
Energy transition case study: Axilone
Energy accounts for a relatively small portion of cosmetics packaging producer Axilone’s overall costs, but rising prices in Europe prompted owner Trustar Capital to accelerate transition efforts
Across the global beauty industry value chain, from original equipment manufacturers (OEMs) to brands, packaging consumes the most electricity. But it is not necessarily an energy-intensive industry: energy is a relatively small contributor to overall product cost.
Europe-based cosmetics packaging producer Axilone is a case in point, with the energy share of cost, in percentage terms, only in the mid-single digit range. But energy price hikes in Europe this year – driven by the Russia-Ukraine conflict – were 10 times higher than anything that came up in the company’s worst-case scenario modelling. As a result, energy transition is being accelerated.
“We expect the price of fossil fuels to remain elevated, so a transition to clean energy is not only beneficial for the environment, but it also makes business sense. All our energy transition programmes across Europe and China are being accelerated this year,” said Yang Shi, a managing director at Trustar Capital who covers investments in consumer and business services.
Founded in 1917, Axilone primarily supplies plastic and metal casings for lipstick, fragrance, and skincare products, working with leading beauty and personal care companies around the globe. It has manufacturing facilities in France, Spain, and China.
Trustar – then known as CITIC Capital Partners – bought a majority stake in the business in 2018. While recycling and pollution were the investor’s priorities in a sustainability context, energy saving and reducing carbon emissions also featured on the agenda.
At the time of the acquisition, Axilone’s France-based factory already ran entirely on green energy, its Spanish facility was 50% green energy and 50% liquefied natural gas (LNG), and its China factory used no clean energy at all. Trustar helped put the company on track to replace the LNG with biomass by 2023, while introducing a 15% solar component to the China factory’s electricity mix.
“Cosmetics brands represent consumers’ values and identity. Leading brands see sustainability as a key proposition and encourage their suppliers to comply with their environmental targets. As a result, our production process has incorporated and evolved with these standards,” said Shi.
Almost all Axilone’s customers are working towards specific environment, social, and governance (ESG) targets on five-year schedules. This is also a widely-accepted industry trend.
For example, L’Oréal wants 50% of product packaging to be fossil fuel-free – which means recycled or bio-sourced – by 2025; LVMH has set a 2030 deadline for reducing scope-three emissions (indirect emissions through its entire supply chain) by 55% per unit of added value, using 2019 as a baseline, while Estee Lauder is looking to do the same with a 60% reduction from 2018 levels.
Axilone is fortunate that, so far, compliance hasn’t led to significant upward pressure on costs, and there are subsidies from brands and local government incentives that help manage the burden.
“We are not necessarily fixated on short-term cost versus benefits,” Shi added. “However, if you don’t do this, in two or three years, you may lose your competitiveness. Peers also put pressure on one another.”
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