Italian tissue paper powerhouse Sofidel is on a quest to conquer the lucrative US market as the company believes it can leverage its technology to make North America the group’s main growth engine. 

“From a manufacturing technology standpoint, the US is 20 years behind Europe and our sector is no exception,” CEO Luigi Lazzareschi tells fDi Intelligence. “We’re bringing innovation with bigger and more efficient equipment, which ultimately guarantees better quality of the end product.”

Mr Lazzareschi adds that competition for Sofidel America in the private labels space — tissues produced for large-scale retailers’ brands — is scarce, as the biggest players in the US, such as Georgia-Pacific or Procter&Gamble, mostly sell their own brand. 

Started by two entrepreneurs in Tuscany in 1966, Sofidel has grown by leveraging greenfield investment, as well as mergers and acquisitions, to become an international group. It employs 7000 people across 16 facilities for the production and conversion of tissue paper in 13 countries in Europe and the US. Today, the group is Europe’s second-largest tissue producer, and the world’s fifth-largest, with a turnover of €3.1bn in 2023. 

With the European market expected to grow at single-digit rates for the foreseeable future, Mr Lazzareschi is betting on the US to shore up the group’s growth trajectory. It made its first foray into the market in 2012, and has already grown its US operations into a $900m business, Mr Lazzareschi highlights. 

“Our goal is to generate half of our business in the US,” he says. Currently, this figure sits just shy of 30%.  

Central to this objective is Sofidel’s assertive growth strategy in the country. The company acquired an existing paper mill in Minnesota in January for an undisclosed sum. A few months earlier, it set aside $185m to increase the production capacity of its flagship US plant in Circleville, Ohio, by 50%. It plans to turn this plant into its biggest facility globally. 

Beyond size and efficiency, Mr Lazzareschi believes the company’s proximity to its final customers also features among its success factors, as well as its focus on reducing its carbon footprint. 

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

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

“We are doing several things, but eventually we will need carbon sequestration technology or else it won’t be possible [for us to achieve net-zero]”.

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This article first appeared in the December 2023/January 2024 print edition of fDi Intelligence