How has Pochteca grown in the chemicals segment?

We started in the chemical business in 2005, with the acquisition of Grupo Dermet. Before, we were active in the paper business, but paper consumption was decreasing as a result of digital communications and tools. We looked for an opportunity to grow in the distribution of industrial products outside the paper industry where we could apply our core competencies, and that is how we came across the chemical industry, which typically grows faster than annual GDP growth, and where the participation of distributors is still quite low. To date, we have done six acquisitions in the region, the last of which was Conjunto Lar, a company dedicated to personal care specialties.

Our focus has been on profitable growth, offering value added products and services. We have a very complete portfolio, with a catalogue of more than 7,000 products from more than 200 suppliers, serving more than 20,000 industrial clients from our 41 locations. We have more than 350 tanks and 310,000 square meters of logistics capacity, which allow us to be efficient and flexible in serving our customers and providers. We do our own blending, dilution, packaging and labeling, following the standards of each country as well as important certifications, like SARI of ANIQ and NACD´s Responsible Distribution. We operate in Latin America with world-class standards while applying our local knowledge of the markets.

What is your capacity to provide technical support on product development?

We have technical teams in different industries such as water treatment, lubricants, household, personal care, metal working and oil and gas, among others, as well as application laboratories in food, coatings, household and personal care, colorants for textiles and quality control laboratories for every product we blend. This way, we can give consultancy on the development of sauces, paints, or hand soap, among many others. We give advice on the latest trends, such as the increasing demand for green chemicals, or the use of healthier ingredients and nutraceuticals in food.

Could you elaborate on these mega trends you are identifying?

In certain industries like coatings, pharma or printing, there is a growing demand for environmental services, such as recycling and use of greener chemicals, like VOC-free solvents. At Pochteca, we do recycling and remanufacturing of solvents and blends, separating the solvents from the waste and redoing the mixes. We also offer environmentally friendly chemicals to several segments, such as benzene-free hexane for oil extraction from seeds, odorless solvents, healthy food ingredients, nutraceuticals, phenol-free products for agrochemicals, food grade inorganics, biodegradable products for the oil and gas industry and others. There is a strong trend in the food industry to use sugar substitutes, to reduce sodium content and to add vitamins and omegas. In personal care, the trend is to use products that are phenol-free and paraben-free. Our product specialists and technical teams are constantly monitoring trends and new products in the industries we serve in order to pass on the knowledge to our customers so they can improve their formulations or consider new ones.

How is your industry mix evolving?

On the one hand, we serve basic industries like oil and gas, mining, manufacturing, coatings and plastics. These industries grow hand in hand with GDP, or a bit faster. On the other hand, we participate in high-growth industries that offer great potential and that follow macro trends at a global level. Some of these are water treatment, food, animal feed and agrochemicals. Additionally, household and personal care are seeing high levels of growth. In some countries, demand for personal care products increases even during difficult economic conditions.

What drove your decision to provide logistics services?

A few years ago, we started offering logistics services to our suppliers and clients because we have a great network of assets dedicated to the chemical distribution business. In Mexico alone, we deliver products in more than 500 cities. We have transportation fleets in Brazil and Mexico that meet all the standards for the transportation of dangerous goods. So, we can offer storage, blending, dilution, packaging, labeling, inventory management and product delivery for clients and suppliers with specialized assets and teams with chemical handling expertise. Even though there are good distributors in Latin America, the region needs more dedicated infrastructure.

We are going to continue promoting these services in all locations where we operate. In Brazil, we have bases in Pernambuco, Bahia, Ceara and Sao Paulo. Reaching some of these remote regions is very difficult. We have trucks that only do two trips a month, because it takes 2,500 km to go from point A to point B. In Mexico, we also reach the northwest of the country. For companies requiring broad regional coverage, we are an ideal partner.

What is your strategy to continue your growth trajectory in the region?

The focus over the next two or three years is organic growth in the five countries where we operate, taking advantage of certain niche opportunities in these markets. We do not want to grow for the sake of growing; we want to do it in a sustainable manner. The truth is that there is still a lot of space for consolidation in Latin America. In Mexico we have more than 300 chemical distributors, and there are thousands across the region. I think that both end users and producers would be happy to deal with less distribution players.