SOFIDEL, the Lucca-based multinational paper company known for the ‘Regina’ brand, has become the fourth largest producer in North America thanks to overall operations worth over one and a half billion dollars. The company, equally owned by the founding families – Lazzareschi and Stefani – and which maintains its headquarters in Porcari (Lucca) announced in recent days the ‘closing’ for the acquisition of the tissue division of Clearwater Paper Corporation. The agreement was announced last July 22, but now that all approvals have been obtained, it becomes fully operational, representing a strategic step in Sofidel’s growth in the USA. In detail, shopping in the States led to the acquisition, for a value of 1.06 billion dollars, of four production plants: Shelby (North Carolina), Lewiston (Idaho), Las Vegas (Nevada) and Elwood (Illinois) and the integration of approximately 1,800 employees. In this way the Group increases its production capacity by 25% (equal to 340 thousand tonnes per year), expands its commercial offering, optimizes its geographical coverage and increases its positioning in the ‘private label’ market segment (that of whose label shows the name of the distributor’s brand, ed.) which is growing strongly in the USA.
“This operation makes Sofidel the fourth largest tissue paper producer in North America, and strengthens its leadership in the private label sector, a further growing market. A step that brings the goal of having equivalent revenues on both sides of the Antico. A crucial acquisition for the future of the entire Sofidel”, were the words of Sofidel CEO Luigi Lazzareschi the day after the closing. “Today – added the president of Sofidel, Edilio Stefani – the largest acquisition made by our Group is taking place. An objective we have been thinking about for years. Today we can say that we were ready to seize the opportunity when it presented itself” . Sofidel’s growth on the North American market has been going on for years now and includes further development phases. Such as the 50% increase in paper mill production capacity in the Circleville (Ohio) plant and in the Duluth (Minnesota) plant which will soon be equipped with converting lines and a new automated warehouse. We spoke with Luigi Lazzareschi (in the photo above) about the strengthening of Sofidel in the USA. “We are in our twelfth year of presence in the USA. They have been years of continuous investments and during which we have learned a lot. In the last 3 or 4 years we have started to see important returns on our efforts and the economic results are so good that we have decided to invest to further increase growth”.
Is the growth in the USA due to a market that has become more dynamic or to you who have become more performing on that market?
“It’s a combination of both elements. The ‘private label’ market is growing and there is still unmet demand. For our part, it took us some time to understand the North American market, and we had to establish sufficient production capacity “.
What drove this growth?
“When we arrived in the USA the market was monopolized by three large producers, all concentrated in the production of their own brands, while the ‘private label’ was relatively low, representing 25 percent of the total; in ten years it has grown, reaching, today, almost 38 percent.”
Has only Sofidel invested in private labels?
“The three big American manufacturers never wanted to develop private brands. First because they would have cannibalized their own brands and secondly because, given their production structure, they would not have been competitive.”
While Sofidel…
“Thanks to our European experience, we had already dedicated a large part of our production to the private label for years and when we arrived ten years ago we had plants built specifically for that type of production and therefore, in the end, we rode the wave” .
But behind the success in the USA, what is typically Italian, not to mention Lucchese?
“Definitely two elements. Most of the assets and machinery are of Lucca origin and therefore the Lucca paper sector is increasingly consolidating itself as the main producer of tissue production machines in the world. And then, as I was saying, our decades-long experience in ‘private label’. We realize that today this segment represents 75% of the market in Europe, while in the USA over 60% is still produced by manufacturers, but with strong growth margins, which we are behind with strong investments”.
Which ones for example?
“Definitely the acquisition of the ’tissue’ part of Clearwater, with an outlay of over a billion dollars. Then there is the continuation of an investment we have in Duluth, Minnesota, the city where Bob Dylan was born, where we are investing a further approximately 180 million dollars to transform the plant into an integrated one, therefore a paper mill plus converting. In addition to this, in our other plant which we had built from scratch in 2018, we are increasing the production of 50 percent by assembling a third paper mill machine: in this case the economic commitment goes beyond 300 million dollars. Therefore, if we make a sum, in the two-year period ’24/25 the company has approved investments in the USA of approximately one. billion and a half”.
A gigantic effort.
“These are figures that I believe few other European companies have invested in the US. On the other hand, we believe very much in this market.”
How does Sofidel’s adaptation to the North American market in terms of product offerings compare to its strategies in other regions?
1. What is the strategic importance of the acquisition of Clearwater Paper Corporation’s tissue division for Sofidel’s growth in North America?
2. How has Sofidel adapted to the North American market since its establishment in 2009?
3. What are the main challenges and opportunities in the US tissue paper industry, and how has Sofidel capitalized on them?
4. How does Sofidel’s focus on private label products differentiate it from its competitors in the US market?
5. How has the company’s investment strategy contributed to its success in the US market?
6. What role has Lucchese heritage and expertise played in Sofidel’s expansion into the North American market?
7. In what ways has Sofidel’s commitment to sustainability influenced its growth and reputation in the industry?
