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Already a well established player in the marketplace, cooler manufacturer Cosmetal has its sights set on even bigger and better things. cooler innovation Editor Hannah Oakman visited the company at its Recanati headquarters to find out more.
Total drinking water solutions is the current mantra of Italian cooler company Cosmetal, but it has not always been so. The name Cosmetal is a shortened form of costruzioni metalliche (literally metallic constructions in English), reflecting the company’s past interests in manufacturing metal components for the office market.
To discover the real roots of the company, you really need to visit Cosmetal’s headquarters, based just outside Recanati, a short journey from the busy port town of Ancona on Italy’s Adriatic coast. This is a relatively unspoilt part of the country, a beautiful area of sunflower filled fields, rolling hills and a coast line sparkling in the sunshine. As the birthplace of famous Italian romantic poet Giacomo Leopardi, it is not hard to see where he found inspiration.
But along with lovely scenery, the area is also famous for manufacturing, from lighting specialists to musical instruments, including companies such as Clementoni, still around to this day. In fact, this is how the company founder Sen Morilli (the father of the current Chairman Fabio Morilli) started out in the 1950s, as a specialist maker of keyboards for electric organs and harmonicas. An original keyboard still sits proudly in Fabio’s office, a reminder of Cosmetal’s roots.
Today, as most people in the industry are aware, Cosmetal is one of the best known and ubiquitous water cooler manufacturers both in Europe and on an intercontinental scale. The company employs around 80 people and had turnover last year of around €17 million. It shipped out around 80,000 water coolers from its wide range last year, with the majority staying in Europe, including vast new markets in Russia, along with customers in the US, Japan, where they are reportedly increasingly attracted by classic Italian design, and as far away as Australia.
In fact, the company has always had an “export spirit” with exported products accounting for a very high percentage of sales. Cosmetal is currently enjoying a great deal of success in parts of the Middle East, with many units sold in Israel, Oman and Saudi Arabia, working mainly on a non exclusive basis with both local distributors and the well known multinationals.
A visit to Cosmetal’s offices and plant clearly shows that working atmosphere is an important part of the business. The purpose built facility, which opened in early 2005 is light and airy, with brightly painted walls in the company’s signature blue. Even the production floor, which you might expect to be noisy and dull, is surprisingly quiet and light, due to the fact all machines are fully hand assembled and staff can enjoy the views of the Italian hills out of the windows.
Tiled corridors with open plan offices off to each side reveal sales and technical teams hard at work, plus design teams using the latest computer aided design software to develop “fly throughs” of potential new cooler designs.
Including this new facility, Cosmetal currently has two production sites. The older facility, nearer to Recanati is due to be relocated next to the new one, offering an 8,000 square metre production site, set to open early in 2007. Current output is around 250 machines per day, with an impressive 800 variations in the models when taking into account customers’ various preferences for colour, water types and sanitisation methods.
cooler innovation interview
Cosmetal Sales and Marketing Director Daniele Nava explained more about the evolving nature of the business.
How did the company move from musical keyboards and metal parts manufacturing to water coolers?
“In the 1970s, the company became involved in refrigeration and related projects in the catering business, which is more in line with the current business. In fact, the first coolers were produced for the catering industry. Around this time, Cosmetal launched the Niagara, the first point of use (POU) machine for the catering industry and the longest serving product in our current range.
At the time, POU was a very new concept so, without really knowing it, we started to do something different. Following this came a range of fountains, including the River, aimed at schools, hospitals and the municipal market.”
When did manufacturing of bottled water coolers begin?
“Around the mid 1980s, we began to look at bottled water coolers, launching the Rio - a classic square water cooler.
“We later brought out the Avant and Connect models, investing a lot more in these two products. The design for the Avant cooler arose from wanting to create something a little more inspired. We realise that a cooler is a cooler, and there are limitations, but we looked at developing the rounded shape, with multiple pieces which are easier to replace singularly, plus a more aesthetic built in cup dispenser. You have to combine practicality with ergonomics.”
What has been the focus of some of your more recent designs?
“In 2003, we launched the Jet, a POU product with hot, cold, ambient and sparkling water, using ice bank technology to produce a continuous six litre supply. The Jet is suitable for all sectors, with particular suitability to professional and industrial customers.
“Sanitisation obviously remains a top priority. We offer Self Sanitising Technology (SST) to provide the highest safety levels and prevent bacterial growth within the cooler. The system has a removable reservoir which can stay in the cooler for 12 months.
“We believe that we have to push the hygiene message hard. While the SST technology means distributors may not have so many opportunities to visit and sanitise their customers’ coolers, the cost can be built in by distributors, saving time on their part.”
