04_consentino_ing:Maquetaci—n 1.qxd

Cosentino group
COSENTINO GROUP
“El Centro Virtual de Experiencias de Internacionalización” (The On-line Centre for
International Business Cases)
is the result of the collaboration of the Spanish
Institute for Foreign Trade ICEX and AEEDE, the Spanish Association of Business
Schools , which includes eleven leading Business Schools. The aim of this project is
to promote the internationalisation of Spanish SMEs, drawing on the academic rigour
of the business schools that have participated in this project.
This centre presents case studies of Spanish companies that are successful internationally. These case studies can be found on the ICEX webpage and appear in a
multimedia format that includes discussion forums and articles that create awareness
of the key issues involved in internationalisation.
The success stories chosen represent a broad sample of sectors and geographical
areas and show the globalisation process that some of our companies have gone
through. The company profile shown here is that of an SME multinational which has
become a reference point in its sector, basing its international penetration strategies
on factors as diverse as marketing, management, financial liquidity and its business
alliances.
This pioneering project, in Europe and throughout the world, serves to promote and
diffuse a comprehensive entrepreneurial culture among SMEs. It promotes the integration and association between universities and businesses, facilitates dialogue and
the exchange of knowledge between experienced businesses and those that are
beginning to take their first steps in international markets. It also emphasises the
importance of human capital in medium and long term business competitiveness.
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Starting point
1
In January 2007 the Cosentino Group, one of the global references in the natural stone market was
preparing to celebrate its first European Convention of Distributors (between 28 January and
February 1), which would bring more than 200 professionals from 17 countries throughout the continent to Almería. The Convention intended to provide a forum to present the company’s annual
policy strategy in the areas of product, promotion and distribution for 2007 to these representatives. The Convention also aimed to obtain the same successful results in Europe, where six of the
company’s eight foreign subsidiaries are allocated, as in the United States. However, the European
results only accounted for 6.46% of their overall turnover.
At the beginning of 2007, Cosentino Group was an Andalusian company with great international
presence. It had 8 subsidiaries outside of Spain and more than 70% of its sales (approximately
EUR 369m in 2006) came from abroad, with a presence in more than 50 countries (establishment
with fixed assets in twelve countries), either through their own assets or through exclusive collaboration agreements.
In 2007 the Cosentino Group was a family company group and held entirely Spanish
capital, focussing its activity on the design, production and distribution of decorative
architectural solutions from natural stone and agglomerate products. The Cosentino
Group based its development on both international expansion and a broad research programme, which allowed them to apply the most advanced technology for obtaining new
materials. The activity of the Group covered the whole process of natural stone, from its
extraction and processing to the installation of flat surfaces, such as kitchen and bathroom countertops, claddings and other products.
In 2007 Silestone® was the quartz surface world leader. Created, evolved and developed in Spain by Cosentino since 1990, this became a new product category thanks to
its characteristics and their ability, after many hardships that brought the company to the
brink of bankruptcy, to find the most suitable applications for the product, especially its
use as kitchen and bathroom countertop. More than one in four of kitchen countertops
installed in Spain in the 2006 was a Silestone product. During this time in the US, the
company held 8% of the market share for kitchen countertops.
In 2007 Cosentino had 6 factories: 5 in the Cantoria Industrial Park, three of which are
Silestone, 1 marble factory and another special materials factory; another for processing
granites in Vitória, Brazil; 14 quarries (Macael, Alicante, Murcia, Granada and Cáceres);
19 manufacturing workshops (US, Mexico, United Kingdom, Sweden and Spain); 25
warehouses (15 in Spain, 7 in Europe and 3 in the rest of the world); 8 foreign subsidiaries (C & C North America (Houston US), Cosentino Northwest Europe (Deurne, Holland),
Cosentino UK (London, United Kingdom), Cosentino Süddeutschland (Munich,
Germany), Cosentino Scandinavia (Malmö, Sweden), Cosentino Porto (Oporto,
Portugal), Latina Vitoria (Brazil) and Cosentino Italia (Padova, Italy).
This provides employment for more than 2,000 workers, (1,024, in Spain) throughout the
world. The group controlled and managed its eight international subsidiaries from its
headquarters in Macael (Almería) and had four trademarks: Silestone, Scalea; Muro by
Silestone and Advance.
As previously mentioned, this was not easily achieved and there were challenges. To
change from a small workshop and develop into an international group of companies
creating a large turnover, required 36 years of hard work and overcoming major crises
that transformed Cosentino in one of the largest European groups in ornamental stone
and a leader in the sector of kitchen countertops prepared with agglomerated quartz.
The key, as Francisco Martínez Cosentino, president of the Cosentino Group explained,
was "a constant effort in research, the control of the trademark and the distribution
channels to keep the variation of costs to the minimum and obtain the greatest possible
value.”
2
Everything you need to know
COSENTINO GROUP
Step by step and failure to failure, but always facing up to problems and providing solutions,
was how Cosentino created its flagship product, Silestone, which resulted from the mixdown
(considered as a strategic and secret in addition to the process itself) of natural quartz crystal
with colour pigments and pieces of marble created for the world market for kitchen countertops. This combination, after a process of condensation and drying, has great resistance with
minimum porosity, and therefore can be cleaned with great ease. With this combination, a
new product was created and its name later became the generic term for referring to other
artificial stone products of similar characteristics made by other manufacturers and known on
the market as Silestone.
