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Cork Supply: ‘it’s not enough to think of only the short term’

05 October 2022 By Arabella Mileham

Jochen Michalski, president of Harv 81 Group, formerly named Cork Supply Group, talks to db about investing for the future amid today’s challenges.

It’s been a challenging and uncertain year for the industry, first with Covid 19, and more latterly with the war in Ukraine, but Jochen Michalski, president of Portugal’s second-largest cork group, Cork Supply, says that it’s not enough to think of only the short term.

The Germany 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 that the company is sustainable both environmentally and economically.

“We are fortunate that the wine industry appears to be a relative recession-resilient industry, and the premium market is even more resilient,” he says. “I cannot say the same for many other industries that have been more affected by the recent challenges in the world.”

Demand, he says, has continued to grow despite Covid-19, the recent rises in the cost of fuel and inflation, and the impact on raw goods pricing, 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 have been growing in double digits and been able to maintain our general business plans,” he explains.

The company has invested between €6 million (£5.35m) and €8m (£7.42m) every year for the past five years, and is planning to continue this growth over the next two years.

Construction of the new state-of-the-art Talis bartop production unit, which ranges over 2,000sq m, has just begun, and once it has been completed next spring, it will triple the company’s current production capacity. Further expansion of the 2,000sq m technical cork production unit was also just completed, allowing for the growth in sales of the Vinc line. Meanwhile, the finishing plant in the US market is also undergoing remodelling to install new equipment, technologies, and processes, and will be completed next year.

While growth has always been organic, the company has made some recent strategic acquisitions, with the addition of: French company Bouchons Abel, which finishes and markets natural and technical corks in France, Spain, Switzerland and Germany; and Legnokaps, a Portuguese company specialising in wooden capsules for bartops of spirits.

The acquisition of a traditional cork business reinforces Cork Supply’s presence in the French market for still and sparkling wines and Champagne, Michalski explains, a market he admits has been a tough one to crack, while the Legnokaps acquisition will boost Cork Supply’s share of the spirits market.

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

The move into spirits closures started 10 years ago, after the team realised the huge potential for bartops. Since the company could easily produce cork shanks – both natural and technical – thereby adding more value to the raw material they were purchasing, it was a logical next step.

“When we started growing, we realised that the demand was really growing for cork with a wood top,” Michalski explains. “There were quite a few of manufacturers already in place, and more opening due to the demand, but demand was still greater than supply, which created big supply issues.

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

As a result, the company is now self- sufficient in its wood supply. “We have our own cork – be it natural cork, or the technical granulated cork that we use the most – so having our own wood source means that we can deliver a lot quicker and grow faster,” he says.

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

While growth and opportunities beckon, it’s not to say there aren’t challenges – and energy is the main one. However, fortuitously, the company had already started to replace gas with biomass to a large extent in its factories, taking advantage of 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%,” Michalski says. “We didn’t do it because we foresaw gas- or energy-price increases, we did it from a sustainability point of view.”

Core 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 three Ps: planet, people, and product, and on what we as a global company can do to contribute to these three core areas,” he says.

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

It has also recently introduced Bloom, a bartop-capsule material made from bio-based polymer and cork granules. This, the company says, provides a solution for those concerned with the environmental footprint of their products and packaging, but one that is economically viable.

“We say that it’s consciously designed,” Monika Michalski, global brand manager explains. “Because most sustainable solutions that show up in the marketplace tend to be quite expensive. When people start counting all the extra cents that their packaging is composed of, they might end up steering away from those types of options because of the price. So we were interested in developing a product that doesn’t fall into that category, and that provides a realistic solution for today. We see that there’s a middle ground that we need to meet people on.”

It is also highly customisable, making it ideal for customers to stand out in the marketplace. Jochen Michalski adds: “The beauty of this tool is that we can add aromas, we can have different colours, it can be fluorescent, we can do different shapes, emboss or deboss it, hot stamping – all sorts of things.”

As Michalski concludes, it is about providing solutions for the customer that literally won’t cost the earth. “We’re looking at all areas of business, wherever we can make a positive impact to the world,” he says. “It’s a gratifying task, and an enjoyable one to be able to contribute positively.”

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