Q&A: GIMA’s Lorenzo Maldarelli

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By Dan Shryock

GIMA, a division of the IMA Group in Bologna, Italy, is a leader in primary and secondary coffee packaging. It plays a key role in the single-serve coffee and tea markets. With the recent acquisitions of Parma-based Mapster packaging machines and coffee roaster manufacturer Petroncini in nearby Ferrara, GIMA coffee has further solidified its position in the industry.

STiR interviewed GIMA c.e.o. Lorenzo Maldarelli in October at the company’s Bologna offices to discuss the company’s growth, the recent acquisitions, and the future of single-serve coffee.

STiR: GIMA has established a strong position in the coffee industry since becoming part of IMA in 2010. Where do you see the company today?

Lorenzo Maldarelli: We have to say GIMA coffee has been able to pull together all the technologies available within the IMA Group. The president of the company, [IMA’s] Mr. [Alberto] Vacchi, is our main sponsor to make the coffee division one of the leading suppliers in the world. Our target today is to complete the process of making the division fully compliant with the customers’ requirements.

What does it mean? For us, the target is to approach the coffee roasters and provide them whatever they need to process and pack the coffee.  It doesn’t matter where they want to put the coffee. It can be in a capsule, in a paper pod, in a bag.

Our strategy is to complete the full range of technology for primary packaging, secondary packaging, and end-of-line [services]. This is an area of strength because if you look at the market several of our competitors are not able to supply turnkey solutions. Some of them are leading in one specific technology but none of them are in the whole range of technologies.

Where do we stand? We are almost at the end. Through our recent acquisitions, we are covering the [roasting] process with Petroncini. GIMA is the umbrella under which there is the primary and secondary packaging and now with Mapster we are able to enter and penetrate the entry-level segment of coffee roasters.

With this said, I think we almost doubled our sales in the last year. This year, the coffee division is going to total about €50 million [$59 million] so we are a relevant player in the market. We are at a good stage but we are not finished yet. We need to have the technology to satisfy the market. We need to penetrate the entire market without always using the same keys. These acquisitions help us do that.

STiR: Single-serve capsule packaging is GIMA’s the primary channel. What are your growth opportunities?

Maldarelli: Single-serve is still covering 70% of our overall business. It’s still leading, it’s the place where we do our major investment. Paper pods remain a very interesting market, not big but it’s still there. We have the technology and GIMA has always been recognized as a leader in this sense.

The bags and all the rest? We are not there yet but we are coming. In our business, there is importance in secondary packaging – how we pack the capsule down the line. This has been an interesting development. Whenever we make a fill-up most of the time we also do the secondary packaging. We provide the full line – primary, secondary, and end of line. This is the strategy. If we look at our turnover, probably our primary packaging represents about 65-70% and the rest is the secondary packaging. That is a valuable slice of the business where our direct competitors most of the time are not there.

STiR: You said Mapster’s technology serves a smaller market. Can you briefly describe the difference in technology and how this serves GIMA’s mission?

Maldarelli: Yes, Mapster is a more open source platform. It’s coming from a more traditional technology platform.

We can provide an economic benefit for the customer. Everybody knows when we do packaging and that can be made through different means of technology. If we consider the GIMA core technology it can be a little more sophisticated electronically or more advanced technologically for both the machine and the customer. So, it requires people with more advanced technical skills and a deeper training. On the other side, there can be customers looking for entry-level and lower-speed solutions, or considering buying their first capsule machine, so we can now propose Mapster, that can be a little bit easier to handle with lower capital investment.

This is a different level of technology and we believe this is the right tool especially when entering a less-developed coffee market where single-serve is coming but is not yet there. This is good technology that matches with a certain level of expectations. The customer that buys Mapster tomorrow can be looking for a further investment [with GIMA] later.

STiR: The IMA Group is invested in a variety of packaging markets such as cosmetics, pharmaceutical, and food processing. How does the technology in another IMA division apply to your coffee division?

Maldarelli: Somebody looking from outside sees available technology in different segments. At the IMA Group, we are able to share technology, competence, and information. These are the key drivers. This really happens. A business manager like me interfaces with other business managers in order to generate this open source connection. This is a strength of being part of a group.

