GROW FOREST, GROW

Peru 2017 | INDUSTRY | VIP INTERVIEW

TBY talks to Drago Bozovich Noriega, CEO of Bozovich, on investing in innovation and sustainability and reducing the impact of the business on the environment.

How has Bozovich invested in innovation?

We have invested a lot of time, effort, and money since our establishment 67 years ago in value-added products and processes, always focusing on how we can differentiate ourselves from our competitors. The sector that we operate in is one of a kind, and we are always innovating in terms of cutting-edge technology to produce just the highest-quality products. This has enabled us to open new and sophisticated markets. Today, we are present in markets all over the world. It is crucial to be innovative because other countries also have forest resources of their own and know how to work with wood. They have been doing it for centuries or even millennia. While tropical woods are more durable, beautiful, and more exotic looking, we have also been able to understand them and develop technologies to process high-end finished products. This allows us to compete in the US, Canada, Scandinavia, Western Europe, Australia, and Russia, against lower quality Brazilian and Indonesian products. The US is the number-one producer of wood in the world, yet it wants to buy from Peru because of the unique beauty and quality of our products.

In a sector characterized by growing competition, building a reputation is crucial. How do you do this?

Brand, brand, brand. Our name is recognized and has always been associated with quality and responsibility. This is true not only in the quality of the physical goods we deliver but in the way we do business, ship on time, and package. This is all important and sets us apart from the Latin American standard of doing business. The bulk of this market works with building materials, while we specialize in decoration materials.

What is your customer profile?

The majority of our customer base is international—90%. We have a broad range of customer types from DIY retailers, most of whom are in Europe and Latin America, to highly specialized manufacturers of furniture, doors, and fine instruments in North America. We do not sell in some Latin American countries because their economies are not doing well or their borders are closed to imports. There are other regions we do not reach yet such as the Middle East, North Africa, and India, but we actually buy some products from Western Africa when we need something special our forests don't produce. Overall, our customer base is a quality oriented one. Predictability on what they are going to get, and when, as well as proven sustainability, helps a lot.

How do you maximize the efficiency of your operation?

We have a state-of-the-art factory to which we moved five years ago from our original location in downtown Lima. We increased our production capacity, invested in new machinery and equipment and a forward-looking layout, with room to grow and innovate for approximately 30 years. Every two years, we invest and bring in new equipment and systems that help us get the best yield out of our precious raw materials. The production of timber in the forest is seasonal as it goes with the rainy and dry seasons, so in order to be able to serve a market 24/7, 365 days a year, it is necessary to carry large inventories and work them down eventually through the non-harvesting season. Few companies can do this due to lack of space, financial capacity, and long-term vision.

What steps are you taking to reduce the impact of your business on the environment?

Our activity is totally neutral on the environment, as the activity that we perform is sustainable and renewable. We are actually ensuring the conservation of these forests by harvesting them responsibly. We avoid deforestation that otherwise would threaten this resources from other economic activities just by being there. We are certified under the FSC standards for sustainable forest management and chain of custody by SGS, which is a third party that assures that our activities are sustainable, socially, environmentally, and economically.

Do you have specific markets that you are targeting with your expansion plans?

We are targeting Russia and Germany because they are both major markets that have been unattended by us until recently; it is just a pending assignment of the never-ending diversification of the risk process. We are always looking for the best business partner, the one that shares our values and principles, and who really appreciates quality and sustainability. In the case of Russia it is more about brand and high quality, while in Germany it is more about sustainability certification schemes and service . Those are our main focus markets today, but we are also trying to work with Korea as we have a big presence in East Asia. We are starting to prospect Korea and hopefully we will start doing business there next year. We are already working in Japan, Indonesia, Malaysia, Singapore, Vietnam, and the Philippines, which are all producing nations themselves. We manufacture some goods in China as well, using our own raw materials, standards, specifications, and brand. We make some decorative panels and engineered flooring there. We have an office in Taiwan with three people on board all the time selling our goods, supervising and controlling the manufacturing we do there. Most of these Chinese products are brought back to Latin America for distribution, where we are the strongest; we understand Latin American tastes so we can successfully produce goods in Asia for Mexico, Chile, Peru, Uruguay, Colombia, Guatemala, and the Dominican Republic. This is the fastest-growing category of products nowadays.

Do you have any priority targets for 2016?

We are currently considering a potential partnership and investment in forest plantations. There are many areas in Peru that were forested once but which are now degraded because of migratory agriculture and extensive cattle raising. We are looking at a project with a large piece of degraded land and we hope to set up some plantations. There are also other secondary forests left that we would like to enrich.