"People want results fast in the commodity market, but with specialty chemicals both time and money must be invested before seeing results."
How has Charlotte Chemical performed over the last two years and which business lines have shown the most demand?
Charlotte Chemical had a surprisingly good year in 2020 considering the context of the pandemic, with the company selling the same amount in US$ as the previous year. In 2021, our focus was to increase our sales by approximately 12%, but we have performed so well over the past few months and expect to close the year with a sale increase of 30%. This increase has not been in terms of price, it has also been an important increase in volume and number of products.
Considering the supply chain and logistics disruptions of the last year, what is your strategy to maintain product inventory and mitigate cost increases?
The pandemic required Charlotte Chemical to be very creative and adapt. Worldwide, there has been an insufficient number of freights and logistics costs increased tremendously. In some cases we even paid more for the freight than for the product, which would impact the competitiveness of any business. However, even with the logistics price increases our products have fortunately remained in demand as there are no other local companies manufacturing the products we sell. We were in a situation where we needed to adapt and find new routes and ways of bringing products into Mexico to remain competitive, but our creativeness has given us the opportunity to grow Charlotte Chemical’s market share.
To what extent is the increasing demand for greener products influencing Charlotte Chemical’s portfolio?
Today when adding new products to our portfolio one of the criteria for inclusion is that the product needs to be sustainable. That means the product either needs to be biobased, have low volatility, or be environmentally friendly. For example, the plasticizers market is generally punished by the public as they argue that phthalates are bad for health. Therefore, Charlotte Chemical is trying to move to more sustainable products and most of the plasticizers we are selling are phthalate free. Going green is not only the right thing to do for the planet, but from a business perspective the company’s increased volume of sales are mostly green products.
Many chemical companies are increasingly investing in the specialties market. What are the main differences in this segment compared to the commodities space?
Selling specialty chemicals and selling commodities is very different. With commodities, the most important value add is having the product available at a good price and in large volume, and if you comply with these factors, it is easy to sell your product. With specialty chemicals, you need to be more technical. Charlotte Chemical’s entire sales team are chemical engineers as they need to understand the product and be able to recommend the best solutions for each customer’s needs.
In the specialty market, you also need to be patient. For instance, Charlotte Chemical has three new products on the market this year. One is already selling, but with the other two, we know it is going to take approximately two years to gain traction. People want results fast in the commodity market, but with specialty chemicals, both time and money must be invested before seeing results.
How are the VOC regulations impacting the coatings market in Mexico?
The VOC regulations have been well adopted by the large and medium sized companies, but the smaller companies have been lagging in adoption as the solutions are more expensive. The challenge is to regulate all coatings that are sold on the market in order to really have safer and less contaminated products, as well as working with the government to educate them so that the coatings market is regulated properly.
Which area of chemical industry do you see as having best potential for future growth?
The PVC industry has always been one of my favorites and it is always going to be relevant. PVC, compared to other polymers, is one of the most sustainable as it only uses 43% of crude oil or natural gas, and the rest of the makeup is mineral salt. The PVC industry has continuously been transforming and has used opportunities to find new niches in various markets. Today, the construction industry holds the largest share of PVC applications. The PVC industry is also continuously looking for more sustainable additives as to be more environmentally friendly.