Whenever there is a need for technology we don’t look for investment unless first we look inside for an opportunity. When we see a very strong pharma positioning or a food positioning, we communicate. This exchange is always taking place. I manage profit and loss so my duty, in the end, is to come out with results. I cannot afford to develop everything. We know what we need, and we know what is available [within IMA]. This, for me, is a real strength. The advantage is that everybody is sharing a piece of the cake and the benefit is huge.

STiR: With Petroncini, GIMA is entering a new segment of the coffee market – roasters. Why was this an important acquisition?

Maldarelli: IMA traditionally is a company that produces packaging equipment. In some cases, IMA is, or in some cases was, in processing. In pharma, we are also combining part of the pharmaceutical processing because there is a tight combination with the packaging. So, whenever there is an opportunity to combine a process, for us it is an opportunity. The target is to go once to the customer and explain what we can do. In this case, you multiply the opportunities.

With coffee we see an opportunity. We knew Petroncini even before the acquisition took place. When we had a common customer, maybe a small customer or a newcomer who understood coffee opportunities, we worked together. This is how we want to position ourselves now in order to combine the two activities, processing and packaging.

When you want to make an investment you first start with the process before you go to the packaging. From a business point of view, you want to jump in as soon as opportunities are available. I know we don’t invest much in processing in other packaging divisions, but in this case, I see an opportunity to combine these organizations and penetrate the market. Technology-wise, [roasting and packaging] are different things so everybody has his own know-how and competence but still we work together.

STiR: Was there something about Petroncini’s equipment or technology that attracted you?

Maldarelli: Whenever IMA approaches a potential acquisition, we first try to understand what is going to be part of the group so that the acquisition makes sense from a strategic point of view.

Second, we understand that the potential seller has technology that complements our needs. So, we look for nice, maybe small, but high technology companies that can grow with our strength and our support to a bigger industrial level.

When we looked at Petroncini, I can tell you that incredibly even for me they already achieved a very high-level customer base. This really switched on the lamp and said that the technology is there. They are not where the [larger roaster] competitors are because they did not have the opportunity and strength and power of investing and growing. With us, there is a chance to grow. This is already taking place.

STiR: Petroncini c.e.o. Claudio Giberti recently told STiR the decision to sell his company to GIMA was an easy one. It was good for the company and good for his employees, he said. Was the decision to acquire Petroncini just as easy for you? 

Maldarelli: The decision was easy especially because apart from the assets we found an owner [in Claudio Giberti] who was willing to sell and allow IMA to enter and participate. Claudio is a passionate man of the market. He is really driven; he is the real engine of the company.

When we approached the company we immediately understood the strength of the company was there. IMA is quite used to make acquisitions and the way we work is very easy. We have a very consultative decision-making procedure. When we enter a company it’s not like we a conquer a company and place a flag and say this is mine and from tomorrow all the rules will be changed.

We don’t change the rules of the game because, if it’s doing well, the company needs to continue. We come as service people. What do you need? You need more production capabilities. You need engineers. We operate at any level as a support for the company. This is a strength. This is our approach, our way to work.

STiR: GIMA’s coffee position relies on the single-serve capsule. Do you have any thoughts about the future of single-serve?

Maldarelli: I can give you my viewpoint today, but I don’t have a crystal ball. In general, the coffee market is a very appealing market from any point of view. And no doubt single-serve will continue to generate a huge opportunity for everybody and for the consumer as well.

We are in a moment of the market where I think there is a process underground working to eliminate what is understood as a sustainability issue. This will generate a change in the [cup] material but it won’t be a dramatic change from a technology point of view. We are just looking at different [packaging] material and this will generate a different appeal in the market as well. From our point of view as the machine supplier, this will be a smooth change.

On drip coffee there is no doubt that the Keurig platform is leading North America in terms of [single-serve] business and leadership, while for espresso capsules the market is a bit more fragmented with Nespresso being the most popular platform but with Caffitaly, UCC, Lavazza and other main players who keep investing and innovating to get closer to the market leader.

Focusing on North America, Keurig became part of a huge group [JAB Holding Company] that is willing to become close to number one in coffee. And this, for sure, will generate investment. It will be a change in order to renovate the way the single-serve is proposed to us.

Most likely, eventually [success will come to the company that] has the chance to invest in technology and try to reduce the total cost of ownership without impacting quality and try to be a little bit more challenging in the market. This can be an opportunity, even for us, because when you provide technology it can be an opportunity in a new era of single serve.

This is what I see personally. The process is going to be long but the change will take place sooner or later.