TBY talks to Catalin Sfrija, General Manager of Henkel Pakvash & President of Henkel Iran, on making Iran one of Henkel's top-10 global markets, integrating recently acquired assets, and the public sector's eagerness to welcome investment.

Catalin Sfrija
Catalin Sfrija was born in 1970 in Romania and holds an MBA and a bachelor’s in marketing. He joined Henkel over 20 years ago. Since coming to Iran, the company has experienced significant changes and become a strong market leader with over 40% market share. Before coming to Iran, he worked as Sales Director for Henkel Middle East North Africa Region. In 2016, he was appointed President of Henkel Iran.

What is the operational difference between Henkel Pakvash and Henkel Iran?

Henkel business comprises three separate divisions. Adhesives and industrial technologies is the largest, with nearly half of the company's global turnover. The second largest division is laundry and home care, and the third is beauty care. Henkel Iran is currently a generic name referring to the business we have in Iran; however, it is not a legal entity as such, and it does not have any operational structure. Still, it helps us internally to build one corporate culture, and to harmonize and optimize our human resources policies and other shared services provided by different supporting functions.

Henkel is a global brand, present in over half the countries in the world. How would you assess the significance of the Iranian operations for Henkel?

Henkel has a clear strategy, and growth is the number-one priority. We cannot imagine intensive growth without having a strong footprint in the emerging markets. Iran is the last big emerging market that has not been approached yet by most global FMCG players. After the JCPOA, it came to mind first for most international companies looking for opportunities to expand. Henkel has a long-standing history in Iran that goes back more than 45 years, to the opening of the Henkel Industries factory. Its laundry and home care divisions started operations in Iran in 2002, with the acquisition of Pakvash business, while its beauty care division initiated marketing and distribution activities in 2016. The Iranian market has everything it takes to become one of the top 10 countries worldwide for Henkel.

How did each of the business units perform over the last year?

In 2016, the growth star was the adhesives and technologies division. This excellent performance was linked to the reenergizing of local industry following the gradual lifting of sanctions after JCPOA. The adhesives and technologies team did a fantastic job in recapturing the market opportunities, and launching new products for our end consumers. 2016 brought also an excellent start for the beauty care business, beyond expectations. Laundry and home care had another solid year, growing its market share and concluding a strategic acquisition. In general, our Iranian business delivered solid growth year after year, despite the macroeconomic challenges and fluctuating demand.

Have you been able to successfully integrate these brands in your business and obtain synergies?

Henkel is targeting both organic growth, consistently developing its base business, and growth through acquisitions. In Iran, we are now focusing on integrating the assets we acquired in 2016 from Behdad Chemicals. The first stage is to get the operations up and running fluently. Synergies will come at a later phase of integration, in line with our long-term plan. The objective is to turn this local brand with a fantastic heritage into a shining star in the Iranian and the regional markets. We are quite happy with the progress and look forward to offering Iranian consumers more exciting innovations under their favorite brands.

What prompted the decision to acquire local brands instead of introducing Henkel's international brands to the market?

The board took this decision after recognizing the strong platform of this local brand, and the strategic fit to our portfolio. Besides, we want to keep on supporting the local authorities with their plan to develop local production and sourcing. This acquisition was a model for bringing foreign investment in a fully compliant way to develop the local economy. The local authorities are extremely open to serious investors and act very professionally when it comes to such investment projects. We received immediate, transparent, and full support from the Organization for Foreign Investment, the Ministry of Industry and Trade, the Ministry of Health, the Governor's Office, and every local authority. It made a big difference in terms of speed of decision and implementation.