Figyelő: report on Caola
The following article is from the 16th weekly issue of Figyelő magazine, which we are now sharing in full:
"Caola quality is destined for great things!"
"Our ambition is to bring the Caola brand back to the level of its name, its 191-year history and its true prestige. We want to double and later triple our turnover with the commissioning of our production base in Martonvar. We estimate that after the factory transfer we will be able to achieve a further 20-30 percent increase in jobs," the company's CEO told Figyelő.
- The Caola name and the company's products are known to all Hungarians. But the brand has been tarnished since the regime change. Why was the company bought?
- Caola can be called a Hungaricum, although it has not yet been officially awarded this status. The company is 191 years old this year and its predecessor was founded in 1831 in Budapest. Up until the fall of communism, Caola was a highly successful cosmetics and chemical company, a leader in the cosmetics and chemical industry in Central Europe. World brands from Western Europe such as Nivea and Axe manufactured their products here. The privatisation of the 1990s adversely affected the company - Caola went into a tailspin. Its market leadership quickly disappeared and the company was unable to compete with Western multinationals. In the 2000s, branding was also abandoned, even though Caola had produced well-known brands such as the still famous Baba and Gabi. My co-investors and I bought the company in April 2020, when it was effectively only months away from complete insolvency. The period of market loss, brand decline and loss of assets was brought to an end with the change of ownership. Caola is a part of Hungarian cultural history, we could not let it go: we also see our acquisition as a kind of social responsibility. We did not want the company to be bought up by a multinational, which is why we decided to buy it.
- The change of ownership took place during the first wave of the coronavirus epidemic. How did you survive the crisis period?
- We started negotiating the purchase in September 2019 and the deal was finalised in spring 2020. We were just about to start the corporate reorganisation when the epidemic hit. Suddenly, disinfectant became a scarce commodity. It was a difficult time, we had to save what we could at the same time. We bought Caola by taking over all the liabilities, so we had to pay the hundreds of millions of euros in arrears and we also had to start the reorganisation. The reason for this was that at that time we had only a very limited portfolio of disinfectants. We were literally rushing to start disinfectant production on all our production lines and then expanding our production lines.
- What structural problems did you face?
– Láttuk, hogy véges a gyártókapacitá- sunk. Ekkor döntöttünk arról, hogy egy teljesen új előállítási technológiával felsze- relt gyárépület megépítésére lesz szükség. Ez a célkitűzésünk kapcsolódott ahhoz a kormányzati stratégiához, hogy Magyar- ország legyen képes önellátásra egészsé- gipari termékekből. A kormányzat pat- rióta gazdaságpolitikai szemlélete a ma- gyar egészségipar egészén nagyot segített. A Pénzügyminisztérium által elin- dított Egészségipari támogatási program- ban (ETP) a Caola is részt vett. Ennek keretében építjük fel Martonvásáron az új üzemünket. Reményeink szerint – az építőipari bizonytalanságok ellenére – ez év végén befejeződhet az építkezés és 2023 elején elindulhat a termelés. Tavaly az épület tervezésével és a gyártósorok technológiájának a megtervezésével vol- tunk elfoglalva. A Covid miatt az egészségipari piac nagy mozgásban volt, ezért a gyártási technológiát nagyon sok- szor kellett módosítani, áttervezni, ennek okán vett igénybe ez a folyamat egy teljes évet. Most már szerencsére a kivitelezési szakaszban járunk.
- What are the state's expectations in return for the support?
- The expectation is that Caola also has the capacity to produce disinfectants. We are therefore equipping the plant with a technology that is flexible, so that it can produce both alcohol and non-alcohol disinfectants when needed. In "peacetime", on the other hand, this technology can be used to produce creams, gels and other cosmetics and cleaning products. Under the ETP, the State will therefore provide aid to enable the plant to produce as many cleaning products, hygiene products and disinfectants as possible, and to do so quickly. Caola has developed a professional range of products in this market segment; we supply public institutions, schools and social services with these products. It is also important to highlight the support of HIPA, the investment promotion and management consultancy agency of the Ministry of Foreign Affairs and Trade. Under the Emergency Growth Assistance Programme, they helped us to purchase filling and cream-making machines that enabled us to increase our production capacity even before the new factory in Martonvár was built.
- What is Caola's position now?
- In two years we have increased our turnover by 50 percent, we have 25-30 percent more employees now than in April 2020. We are using 80-90 percent of our production lines, which was a fraction of what Caola was able to do under the previous owners. Our aim is to double and then triple our turnover once our production base in Martonvár is up and running. We estimate that we will be able to achieve a further 20-30% increase in jobs.
- They also participated in the Hungarian National Bank's growth programme. With the help of the central bank loan, what acquisitions are you planning?
- Hungarian cosmetics and household chemical companies cannot achieve the same volume in the market individually, competing with each other, as the domestic representatives of multinational companies. That is why we decided to consolidate Hungarian companies through various acquisitions. In this way, we rationalise production, the product portfolio and the workforce - and as a result we can achieve better productivity in the market. This is the only way we can compete with multinational companies. In the MNB's growth programme, the bond we have been granted is a loan security, so it is not a subsidy in the classical sense, because we will have to repay the central bank on the basis of a loan security. The national bank bought on both the primary and secondary markets. This means that they have subscribed to seventy percent of this amount, they own it. Only with such comprehensive programmes can we make changes in this market segment. Such state involvement is essential to put Hungarian businesses in a better position.
- Will Caola's product structure change?
- The image of our products is currently considered outdated, but their quality is impeccable. Our plan is that, after the completion of the acquisition process just mentioned, Caola will have an "industrial leg", producing various cleaning and disinfecting products for economic operators. The 'cosmetic leg' will be the production of quality products known to the general public. The design changeover has started and the first products with the new image are already in the shops. We are constantly expanding our range of products and formulations, and are proud to produce several own-brand products for several supermarket chains. In the disinfectants market, we are in the research and development phase with several of our professional products that will be used in agriculture and the automotive industry. There is a need for progress in the production of powder-based disinfectants, and we will continue development in this segment. Our aim is to have the entire production of our products in-house. This includes the implementation of packaging technology and the production of raw materials. The latter would allow us to reduce our exposure to imports, which would decouple us from international dependence. In Szeklerland, we have signed a cooperation agreement with the mayor of Chisinau. Within this framework, we would build an alcohol base material factory in the city, building on the research and development knowledge and human resources of Sapientia University. This would enable us to carry out all the sub-processes of alcohol-based disinfectant production in-house. In addition to the production of the raw materials, we would also manage the packaging and production of the finished product. The motivation to set up a factory in Chisinau is the same as the original motivation to buy Caola. We can contribute to the strengthening of the Hungarian community through industry, including the cosmetics sector, and we can also serve the well-being of minority Hungarians and their stay in their homeland by creating jobs. Not only Caola, but the whole Hungarian society can benefit from this.
- The Prime Minister has repeatedly spoken about the need for Hungarian companies that can grow into global brands. Does Caola have such ideas?
- We are motivated by this as a long-term goal. We think that Caola quality is really ambitious. Our employees have the same expertise and humility that we had in the company, for example, before the regime change. Our ambition is to bring the Caola brand back to the level of its name, its 191-year history and its true prestige. And it is not just a dream: we have started the work and we are on our way.
He wrote: Tamás Pindroch
*source: Figyelő
