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Axilone talks diversification strategy

Alissa Demorest
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Axilone talks diversification strategy

With its acquisition of formulation specialist Anewcos in China, Axilone is reorienting its strategy for growth. Read our sneak preview of the exclusive feature interview published in Luxe Packaging Insight sister publication Formes de Luxe's Summer 2022 issue with Axilone's management team. 

Strategic changes are underway at Axilone. What exactly is on the cards?

Laurent Chevallier: For many years, about three quarters of our activity came from major international brands. Makeup, our primary market, was extremely dynamic and we wanted to retain our focus on those clients to maintain quality contract fulfilment and our supply chain. The simple fact of delivering high quality, on time, and to capacity in a rapidly growing market was a challenge! We didn’t want to spread ourselves thin by expanding into other product categories or geographic zones. With the arrival of our Chinese shareholder in 2018, we became more attuned to the Chinese market. At the same time, a number of local and international brands were emerging in our segment there, namely masstige and premium players. We decided to approach China and greater Asia through direct client relationships, while continuing to serve our international clientele. To address the needs of the Chinese market with our historic primary packaging offer, we applied our model to what, at the time, was new territory for our company. And we noticed differences: first of all, time-to-market for domestic brands is much tighter—by two to three months. In addition, the projects we were getting from the “younger” brands were far less developed than what we were accustomed to from our international clients; these newer companies have an intense launch schedule and are very marketing focused. But their projects are less developed, so their needs are broader.

So these brands are looking for expertise beyond “just” packaging?

LC: Yes, namely design expertise. The design briefs are much more openended. This, coupled with a shorter time-to-market, is why we’ve made changes to adapt to the Chinese market: we set up a design-pack unit that offers creative and technical expertise to guide product development, and we expanded our stock offer to respond to growing demand. There’s also the fact that these marketing-oriented brands have no industrial footprint— they outsource a large portion of their operations; specialized manufacturers control project execution, including formula development, filling, etc. Our European customers have a completely different way of operating. As a result, formulators and fillers have more power on the Chinese market.

Initially, your idea was to partner with a Chinese player to offer turnkey services.

LC: Yes, but in China, our factories are specialized in metal and plastic. The question was whether we should diversify or not. How could we make the best use of our technology—aluminum stamping, plastic injection, and decoration and surface treatments—to manufacture other beauty products using the same materials? That’s what led us to buy Anewcos (turnover: around $20m) in 2021. The Chinese company has expertise in skincare and powder formats as well as a catalog of proprietary formulas that complemented our offer. For us, it was a logical move as it meant we were diversifying our offer and acquiring a one-stop shop capacity. Since we didn’t want to change Axilone’s DNA, we opted for a smaller company positioned on the Chinese market and with expertise in formula development. Our primary objectives are to use its assets for Chinese brands, to modernize production in order to increase our capacity, and to create synergies with our customers.

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