In addition to the advantages of product, the control of their distributors by their integration
into the Group through shareholdings, ensured this leadership is maintained smoothly: "We
have achieved an opening in a market as difficult as the US and we are present in other 49
of South America, Europe, Middle East and Oceania.”
BACKGROUND TO THE INTERNATIONALISATION OF THE GROUP
The history of Cosentino is similar to that of many companies in the Comarca del Mármol
(marble region) in Almería, located in the area of Macael which has an ancient tradition of marble quarrying and handcrafts.
This began in the 1970s when the Martínez Cosentino family moved from Macael to
Barcelona, but the two sons, Francisco and Eduardo decided to launch the family business
because "we decided it was better to generate our wealth in the land of our birth, something
that at the time sounded strange.” Francisco left his position as a primary school teacher to
take care of purchases of material and quarries in Macael and Eduardo, from Barcelona,
managed the sale of products of the workshop. The 1980’s passed with the incorporation of
the other brothers to the business and small profits were made that were reinvested in the
purchase of quarries.
The Martínez Cosentino’s wanted to avoid that the family nature of the company would be
converted into its main weakness: "We didn’t want the company to be weakened after our
generation, but neither did we want to lose the human contact of SME's. For this reason the
only way was to subordinate
to a board of directors and
internationalise.” In 2007,
Francisco Martínez Cosentino
was the chairman of the
Group and his brother a board
member, in which there was a
series of professionals whose
decisions were followed by
the family. It was in the 1980s
when they decided that they
had to open up to the world
markets.
The
Martínez
Cosentino brothers began to
move to markets at European
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COSENTINO GROUP
level: "There we realized that marble was not easy to export due to the transport and storage costs. We had to seek new materials and market sectors.. We manufactured a material
from waste marble, known as Marmolstone , targeting market sectors such as floorings and
facades. However this was unsuccesful as other manufacturers had already dominated these
sectors.”
It continued a model developed by the Italian producers of Carrara marble, before the impossibility of massive exportation of such sensitive material. Cosentino established trade delegations in Germany and France to begin their internationalisation process. Furthermore, the staff
devoted to exports and marketing was increased considerably. Nevertheless, these initial
experiences did not produce good results. However, the balance of the first market introduction entailed a motivation to continue increasing export quotas:
"When we first started to go abroad, we
did not give off the typical businessman
image: the truth is that we were promoting our particular brand image. Currently,
we are proud we have become a world
reference point. We are another example
for a large number of up-and-coming
Spanish businessmen that trying to succeed in foreign markets for the first time".
However, the balance of the first market introduction entailed a motivation to continue increasing export quotas: "When we first started to go abroad, we did not give off the typical businessman image: the truth is that we were promoting our particular brand image. Currently,
we are proud we have become a world reference point. We are another example for a large
number of up-and-coming Spanish businessmen that trying to succeed in foreign markets for
the first time.”
The economic crisis in 1993 and failures from Marmolstone and the first years of Silestone
(when it was used in floorings and façades) forced the company into a strong re-organisation
of staff, "where there had to be cuts that were not traumatic thanks to maintaining dialogue
with workers at all times .”
In late 1993, Francisco and his team were on the brink of bankruptcy leaving no option but
to seek solutions to solve the problems with Silestone: the installation and different degree of
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COSENTINO GROUP
dilation of the resin in respect of agglomerate (the quartz had a dilation coefficient which was
almost nonexistent), of the impossibility of adherence with the traditional materials, aesthetic
problems as it needed a large space between the boards, the need to design and use a
cement tail specifically designed (and therefore expensive) to meet the appropriate properties, the lack of collaboration of installers to change the cement (as they thought that a manufacturer had little or nothing to show them), the risk of detachment from the façades when
the product is placed vertically, the increase in the dilation of the resin when exposed to sunlight, the discoloration due to sensitivity of the resin to ultraviolet rays and its reaction which
affects pigmentation; the loss of floor shine due to friction caused by intense traffic and problems of accumulation of static electricity (especially in raised floors).
“The entire workforce of the company
was from the region and it was not easy
to live with the thought that the plant
would close and be a resounding failure”.
Together with all these internal problems, during this time a deep economic crisis was affecting Europe and Spain. The building sector was virtually at a standstill and the peseta was
paradoxically stronger than ever (during 1991 and 1992: 90 pesetas per dollar). These two
factors impeded the possibility of the Cosentino Group settling the crisis situation produced
by Silestone, through the traditional marble business.
In addition competition for agglomerate had already emerged in Spain and since 1991 companies as important as Aguas de Barcelona and Catalana de Gas had ventured to install a
process very similar to Cosentino with strong capital investments (acquiring the technology
and machinery from the same Italian supplier that Cosentino used: BRETON). Although by
that time they had not been able to dominate the market. The entire workforce of the company was from the region and it was not easy to live with the thought that the plant would
close and be a resounding failure.
