Founded 150 years ago on the Aegean island of Lesvos, Papoutsanis is leading a new wave of international expansion among Greek manufacturers as the country’s economy recovers. One of Greece’s leading manufacturing companies and listed on the Athens Stock Exchange, Papoutsanis produces soap, toiletries and hotel amenities exporting to 25 countries across the world. In this interview, Executive Vice President Menelaos Tassopoulos reflects on how his company bounced back from Greece’s economic troubles, highlights his commitment to sustainable growth, and looks forward to an upcoming new venture with one of Germany’s leading FMCG companies as the company continues its international expansion
How would you describe the role Papoutsanis plays in the Greek economy, particularly within the context of Greece’s recent economic recovery?
We are one of Greece’s leading companies and one of the largest manufacturers of soap and hotel amenities in Europe, producing over 150 million products every year. We have the largest integrated production unit in the southeast of Europe which uses the most advanced technologies and generates innovative and state-of-the-art products from raw materials that raise the bar for quality in both Greek and international markets. On the back of our legacy of 150 years of high-end technology, expertise and ongoing market presence, we are now mapping out Papoutsanis’s future via a four-pillar strategic business plan focusing on own brands, hotel amenities, specialized soap noodles for our industrial clientele and third-party and private label manufacturing. With our ever-increasing presence in more than 25 countries all over the world, we are constantly expanding the reach of our products. Our exports to Europe, America, Asia and Oceania account for 55% of company sales creating significant value for the Greek economy.
You have been instrumental in turning around the company’s fortunes since 2010. What has been your recipe for the company’s success?
Amidst challenging times for the Greek economy, we identified the value and prospects of Papoutsanis and we decided to explore the opportunities at our disposal through our diversified portfolio of products, the capabilities of our state-of-the-art production plant in Ritsona and the deep know-how of our people. During the first period of our turnaround, our main focus was on reestablishing trust with all stakeholders – our own people, suppliers, customers, banks – while controlling cost. Once that was achieved, we embarked on our current growth period with a strategy focusing on sustainability and innovation through R&D and extroversion in order to become a one-stop-shop for the needs of our customers, while always maintaining cost competitiveness and quality.
Having overseen growth in Papoutsanis’s exports, what are your objectives for international growth and how important is the German market in this regard?
For years our strategy has been to increase volumes by expanding our portfolio, focusing on added-value products, continuously improving our cost basis and concentrating on sustainability, whether it relates to the type of raw materials we use, the formulas we develop, the packaging we produce or certifications. In addition, being fully vertically integrated helps further reduce costs. Going forward our focus will remain on all the above, while we will be also looking to expand our commercial agreements, identify new distribution networks for our products and partner with major overseas companies.
Germany directly or indirectly is already a very important market for us accounting for about 12% of our sales. Furthermore, we have recently agreed on a new cooperation to produce soap bars with one of the largest FMCG companies in Germany that, according to our estimations, will generate additional sales representing approximately another 12% of current sales. The partnership will be launched in the second half of 2020.
With Greece’s economy showing signs of recovery, what opportunities do you see for Papoutsanis in the domestic market?
Over the past years, the Greek economy has faced a period of low investment. As a result, businesses and households reduced their expenditure, drastically affecting the amount of money circulating in Greece. It is our belief that with Greece’s return to positive growth, companies and consumers will gradually return to their normal consumption and investment patterns. A more stable social and financial environment, further progress with the various much-needed reforms together with increased activity in the tourism sector, should facilitate this transition. We can be optimistic about the times ahead and we believe that we will have the opportunity to further grow our business within this context.
How do you assess the company’s performance in 2019 and what are your investment, commercial and expansion objectives?
We are very pleased with the results of 2019. Our product portfolio, trade initiatives, and partnerships in various areas have contributed to significant turnover growth. By adopting a consistent and successful strategy, we are focusing on expanding the growth and profitability of the company, while further developing all of Papoutsanis’s product categories. We are also proud of our use of sustainable high standard production methods that respect nature and protect the environment.
And how would you evaluate Papoutsanis’s role and contribution to Greece’s socio-economic development?
We have a targeted action plan that is a core activity of Papoutsanis and has had a proven contribution to society. As such we have been supporting a series of organizations that carry out important work for children and for the youth in Greece, two groups of people that were most affected by the crisis. Indeed, part of our CSR action plan includes increasing the interaction between Papoutsanis and the younger generation for educational purposes, through visits from schools and universities to our facilities which aim to enrich their knowledge, and also via job opportunities for young candidates that contribute to the country’s employment index. Additionally, our corporate philosophy focuses on respect for nature and protection of the environment. In this context, we ensure our total compliance with European and national environmental legislation regarding the operation of our facilities and energy consumption. We are also focusing on sustainable growth by continuously developing new certified product lines – such as Vegan, Cosmos Natural, Cosmos Organic and Nordic Swan Ecolabel – using only recyclable and recycled PET, and planning to adopt the most recent relevant guidelines.
How can Greece raise its profile as an economy and further instill confidence in foreign investors?
To be honest, the crisis critically affected Greece and its people, however, even though the global economy is still facing challenges, we have finally returned to growth. The country has to proceed with the implementation of various changes that will strengthen its profile if it wants to remain under the spotlight of foreign investors. We have to continue reforming our economy, focusing on a more viable model that will allow us to grow over the coming decades. The adoption of new technologies and the reduction of bureaucracy will play a vital part in achieving this. By the same token, we have to modernize our education system in order to be relevant to the needs of modern times. Finally, we have to take measures to help the Greek banking system stabilize while we also need to rationalize the tax framework.