French Cork and wine barrel maker, Sabate Diosos, has revealed plans to restore the profitability of its closures division, which has been suffering losses in recent years.
Formulated by the company's management team the plan involves gains in terms of raw materials, enhancing logistics to reduce costs and redeployment of the sales team.
The division is planning to overhaul its procurement strategy by buying materials according to sales forecast, keeping supply more flexible and firming up pricing policies. The company estimates such measures will save the company around €3.5 million next year.
The company has completed several acquisitions in recent years requiring the integration of their operations. Current complexity generates additional costs and prohibits the realisation of economies of scale, the company said. The new plan provides for refocusing the division on its three main centres at Céret in France, San Vicente de Alcantara in Spain and Rabat in Morocco.
Still-wine closure finishing will now be carried out at Céret in order to provide fast turnaround and optimal service to European customers. The plan also calls for closing the sites in Burtigny (Switzerland), Bordeaux and Le Muy (Var) in France. Customer service will be strengthened by having Céret function as the sole logistics centre in Europe.
Finishing centres recently opened in the United States and South Africa will be expanded in order to provide local service to customers in wine-producing regions outside Europe.
The plan will also provide "beyond-reproach" continuity of service in the Champagne business for customers of the Sibel and Truchon-Jano brands. As a result, the Cumières production site will be transformed into a modern finishing centre, and the Palamos site in Spain closed, with the sparkling-wine closure component production transferred to Corchos de Merida.
Lastly, the division will withdraw from Eurotapon (agglomerate corks) and Transab (transport).
Combined, these measures will reduce full-year costs by an estimated €6 million.
The division's sales force has recently been strengthened with a new Champagne sales unit (June 2002) and the creation of a worldwide and multiple-brand Closures division sales function (October 2002). In addition, a new sales director for the Suber and Sibel brands is due to take up his position shortly. The company says that such measure have already reduced costs and the methods used to manage sales staff will be changed substantially next year in order to increase motivation and efficiency.
The company also said that its Altec closure range is being extended, which should lead to market share gains.