That was the reality, despite the goodwill of Cosentino, none of the "creative" alternatives
which were intended as a solution to the claims were really satisfactory. The company was
facing a major problem.
Francisco was not only concerned with the amount of money that the company was losing,
but also with the deterioration of the company image, which, if continuing that way, could be
unrecoverable. Furthermore, in focusing all efforts on the new production line, they were
neglecting the traditional marble business which had so far obtained very good results. Some
suggested abandoning the business. Of course, experience seemed to back the idea that
the industrial agglomerates caused many problems and were not a good business. However,
Francisco wanted to avoid, as much as possible, closing the new plant. He could not surrender after everything that had been invested and worked on. Furthermore, he believed that the
industrial products could be key to the future of the company.
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COSENTINO GROUP
THE DISCOVERY OF A NICHE MARKET SUITABLE FOR THE
SILESTONE, ITS INTRODUCTION IN SPAIN AND THE FIRST STEPS OF
INTERNATIONALISATION VIA THE US MARKET.
In the midst of the despair at the end of 1993, Francisco received a call from one of its distributors of natural stone in Israel, Shimony Indian Ltd. who invited him to return to visit again
a Kibbutz (a socialist collective commune, typical of Israel), called CAESAR STONE, with
which BRETON had completely convinced Cosentino to venture into chipboard. Without anything to lose Francisco accepted the invitation and discovered that CAESAR STONE, focused much more on the applications of its agglomerate for countertops in kitchens and bathrooms than for flooring.
After this visit, the years 94, 95 and 96 were not easy, but efforts were focused on approaching kitchen shops throughout Spain to create the need in the last link in the chain, the final
consumer, and convince the traditional marble mason of the advantages of a product in
which it previously did not believe. It created a network of sales representatives comprising
31 people (some of whom were retired from the Comarca and wanted something to do) who
went to every kitchen shop and outdoor application was not recommended.
While this was being carried out, a new resin was sought that would eliminate the problems
that were generated with the original resin, and the group created a workshop in Cantoria
with the aim of not only make Silestone panels, but to manufacture custom-made countertops - therefore creating and gaining much more added value and profitability. The sales in
Spain began to recover and the product began to experience widespread acceptance in the
market thanks both to the variety of colours which were offered to consumers and the efforts
made by the company in promotion, marketing and advertising.
During the first half of the 1990s the US market was very complicated to penetrate due to the
strong position of the peseta, which left Silestone in a less competitive position with other traditional products of the United States. In 1995, Francisco learned that a Mexican family business, the Contreras family, was
building a plant in Minnesota,
to produce a Silica agglomerate very similar to Silestone for
the US market and that while
constructing its plant, wanted
the Consentino Group to produce agglomerate in order to
start venturing into the US
market.
After several talks in 1997
Francisco managed to convince the family Contreras to
devote to merchandising, since
production was extremely
complicated (" and the Group
had achieved domination together with BRETON in creating a
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COSENTINO GROUP
process and exclusive mixture similar to that of Coca Cola ") and they accepted and sold the
factory. In 1997 created a mixed distribution company.
FROM MACAEL TO US AND FROM THERE TO THE REST OF THE
WORLD
The steps taken by the Group at the time to establish themselves in a foreign market followed a series of patterns. The first was establishing business contacts through participation
in trade fairs in countries whose markets were interesting for Cosentino, such as European
countries and the United States and Canada, since their products were made for
medium/high purchasing power customers. After sending several orders and in anticipation
of a potential demand, they then established a subsidiary, which was chaired by someone
with perfect knowledge of the market in this sector. Cosentino gave purchase options to the
partners of the subsidiaries, although it reserved more than half of the shares with the purpose of implementing its policy of maintaining control on the distribution. If the volume of orders
of the country was very large, then production centres and workshops were set-up, where
Cosentino S. A. provided the know-how and training schemes for the staff. In relation to
management issues and marketing, Cosentino allowed a fairly broad autonomy, but required
always positive results.
“Cosentino gave purchase options to the
partners of the subsidiaries, although it
reserved more than half of the shares with
the purpose of implementing its policy of
maintaining control on the distribution.”
This was the path that was followed in 1997 in the US, as highlighted Francisco Martínez
Cosentino, "right now it is our external market with greater potential for growth.” Cosentino
pointed to human relations as one of its main assets within the company. "Good team work
is reflected in both the product and in the service. Not only the good work of employees, but
the quality of service of the workshops working with our materials is a way to convey our message: our customers are not warehouses which supply Silestone, but the people who want
to fit a quality kitchen countertops product.”
In the US a platform was created for international growth of the Group. In 1998 the Group’s
first subsidiary in the US was created, C & C North America based in Houston, Texas, a company controlled by the Group, and whose area of action comprised the US, Canada, Mexico
and Puerto Rico. The management of this subsidiary allowed the Group access to an 8%
stake of the kitchen countertops market in the US.
