No stone unturned
With competition in the quartz market hotting up, how is Spanish giant Cosentino looking to stay one step ahead? Tim Wallace meets UK managing director Christophe Gontier
My trip to Cosentino’s Spanish headquarters comes soon after news that its main quartz competitor, Caesarstone, has switched to direct distribution and is making a big play for the UK market. Initially, the move threw Cosentino’s sales force into a bit of a flap, but UK MD Christophe Gontier (pictured) seems unconcerned as we sit down to discuss the implications.
“When they announced that Caesarstone was coming, my sales guys were panicking,” he laughs. “But I told them not to worry, just stay focused, be aware. They’re miles away and let’s make sure they stay there. I run the bulls in my home village, near Madrid. The whole idea is to keep them away, at a distance. It’s the same with Caesarstone, the important thing is they’re miles away, let’s keep them miles away.”
While accepting that Caesarstone is upping its game, he argues that, if anything, the laminate market is a bigger competitor. Continued uncertainty over Brexit has hampered growth after record turnover figures in 2016, but with new colours launching this month the company is still on course for UK turnover in excess of £70 million this year.
Q: Would you say that Caesarstone’s decision to switch to direct distribution makes them a more credible competitor?
A: Competing in quartz is good for the trade. We’re promoting a material where we’re leaders. Our job is to stay leaders and keep innovating. You need to be sharp and not rest on your laurels.
If Cosentino grows 20% next year, Caesarstone will have to grow 30 to 40%. The question is how much is the quartz market going to grow? Any business needs to grow as much or more than the market.
Q: Caesarstone’s UK MD Amir Reske claims they’ll give Cosentino “a fight for their money” by using direct distribution. Its stated aim is to take over from you as the number one quartz supplier in the UK. What’s your response?
A: You should always aim to be the first. But it will take a long time to reach our sales. As a team speech, I would say the same thing, but it’s going to be difficult for them. My view is they should have gone direct, not through a distributor, a long time ago. At least five years ago.
Q: How would you have handled their split from [former distributor] CR Laurence?
A: If they’d worked with them and put a plan in place, it would have been less traumatic. Now CR Laurence has become a heavy competitor. People buy from people. I would have done it a different way. You also need to make sure you keep that relationship with the fabricator, which is one of the most important things.
Q: How does Cosentino compare with them in terms of size?
A: This year our turnover is going to be over £70 million in the UK. They have a long way to go. But it’s good for the sector, good for the fabricators, good for the kitchen studios. It means more competition, more colours, more affordability, better service. All that is good.
Q: The downside is when they start taking market share from you…
A: OK, but the competitor is laminate. That’s number one in volume. We can grow at the same pace by taking business from laminate. People aspire to have a solid worktop. Silestone and Dekton are aspirational brands. Laminate is the competition, not the other brands.
Q: How do you take market share from laminate?
A: By bringing in more attractive colours, bringing in group one and two to make it more affordable. We are working on 20mm instead of 30mm. The UK market is more 30mm. Developers are all putting Silestone in their kitchens, but of course they’re all using 20mm and the colour is more affordable. That’s the way to do it.
Q: How’s the UK quartz market looking?
A: This year it’s still OK, but it’s slower. The retail sector is slower because of the uncertainty over the election and Brexit. But we have a strong commercial department. Overall, we’re growing at 22%, which is very good, but we’re used to much more. We’re aiming for more, but it’s still very good.
Q: So the wider market is struggling?
A: Yes, internal consumption is going down, whether it’s kitchens or cars. People are being more careful with their money. It’s been happening for a few months. Some months are better than others. The sooner we sort out Brexit the better.
Q: Have you increased prices?
A: Yes, this year we discussed it with the headquarters and kept the increase to a minimum – we increased by 4.5% which, compared with the drop in the pound, was almost a third. The headquarters took the major brunt of it.
Q: What’s your gut feeling on how much impact Brexit will have?
A: It depends on interest rates. If we increase interest rates, we’ll have a stronger currency, but it’s hard to see it going back to previous levels. It’s a slowdown, but we’re not going backwards. It’s just not growing as fast as it was. We don’t have to worry – yet. It’s still OK. As soon as we can stop the uncertainty, it will help everybody.
Q: How does growth in the retail side of the business compare with commercial?
A: Retail is slow, but the rest is doing well – so, at over 20%, we’re very happy. The commercial side is going very well. Commercial is a pipeline, it takes a long time to get a project. We may find later developments stop, but at the moment it’s going well and compensating for retail.
Q: How would you sum up your strategy going forward?
A: Firstly, it’s about the people. We have a great team. We have to train them better and give them better tools to work with.
We will grow again next year with two new warehouses and 20 more people. Dekton should be 15 to 20% of our sales. It’s going to be one of our major energies.
Q: Last year, Cosentino saw a record 14% increase in total consolidated turnover, reaching €834 million (£730m). Are you happy with that?
A: Yes, Dekton was a part of it, it’s growing faster. We’ve also launched new colours, which keeps the market alive, plus the Eternal range, which is very popular. It’s a marble lookalike with all the benefits of Silestone.
Q: What other colour trends are proving to be popular?
A: We launch colours twice a year, in January and September. Sensa, the protected granite, is doing well. The major growth in percentage is Sensa, not Dekton. All these colours we’ve launched with the exotic look have been very well received. At the moment, the marble effect is proving popular,
Silestone is still our biggest brand by far. Dekton is growing nicely. Sensa, the granite, has been a surprise. We do 14 colours, we deliver on time and it’s always in stock. People like the natural stone lookalike – the marble effect, the lookalike granites.
Q: Dekton seems very expensive…
A: That’s what people think, but it’s not. We have a price group from one to six. Some is cheaper than Silestone. We have colours for different budgets. It’s mid to top. Dekton starts at the middle of Silestone. With the product range at the moment, we are covering I would say 75% of the market. The bottom 25% is difficult, it’s very, very cheap. We are fighting against laminate.
The big unknown is the size of the Asian quartz market. There’s no brand. They come cheap and cheerful in containers. To make it cheap, they put less quartz in and more resin. It’s a more freckled product. The fabricators can tell just by smelling it when they cut it. It has less resistance than proper quartz.
Q: What would you say are the biggest challenges facing Cosentino?
A: Our people – training them better and getting them to work smarter. There’s no point in getting rid of somebody just because they don’t perform. It’s better to spend more time and money on them and explain what the company needs. Replacing is no solution. You just get the same person again.
Secondly, how can we help the kitchen studio? And third, how can we help the fabricators in the middle?
Q: Are there any other initiatives that Cosentino is launching?
A: Yes, we’ve got a new arrangement with a house valuation website called propertypriceadvice.com, where people are prompted to reveal when their kitchen is due to be renovated when they register. Then a landing page and digital advertising will pop up of the élite Cosentino studio that’s paid PPA to be listed within that region or postcode.
Quite a few kitchen studios think a website, a Facebook page and a Twitter account is enough, but they forget that they can do much more. Our élite studios participate and the cost is minimal, £100 a month. They can get into direct contact with the consumer. It’s a numbers game, but if you get 30 leads a month, you may sell one kitchen.
We started it a few months ago and, to be honest only 40 to 50 have gone on the platform. A lot of studios think they’re doing enough, but there’s more to do. We used to send e-shots and e-mails, we used to shoot and hope. Now we’re being much wiser. What we’re trying to do is bring end consumers with a high probability of buying a kitchen into the élite studio programme. It’s one of the ways we support them. Not being on the platform is a missed opportunity.