What are the most important aspects of the design process?
“As well as always considering the ergonomic aspects of any new model, we are also looking at environmental issues as these are a reality and do have cost implications. We already comply with the RHOS restrictions here in Italy and the WEEE Directive is having an impact across European markets.”
Which areas of the business are growing at the moment?
“We are having a lot of success with our POU machines, while maintaining our share of the bottled water cooler market, which obviously has a much larger base. It does seem that POU will continue to be more and more important, but the bottled market is huge and still very important, so we cannot lose sight of this. In Italy, for example, the POU market is just starting out and the issue of poor tap water quality, perceived or otherwise, is one of the biggest barriers to growth.
“We are still looking at the residential market and have plans for further innovation here. While the Jet cooler has recorded 80% of its sales in the home, it probably offers too high an output for the average family and, size wise, is still a little big for European kitchens.
“In other sectors, such as schools and hospitals, the Niagara model has proved a success. With water becoming a more popular drink in schools following successive bans on soft drinks in vending around Europe and in the US, we believe this will continue to increase.”
How do you win new business?
“We have a certain advantage as we have been in this industry for over 30 years and have a wide range of products. In a lot of countries, Cosmetal is a well known name and we have been working with some distributors for over two decades. We are of course looking to acquire new clients, which happens through various contacts and marketing activities.”
Do you face much competition or barriers to growth in the market?
“We are not afraid of fair competition - it is normal practice in any industry. Competition helps our research and development teams to come up with new ideas, our sales team to be better, and our production to be more effective. It boosts the industry and means we do not focus purely on price.
“But what does bother us, to a certain extent, is low price imports from certain markets. We do not know how long these imports will last but we still have to plan how we can compete.
“The reality is that we are losing some clients in certain markets. They are buying cheap models and keep Cosmetal models to attract customers at the high quality end, while pushing the cheaper cooler harder. Again, this is not all bad news as it forces us to look at more efficient production methods - we have already become more competitive as a result.
“The threat also varies from market to market. For example, we see the Middle East as very much a price market, whereas European distributors tend to display a bit more loyalty.”
Can you compete on both quality and price?
“We believe that the industry must aim to maintain quality standards. If we all just focus on price, this is the beginning of the end. It all comes down to whether price or quality issues are most important.
“We made a choice that the quality is the most important. In the long term, I believe that if you don’t have quality, you will run into problems. We realise that “quality” is a word which everyone uses frequently, but we really mean it. We will not produce cheap coolers. Of course we will always look at our efficiency and staying competitive, but we will not cut quality to cut price.”
Is manufacturing in West Europe now more expensive in general?
“Yes, of course, more so than other areas, but we are lucky here that we are in an area where we can be competitive. If we were based in Milan, for example, our overheads would be much higher. The introduction of the euro here in Italy has affected the general cost of living but this is all relative in terms of manufacturing costs.
“I do believe there are advantages to being an Italian company, as we have a great heritage of manufacturing in this country, not just in water coolers, but in many other well known household and industrial appliance brands.”
How do you work with distributors?
“We are willing to create exclusive agreements with distributors located globally. For example, in the UK, Spain and Ireland, there are distributors who are committed to our products and we are committed to them. We will not sell our products to anyone else, within the same product range.
“However, sometimes when we become involved with the big players it can be difficult because they do not tend to create agreements. We believe in partnerships which are reciprocated and wish to create a network of partners. We always wanted to have our own independence, rather than be at the whim of the fortunes and acquisition activities of the big players.”
Do you have a wish list for distributors?
“Our ideal distributor is the one which values our products above others. If we are only 1% of their turnover, it’s difficult for us to have real loyalty from them.
“It is a reciprocal thing. We are more than happy to work closely with distributors to look at different markets and see what the best strategy would be. We don’t want to be just supplier and client, we want to be partners looking together at co-marketing activities, trade shows, special promotional items, email marketing. In doing so, we can boost the entire market.”
What does the future hold?
“We are set for a busy period, with our new 8,000 square metre site due to open next door in 2007. We are also looking at expanding our marketing and sales department. While we already have managers responsible for each geographical area we focus on, our strategy for partnerships means we already need more people on the ground.
“We are always looking to new markets. This includes improving our position in West Europe and developing in East Europe, with Russia as one main focus.
“We want to be a truly global company and now have the capability, finances and desire to achieve this. We will expand our sales network and maybe open new operating subsidiaries in certain markets. We certainly believe our future will also be based on acquisitions, so watch this space . . .”