Thanks to Silestone, Cosentino was present in retailers specialising in construction in the US
such as Home Depot. The countertop was brought to the final consumer through the retailer
and the Cosentino Group controlled 80 workshops responsible for the production and insta-
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COSENTINO GROUP
llation of the countertop in the shape and colour that the client wished. In 2006 around 40%
of sales of the Cosentino Group were carried out in the US.
After years of crisis in the revival of Silestone, in its new and successful form (kitchen countertop) and the introduction in the North American market, the growth of Cosentino was enormous, with a turnover of EUR 29m, EUR 52.54m and EUR 84.38m in 1998, 1999 and 2000,
respectively.
With its headquarters in Cantoria, Cosentino was characterized since the beginning by a
strong commitment to its international expansion and the continual reinvestment of resources in business assets, innovation and technology. This policy of expansion was based on
the participation in a multitude of international markets and, especially, in the establishment
of subsidiaries with their own commercial assets and the development of distribution agreements in other countries like Australia, China, Japan, Singapore, United Arab Emirates and
Saudi Arabia.
Following the pattern of the United States, in 2007 Cosentino had managed to develop seven
more subsidiaries, (besides the aforementioned C & C North America in Houston, Texas).
Cosentino Northwest Europe, which was set up in 1999 has its headquarters in Deurne
(Netherlands) and it is a subsidiary that offers their services to 10 countries in the centre and
east of the continent, as well as Scandanavian countries. Latina de Vitória, created in 2000
to cover the specific needs of Latin American market, focussing its activity on the meticulous
preparation of Brazilian granites and their preparation for export. In the same way, Silestone
and Scalea products were distributed throughout Brazil from the facilities at Vitória (Espírito
Santo). Cosentino U. K., created in 2000, provided service to customers of United Kingdom
and Ireland, and had a workshop to develop Silestone countertops - Silestone of London-,
including a logistics warehouse in Watford. Cosentino Süddeutschland was created in 2003
with warehouses in Gottmadigen and Munich and in 2006 three subsidiaries were created:
Cosentino Scandinavia (Malmö, Sweden), Cosentino Porto (Oporto, Portugal) and Cosentino
Italy (Padova, Italy). (See APPENDIX: 1 International Subsidiaries).
As previously mentioned, Cosentino had six production factories, fourteen marble and quartz
quarries and nineteen manufacturing workshops throughout the world. The headquarters of
the company were located in the marble region of Macael (Almería), where Cosentino had
placed its industrial park in Cantoria. With an area of more than 950,000 m2, the park constituted the centre for production, administration and logistical support from where the group
controlled and supervised the
system of global distribution.
In addition to the central offices, the park included all production factories, (except the
granite factory at Vitória,
Brazil), Silestone plants I, II
and III, the marble plant - one
of the largest in Europe - and
the most recent which was
devoted to the production of
special materials such as
MURO.
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COSENTINO GROUP
During 2006, the production capacity of the plant Silestone III was expanded, with the addition of two new presses, thus reaching nine production lines that would produce approximately a million of panels of Silestone during 2007. (See APPENDIX 2 : Production Centres).
At an international level, the distribution of Cosentino was grounded in a system of subsidiaries, supported with centres of storage such as those at Deurne (Netherlands); London (UK),
or Munich (Germany), or underpinned with transformation workshops to manufacture kitchen
countertops as in the case of the US, Mexico, United Kingdom, Sweden or Spain.
Furthermore, in more than 50 countries of the five continents, Cosentino had agreements with
local distributors, the goal being the creation of greater potential added value reaching the
final customer. (See APPENDIX 3: Value Chain)
CREATING THE FOUNDATIONS OF NEW PRODUCTS TO MEET THE
CHALLENGES OF THE GROUPS’ FUTURE GLOBAL GROWTH
During the period 2004-2005 Cosentino invested EUR 95 M. For the period 2006-2007, they
intended to invest EUR 150 million more, for the most part, by the company. The main objective of these constants investment was, firstly, to maintain the position of leadership of the
company and further develop innovative products with the implementation of the latest technology. In addition, another of the goals was to improve the production capacity with the
development of a third Silestone factory as well as improving the logistics network and distribution of Cosentino at national and international levels with the opening of new warehouses
– such as those in Munich, London, Deurne or Porto -, and the modernisation of the existing
workshops in Spain.
At the international level, in 2005 the Group acquired the company American US Stone,
which specialised in the development of kitchen countertops. With a total investment of USD
15m, the Cosentino Group went on to control 100% of the American company and with it
their facilities and the Avanza trademark. The activity of US Stone focused on the manufacture of kitchen countertops to the entire US market, through the aforementioned trademark.
The Cosentino factories had an area reserved for continuous training. It was where workers
received a course prior to their recruitment at the factory. Furthermore, it was free of charge
to distributors and staff of workshops that wished to know more about the required care and
treatment of the materials developed by the group. Vocational courses and personal development for the workers were made available, so that they did not have to leave the region in
order to continue this specialised training. The congresses and seminars abroad on its products were continuing, "because we do not want to be distributed in simply any old way. It
is important that our distributors are aware of every detail of our products in order to offer
good service to customers .”
