europe, December 2010

AEROSOL EUROPE: Dr. Contini, the International Aerosol Congress in Rome ended recently. What is your impression of this event? Do you think it is sufficient to meet every three years?

Claudio Contini: As someone who has attended the congress for the past 20 years, I can say that the most recent one was among the best.  With only a few exceptions, the key players in the industry were in attendance, and the choice of venue (the hotel Roma Cavalieri) was a good one.   Holding the event in a single location made it much easier to work, and the general organization was much improved compared to previous events.   The congress took place at a time when the industry had turned the corner: we’d put the worst behind us, so it was fortunate in that respect, too.   In any case, to take the pulse of the industry it’s probably sufficient to meet every three years.

AEROSOL EUROPE: As one of the leading manufacturers of aerosol valves and machines, how is Coster performing in 2010?

Claudio Contini: To be honest, I was surprised by the strength of the recovery. It began in July of 2009, across all product lines.   At first I thought that the strong initial growth was due largely to stock replenishment following the crisis, and I expected to see some slowing.   In point of fact, strong growth continued through the first seven months of 2010 and has only just recently begun to slow.   We have experienced extraordinary growth in our machine sector in particular.  Machines are more closely tied to economic cycles, and for a period of 8 months during the crisis there was essentially no movement at all.   However, we have since seen an extraordinary jump in orders like nothing we have ever seen before. We attribute this to strong economic development in emerging countries such as Brazil and Mexico. To date there has not been much filling activity in these countries, but we see enormous growth potential for aerosol products. While the recession had a considerable impact in Europe, these emerging markets continued to grow.  In my view, the outlook for renewed robust growth in Europe is not particularly favourable.  Consumer attitudes have changed.  Savings are up and people are spending less on non-essential items. So I don’t see a return, at least not in the immediate future, to pre-crisis growth levels in the mature Western markets. Our big multinational customers are investing in emerging markets like Brazil and Mexico, which continue to grow and where they see the greatest growth potential for the future.

AEROSOL EUROPE: Europe is the core market for Coster. Could you please tell our readers how sales have developed over the last two years?

Claudio Contini: Today Europe accounts for approximately 2/3 of our turnover and remains our primary market.  Since the high growth areas are outside Europe, however, the geographic distribution is shifting toward emerging markets.  Our largest subsidiary, for example, is Argentina, which along with India has seen remarkable growth.  If we look back over the last couple of years, we should probably start with the collapse of Lehman Brothers in September 2008.   Orders dropped sharply almost immediately, and remained so weak that 2009 began with turnover down more than 20% over the previous year.   It wasn’t until July 2009 that we began to see an improvement, but the recovery has been remarkable and our loss for the year 2009, in comparison to 2008, was limited to -6%.  The first nine months of 2010 brought an increase in sales of 24% over the same period in 2009.   That’s the best performance in the last 10 years, and sales were the highest in the history of Coster. I’ve never seen anything like it.

AEROSOL EUROPE: What about the Asian markets and India?

Claudio Contini: Asia is dominated by China and its producers, so it’s very difficult to compete against them. We have invested in Malaysia, which cannot be defined as a low-cost country.   We are located very close to Singapore, and while we have lower costs than in the USA or Europe, we’re a long way from being able to compete against China.   We continue to do well with spray caps and special actuators. In India there are very few aerosol applications apart from the pharmaceutical area.   In 2008 we acquired the local leader in the production of perfumery pumps, which showed the best growth performance in the Coster Group this year.

AEROSOL EUROPE: Do you see potential in Russia? What is your opinion on Russian market?     

Claudio Contini: The market is growing significantly and because of that we see strong interest on the part of multinationals.   Traditionally Coster has expanded in the wake of our multinational customers as they drive their own expansion.   In the case of Russia we may decide to follow this policy in that market as well.

AEROSOL EUROPE: What do you think about the Eastern European countries? Do you see any further potential there?

Claudio Contini: As of today, apart from Poland, Czechia and Hungary, where multinationals are investing, I would say prospects are unpredictable, and therefore uncertain.  At the moment, it’s a consumer market only. Coster’s customers are the fillers, not the end users, so Eastern Europe is not one of our top priorities.

AEROSOL EUROPE: Which innovative products have you introduced to the market lately?

Claudio Contini: We focus on providing stable, proven, quality products, so we’re more of a follower than an innovator, although we do help our customers to innovate in the area of special actuators.  On the other hand, I should point out that in terms of our production facilities we have been at the cutting edge for some 15 years, and we continue to invest in the most advanced methods, means and production technologies, which allow us to assure the highest levels of quality and productivity.

AEROSOL EUROPE: What do you think of food aerosols?

Claudio Contini: In addition to the traditional whipped cream application, we are active in some niche markets such as seltzer in Argentina, and some applications for beer, but in general we don’t see much demand.   As always, we’re ready to follow our customers should a significant market develop.

AEROSOL EUROPE: What are Coster’s focuses in years to come?

Claudio Contini: We will continue to expand and complete our geographic coverage so that we can benefit from the growth of emerging markets.  We have diversified into the pharmaceutical aerosol sector and expect to see continued growth in both products and filling machinery. We will also maintain our commitment to construct state-of-the-art factories in order to ensure that our products continue to meet the highest quality standards. This is particularly important in emerging markets.

AEROSOL EUROPE: Where do you see potential for technical innovations?

Claudio Contini: For some time now, Coster has viewed sustainability as a significant issue.   There’s a great deal of potential for innovation, and the multinationals have initiated a number of programmes.  For a producer of aerosols, a commitment to sustainability implies research designed to reduce the use of materials overall, and specifically to reduce the use of gases and dangerous propellants.  It also implies recyclability. Coster has experience in the design and production of actuators, such as Crystal, that require much less material without sacrificing structural strength.  Our production facilities are designed to minimize pollution, and a number of our factories have already obtained environmental certification (ISO 14000).  I should also point out that we are one of world’s major producers of Bag-On-Valves, which permit filling with air rather than liquid propellants.  Our ultimate goal is to offer solutions that enable the complete recycling of aerosol products, although we are well aware of the technical challenges involved.

AEROSOL EUROPE: What challenges does our industry face in the future?

Claudio Contini: Given the continuing rise in the price of raw materials, it will be a significant challenge to continue delivering cost-effective solutions. If we don’t succeed, growth prospects will be limited. Consumer attitudes are changing.     People are saving more and spending less on products they consider unnecessary.  AEROSOL EUROPE: In the opinion of leading economic institutes and experts, the global economic crisis has hit bottom. How do you see the economic development in 2010/11?

Claudio Contini: I agree with those who predict stagnation in Europe and the USA until 2014-15.  We will see growth only in the emerging markets, and the key challenge will be to benefit from it, which will involve an increase in local presence.

AEROSOL EUROPE: Dr. Contini, we thank you for this interview.