The group had an interdepartmental centre for research and development in the headquarters of Macael, besides maintaining a policy of active collaboration with leading external advisers in the field of design and the engineering. The comprehensive system of management
established by Cosentino since 2004 had evolved continuously since the beginning, along
with their policy of continuous improvement. In this way several sections were included such
as the technological observatory, which tried to detect new emerging technologies in the sec-
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COSENTINO GROUP
tor, the management of ideas and projects, which allowed the company capture ideas from
any source, whether Universities, clients, suppliers or the employees themselves, and the
management of the project portfolios, seeking an efficient implementation of the same.
At the end of 2004, the company announced the development and next marketing of a new
antibacterial Silestone. With an investment of EUR 70m, including the whole process of research, patent rights and test, the group from Almería developed this new material together with
the American company Microban International Ltd. This innovation made the new Silestone®
one of the world’s safest, most hygienic and resistant surfaces, while maintaining its own characteristics of colour and beauty. With this development, for the first time a material could be
obtained that inhibited the growth of bacteria such as the cause of salmonella, and the emergence of mould and other fungi that cause stains, smells or could deteriorate various products in places such as the kitchen, bathroom, hospitals and laboratories or in the catering
field. The new Silestone with antibacterial protection began manufacture in March 2005 in the
Cosentino Industrial Park in Almería, and since then has been exported to more than 50
countries. Cosentino manufactured annually almost 3 million square metres (the dimension of
each panel is 3 square metres) from Silestone. Throughout 2006-2007, with the incorporation of new production lines, production was estimated to reach 4 million square metres per
year. The leadership of Silestone in international markets has led the brand to become a new
product category: hygienic quartz surface. The variable design on this product came from the
study of the palette of colors, in which they took into consideration the tastes of consumers
in different countries of the world.
The Rivers series consists of seven colours: Amazon Grey, Nile Yellow, Mississippi Brown,
Sonora Gold, Yukon, Tigris Sand and Rhine, was the latest launch of the mark, coupled with
Leather, "the most innovative matt texture in the world market.”
The company also decided to boost the business of the marbles and other natural stones,
such as quarzites, Brazilian granites and soapstone. Their own quarries, preferred agreements with foreign quarries, and a wide network of distribution warehouses, were the ingre-
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COSENTINO GROUP
dients necessary to ensure the success of this re-launch, in which the design provided the
rest. Scalea by Cosentino was the new brand for positioning the natural stone of the
Cosentino Group, in response to the latest trends. Cosentino extracted and transformed a
wide variety of marble, adapted to the needs and tastes of consumers. Among the main references highlighted were the traditional marbles from Macael and new lines as "Perlado",
"Tranco", "Crema Luna", "Crema Marfil" or "Travertino Nazarí.” In 2005 these varieties were
introduced, all of them extracted from its own quarries. Solutions were presented for both
public and private areas in its three textures: Mirage, Glasse or Century and multiple formats.
ingredientes necesarios para asegurar el éxito de este relanzamiento, en la que el diseño
aportaba el resto. Scalea by Cosentino era la nueva marca para posicionar la piedra natural
del Grupo Cosentino, pensando en responder a las últimas tendencias. Cosentino extraía y
transformaba una amplia variedad de mármoles, adaptados a las necesidades y gustos de
los consumidores. Entre las principales referencias destacaban los tradicionales Mármoles de
Macael y nuevas líneas como “Perlado”, “Tranco”, “Crema Luna”, “Crema Marfil”, o
“Travertino Nazarí”. En el 2005 presentó las variedades antes citadas, todas ellas extraídas
de sus propias canteras. Soluciones tanto para ámbitos públicos, como privados debido a
sus tres texturas: Mirage, Glasse o Century y a los múltiples formatos en que se presentaban.
During 2005 the company made an investment of more than EUR 4m in research and development, with which it secured new textures and ranges, such as the system Muro by
Silestone, which continued to live up to the quality criteria and resistance which are already
applied in their products and brands. Their new product MURO by Silestone, consisted of a
system for the cladding for interiors, in mosaic format. Made from Silestone material, MURO
is a solution for decorative public and private spaces that is characterized by its lightness and
ease of handling, which facilitates its installation, even by the same user that can customise
its application to their own tastes. At the same time, MURO maintains the rest of attributes of
Silestone, which include its low porosity, its easy cleaning and high resistance to acids, heat,
staining or impacts.
Thanks to its chromatic variety and decorative possibilities, MURO could be installed both at
home and in public spaces, stressing its use in the front and back parts of kitchen and bathroom countertops, shower areas or wall claddings. They launched their first collection consisting of eight combinations of colours most used in the kitchen and bathroom countertops.
In February of 2005 Cosentino became the first Spanish company to advertise a product or
brand in the great sporting event, the "Superbowl.” The advertisement with famous ex-players from the NBA and football, improved the importance of the Silestone brand in the most
competitive market in the world.
During 2006, Cosentino participated in more than 20 national and international trade fairs. In
Spain it usually participated in fairs like Cevisama, Casa Pasarela, Construmat, SICI or Piedra.
In Europe, it highlights its participation in fairs of recognized prestige as Interbuild and KBB,
London Surface Show and Grand Designs Exhibition, all of them in the United Kingdom,
Marmomacc in Verona (Italy), Concreta and Tektonica in Portugal or Equip’hôtel in France. In
the United States presented its latest collection in K/BIS(Chicago) or in IBS (Orlando).
In Brazil, the company participates in the International Mármore and Granite Exhibition in
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COSENTINO GROUP
Vitoria, in the Kitchen & Bath Expo in Sao Paulo, as well as in the various Casa Cor exhibitions held in thirteen of the major Brazilian cities. The United Arab Emirates or China, are two
areas considered strategic by the Group where Cosentino participates in various exhibitions
such as the Hotel Show and Big 5 Show of Dubai, and the Kitchen & Bath event in Shanghai.
During 2006 Cosentino conducted a multitude of presentation events of the new antibacterial Silestone. From Amsterdam to Sydney, Melbourne to Sao Paulo, perceptions of the
Group were generally good, stressing the enormous contribution to improved hygiene and to
home safety.
In 2005 the Cosentino Group obtained a consolidated net sales EUR 326.8 m in 2005.
Cosentino, as a Spanish family company, had been characterized by having experienced a
steady growth since the beginning. This growth was remarkable especially in the past five
years coinciding with the expansion of its brand Silestone, both in the Spanish market as well
as in the rest of the world, especially in the US. (See APPENDIX 4: Evolution of Net Sales and
Fund).
According to Francisco Martínez Cosentino: "The other key to this steady increase is the
policy of international expansion supplemented by the reinvestment of capital and participation in the management of all stages of development of materials and products, from the
extraction to the installation in the homes of consumers.”
In the financial year 2005, 71.5% of sales of the Group were from sales abroad. By region,
the main market for Cosentino was concentrated in USA/Canada (62%). The next was located the Spanish market (29%), the rest of the European countries (7%) and, to a lesser extent,
Latin America (2%) and other countries like India, China and Australia. The turnover forecast
for the Cosentino Group in 2006 was EUR 369m approximately. (See APPENDIX 5:
Distribution of sales by regions and the APPENDIX 6: Financial Statements of 2005). When
speaking of the economic performance Francisco commented "I don’t see my life as a gene17
ration of wealth for exclusively personal benefit. If you do not think you are to help to create
wealth and social welfare to around you, you become hated and despised. In addition, the
personal satisfaction you produce by seeing your people, your town, your district and your
province profit cannot be paid for with all the money in the world.”
The first European convention for distributors was approaching, in which for the first time, the
company from Almería would meet their European distributors in an event that intended to
reflect on the growth by the group in this market. 200 professionals from 17 countries throughout the continent would have the opportunity to review the different enclaves in the province. The event was included within the growing strategy of consolidation and expansion for
the European market which had engaged the company, and was aimed at becoming a meeting point on an annual basis for the commercial organisation of Cosentino throughout
Europe. This was not the first experience of the group in this type of event, since in October
2006 the seventh edition of the meeting of the American distributors had taken place.
The success in Spain and the North American market was clear, however Francisco wondered what else could be done in the European market to increase its turnover and market
share. The strategic alternatives that were in Francisco Martinez Cosentino’s head in order to
achieve the above were several though certainly not exclusive: From the point that the primary production would be from the region of Macael and that the group has subsidiaries in
the major European markets, the first alternative that he came to was to emulate the process
followed in the United States. In other words, trying to get through to the "Category Killers"
such as Home Depot which existed in different European markets, in order to make the process of adding value to the countertop in workshops or own franchisees by the company,
ensuring the largest added value as possible, the control of the brand and contact with the
final customer. Another strategic option was entering through the kitchen shops in every
European country, which would entail a major deployment of commercial structures in each
of the countries. Not discarding the possibility of the purchase of a European company which
was already positioned in the market for kitchen countertops thus facilitating the introduction
of the company in the old continent.
18
As a senior manager of the company suggested: "if we really want to become the leaders of
the European market for kitchen countertops, we would really dominate the channel through
setting up a wide network of kitchen shops throughout Europe"
“Not discarding the possibility of the purchase of a European company which was
already positioned in the market for kitchen
countertops thus facilitating the introduction
of the company in the old continent.”
19
In more depth
3
1.- What was the key for the Group to overcome the serious crisis which it suffered in 1993?
2.-What is your opinion of the steps to set up in a market abroad taken by Cosentino?
3.-What is your opinion of the policy of training for internationalisation?
4.-What is your opinion of the strategy of control over the brand, the channel and achieving
greater potential value followed by the group in their markets?
5.-What is your opinion about the strategy of quality and innovation followed by the group
and its relationship with internationalisation?
Analyse
4
The first European convention for distributors was approaching, in which for the first time, the company would meet their European distributors in an event that was intended to reflect on the growth
by the group in this market. 200 professionals from 17 countries throughout the continent would
have the opportunity to review the different enclaves in the province. The event was included within
the growing strategy of consolidation and expansion for the European market which had engaged
the company, and was aimed at becoming a meeting point on an annual basis for the commercial
organisation of Cosentino throughout Europe. This was not the first experience of the group in this
type of event, since in October 2006 the 7th meeting of the American distributors had taken
place.Furthermore, Cosentino had held three other conventions for the distribution channel in Latin
America.
The success in Spain and the North American market was clear, however Francisco wondered,
“What more should be done in the European market to increase their turnover and market share?”
5
Meet the team
COSENTINO GROUP
An Interview between La Entrevista and Francisco Martínez Cosentino
E. We are talking about a family group, a group that belongs to you, the Cosentino group.
The Cosentino group was small to begin with but it is has successfully grown and introduced
itself around the world, hasn't it?
F. That is right, it is a family group, we are three brothers who started out with sixteen workers but today we employ 2050 workers around the world and 970 of these workers work in
Spain. 70% of the company's turnover is made abroad through exports. We don't invest
abroad. Today, Cosentino makes more than 250 million euros thanks to its large distribution.
E. How does one make it on to the TIME magazine’ list of the seven products that are going
to increase the quality of life of citizens?
F. For us it was a surprise when the TIME magazine phoned us. It was a privilege to appear
on the cover of October’s edition for having produced one of the innovative products of the
C21st. It was satisfying, because Cosentino has made a big effort with Silestone. By adding
to Silestone microban we have made kitchen tops where bacteria cannot grow. This needed
an investment of 60 million euros which for a company like ours makes up an important investment directed to improving our products.
E. We are all used to thinking about Silestone for the kitchen tops and floors as well as for
bathroom tiles. This is a product that has been well received everywhere. Where did the ideas
for Silestone come from?
F. Firstly, Silestone is quartz. Quartz is one of the most beautiful and strongest stones that
exist. Ancient civilisations considered quartz to be the stone which gave most luck and that
is what Silestone is, quartz. It is all thanks to hard work. At first it was difficult because we
were working with rests of marble which was not easy to do. However, my team and family
worked hard through these difficult times until we came up with Silestone. Instead of making
a marble product, Cosentino produced a quartz product. Using quartz was the secret to our
success.
R. Is Cosentino ahead of society or does society demand products such as Silestone? How
did this product come about? Why do companies listen to the needs of the public or why do
companies decide to take such products to the market?
F. […], We did not know the niche of Silestone was kitchen tops, at first Silestone was being
promoted with products that were not in the same market niche as Silestone. Suddenly we
came across kitchen tops and this is when everything started to go well for us. It was as if
this product had a market niche that had been waiting for it all along. We had hit the bullseye in what concerns the ideal product for a kitchen top. This has been Cosentino’s great luck
and its work.
R. However, what does seem obvious is that to produce a product such as Silestone reseach and development must take place. How much does Cosentino invest in R+D?
26
F. Well, in 2004 it was 9% of its turnover which was more than 5 million euros. But since then,
Cosentino has invested 60 million euros in research and development. This is what distinguishes us from our competitors. At the beginning you could only find Silestone in the market but
today our competitors want to copy us and because we want to continue having a leading
edge over our rivals we invest significantly in R+D. The quality and the different products that
have arisen because of R+D is what has made Cosentino successful.
E. And how many people work in the Research and Developments department?
F. Well there are ever more people working in this field. We have 30 to 50 people working
jointly with other companies and universities. For example with antibacterial microban we are
working alongside an American company, we bought the patent for microban and we jointly
did the research for this product. The research is jointly done by Cosentino and this American
company.
E. I am struck by the fact that you continue to live in Macael a town ridden with production
plants.
F. I think that one is always proud of the place where one comers from. In Spain there are
many business leaders who like to do business in their region. For example, Armancio Ortega
and the el Pozo family have chosen to set up companies in their home towns and in so doing
have helped those places develop. You see in a business it is not all business, what surrounds
it is also important. In my case my family and I cannot imagine my family moving somewhere else.
E. […] Is it possible to work well from Andalusia?
F. Firstly let me tell you that you can work perfectly well in Andalusia. Nowadays you can produce from anywhere in the world that is globalisation. It is manageable to produce the products here and to send them to the U.S.A. At the moment Cosentino is the company which
ships the greatest quantity of products from Spain to the U.S.A. Therefore, you have my word
that one can work from Andalusia. However, Andalusians have yet to fulfil all the necessary
conditions needed to work with any country in the world. As you mentioned before it has to
do with survival. I have seen how the coal fields of Salau closed down and how around
Almeria they went form working with grapes to working with coal.
27
COSENTINO GROUP
E. […] We have heard talk about the Andalusian government’s interest in research and development. What is the relationship between Andalusian businesses and the Andalusian
government?
F. Well, Cosentino has entered the Technology Foundation. From the 40 companies that
entered, most were saving banks, financial entities, some developers and some entrepreneurs such as Cosentino. We collaborate as we have a renowned technology centre in
Macael where we are constantly working to produce new products, advising and helping
small businesses on R+D as most of them do not have the technological facilities we have.
These businesses can carry out their research from our centre individually or jointly. By helping these small and medium-sized companies flourish we are helping the region to develop
and this will create a great amount of work in the future. We are hoping Andalusia becomes
another Benetto (in Italy) a place where once small and medium-sized companies develop,
they appear all over the world and do surprisingly well.
R. Previously, we talked about how Cosentino is ahead of society concerning innovating products and you mentioned that almost 60% of Cosetino exports go to U.S.A and the 29% of
remains in Spain. Is there much difference between tastes in the U.S.A and Spain?
F. The tastes are different. For example the colours that are sold in the U.S.A do not coincide with those sold in Spain. […]The advantage that Cosentino has is that it can adapt to any
market as it is impossible to work in the same manner in different markets. Different markets
require different sales, marketing and distribution procedures. We try to emulate Laurence of
Arabia which is to say that we adapt to the places where we are present. If we are in the
U.S.A we are American.
E. And in China for example,
F. We are also working there and we also try to get to know the Chinese way of working and
the Chinese market well. As I said before, we try to adapt no matter if we are in China, Iran
or an Arab country. To succeed, I believe that it is important to get to adapt to the countries
in which we work and we can do this by listening and speaking to them and by getting to
know their culture and tastes. This is what we do to survive abroad.
E. And what tastes do foreign countries share in common with us?
F. The countries that are most similar to us are all the South American countries, the Arab
countries and those countries which are similar to us. At the moment Italian and Spanish
design is increasingly demanded in the Anglo-Saxon world. However, their taste is different
to ours they prefer darker colours to us.
E. […]I think training workers is important. What training do your 2000 workers receive?
F. Training our whole workforce is of particular importance since we have developed a new
industry. We try to motivate the skilled workers to pursue Master courses so they become
better prepared. We never stop training them because they are our future. The people who
undertake the R+D as well as the Sales and marketing are Cosentino workers. This is the reason it is important to invest in the personnel and to treat them well so they can feel identified
28
COSENTINO GROUP
with the company. We might have not been able to achieve this objective 100%. But it is the
will of the company, the managers and my family is to obtain this objective as we know the
future of Cosentino is its people. I am also going to add the most important asset a province
or a region has is its people - not its wealth nor whether it has marble like the one you find in
Macael but its people.
29
Appendices
COSENTINO GROUP
APPENDIX 1. INTERNATIONAL SUBSIDIARIES
APPENDIX 2.PRODUCTION CENTRES
Fábricas
Macael (Almería)
Canteras
Marble
Vitoria (Brazil)
Talleres fabricantes
Macael (Almería)
Houston (USA)+ 15 localisations.
Alicante (Spain)
London (UK)
Murcia (Spain)
Mexico DF (Mexico)
Granada (Spain)
Malmö (Sweden)
Bilbao (Spain)
Granite
Vitoria (Brazil)
Quartz
Caceres (Spain)
APPENDIX 3. CADENA DE VALOR
Extraction
32
Manufacture/Investigation
Distribution
Installation
COSENTINO GROUP
APPENDIX 3 (CONTINUED) DIAGRAM OF THE DIFFERENT PHASES OF
THE PRODUCTION PROCESS OF SILESTONE
LIZARRÁN EN EL MUNDO
33
COSENTINO GROUP
APPENDIX 4: TOTAL SALES AND EQUITY
Total Sales (millions of euros).
Total Shareholder's equity (thousands of euros).
APPENDIX 5. DISTRIBUTION OF SALES BY REGION
EE.UU and Canáda are grouped
Sales distribution.
34
COSENTINO GROUP
APPENDIX 6: FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET - 31 DECEMBER 2005/2004
ASSETS
2005
2004
Fixed Assets
185.745.023
98.978.455
Goodwill
2.415.419
2.315.372
Deferred Expenses
217.677
954.605
Stock
56.526.605
28.313.245
Accounts receivable
66.666.913
57.003.932
Short-term Investments
19.194.925
19.716.050
Cash account
19.756.575
9.072.119
Accrual
3.304.436
900.004
TOTAL CIRCULATING ASSETS
165.449.454
115.005.350
TOTAL ASSETS
353.827.573
217.253.782
CURRENT ASSETS
LIABILITIES
2005
2004
Shareholders' Equity
135.500.000
106.900.000
Minority Interests.
24.519.400
15.040.751
Negative Goodwill on consolidation
51.005
0
Various deferred expenses
15.500.700
Provisions for liabilities and charges
590.359
66.343
Long term creditors
59.759.430
14.450.271
Short-term creditors
117.906.679
76.667.167
TOTAL LIABILITIES
353.827.573
217.253.782
4.129.250
35
COSENTINO GROUP
Consolidated Profit and Losses 2005-2004
2005
36
2004
Revenue
326.800.000
241.500.000
Total operational costs
255.352.557
180.098.938
Operation profit
71.447.443
61.401.062
Total financial costs
15.771.714
4.436.599
Positive Financial Results
0
2.335.959
Negative Financial Results
-9.001.009
Ordinary activity gains
64.676.738
63.501.702
Extraordinary costs
3.115.545
273.705
Extraordinary profit
939.968
2.344.517
Consolidated profits before taxes
62.501.161
65.572.514
COSENTINO GROUP
37
Cosentino Group
A case of successful internationalisation
INSTITUTO INTERNACIONAL SAN TELMO
Author: Miguel Ángel Llano Irusta