Corticeira Amorim, Sociedade Gestora de Participaço es Sociais, S.A.

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Corticeira Amorim, Sociedade Gestora de Participaço es Sociais, S.A.

Edificio Amorim
Rua de Meladas 380
Apartado 20
4536-902 Mozelos VFR Codex
Portugal
Telephone: ( + 351) 22 747 5400
Fax: ( + 351)22 747 5410
Web site: http://www.amorim.com

Public Company
Incorporated: 1922 as Amorim e Irmãos Lda.
Employees: 4,190
Sales: EUR 481.8 million ($385.44 million) (2000)
Stock Exchanges: Lisbon
Ticker Symbol: COR
NAIC: 321999 All Other Miscellaneous Wood Product Manufacturing

Corticeira Amorim, Sociedade Gestora de Participaço es Sociais, S.A. is the world’s leading producer of cork and cork products, including corks and stoppers for wine, port, champagne, and other alcoholic beverages; wall coverings and floor coverings; and other products, such as cork gaskets for the automotive industry. Corks and stoppers nonetheless represent the largest part of the company’s production, which tops 3.5 billion corks produced each year and distributed through a worldwide distribution network in 19 countries. Corticeira Amorim is vertically integrated, controlling production from the raw material to the finished product. The company has grown in large part because of its ability to achieve economies of scale—using scrap and non-bottle graded cork as the basis of its diversified cork products range. The company produces some 75 percent of Portugal’s cork and holds a 15 percent share of the worldwide market. Beyond cork, the Amorim Group, under holding company Amorim Investimentos e Participaço es (AIP), has expanded strongly since the 1990s, diversifying into such areas as tourism (the company owns more than 25 hotels), real estate, insurance, textiles, banking, temporary employment services, telecommunications (through Telecel), and even the oil industry, through its shareholding in GALP, Portugal’s leading oil company. Corticeira Amorim is one of the six chief subholdings under AIP and its largest revenue producer, with revenues of nearly EUR 500 million per year. Listed on the Lisbon stock exchange, Corticeira Amorim remains nonetheless controlled by the founding Amorim family. Américo Amorim, longtime chairman and chief architect of Corticeira Amorim’s growth in the second half of the 20th century, retired in 2001 and was replaced by Antonio Amorim, representing the fourth generation of Amorims to lead the cork company.

Stopping Starts in the 19th Century

French monk Dom Perignon was credited with being the first to use cork to seal his bottles of sparkling wine in the 17th century, yet cork had been used as long ago as pre-common era Egypt for its airtight, water-tight properties. Cork was derived from the bark of a species of oak tree specific to the Mediterranean basin, and especially concentrated in Portugal and to a lesser extent in Spain. The first cork factories developed in the late 18th century, but the cork stopper industry grew strongly during the 19th century in parallel with the wine and port industries. Although cork remained useful for a variety of other products and applications—ranging from fishing bobbers to flooring—it came into widest use as the material for bottle stoppers.

Despite its position as primary source of raw cork, Portugal’s lack of industrial infrastructure meant that nearly 80 percent of its raw cork was shipped overseas for transformation, a situation that was to last until well into the 20th century. Nonetheless, the production of Portugal’s alcoholic beverage specialty, port, stimulated a cottage industry of small cork producers by the middle of the 19th century.

One of the new cork makers was Antonio Alves Amorim, who opened a cork stopper factory in Lisbon in 1870. While Amorim, and three workers, provided the manpower, financial backing came from one of the region’s wealthy and politically powerful families. After 30 years at the factory, Amorim and his backers became embroiled in a legal dispute over the sharing of profits—a dispute that Amorim lost. Amorim then retired, at the age of 78, to the village of Lamas.

Yet Amorim’s wife, 33 years his junior, was determined to rebuild the family business. In 1908, she constructed a shed at the back of their house and installed two cork stopper machines. Joined by her sons, the Amorim family grew quickly—by 1914 the company operated 17 stopper machines. The family business continued to grow and by 1922 production was moved to a new purpose-built factory. At that time the company officially incorporated as Amorim e Irmãos Lda. The company counted nine shareholders, all Amorim brothers. In that year, family patriarch Antonio Amorim died.

Civil wars in Algeria and Spain, meanwhile, were devastating those countries’ cork oak forests. The cork oak was in fact a somewhat fragile resource—it took 40 years for a cork oak to reach maturity, then another nine years before it was able to yield its first cork harvest. The destruction of its neighbors’ cork oak forests made Portugal the center of the world’s cork production.

The Amorim brothers—only five of whom were directly active in the company—were quick to seize on this new opportunity. By the 1930s the company had grown to become one of Portugal’s largest stopper producers. In 1935, the company was able to build a new and larger factory, this time in Rossio, at the heart of Portugal’s cork oak plantation. Much of the country’s raw cork harvest had by then come under control of foreign companies, which exported the raw cork. By moving close to the cork oak forests, Amorim was able to cut out its reliance on middlemen and purchase raw cork directly from local producers.

Yet Amorim e Irmãos was nearly wiped out as a fire completely destroyed its warehouse and factory in March 1944. The Amorim brothers—José, Henrique, Américo, Ana, and Rosa—quickly rebuilt, however, and production resumed before the end of that year.

King of Cork in the 1980s

The next generation of the Amorim family, brothers José, Antonio, Joaquim, and especially Américo, entered the business in 1950. The new generation of Amorims were to transform the country and the Portuguese cork industry over the next 40 years. Led by Américo, who was later to be dubbed “the King of Cork,” the company stepped up its production to meet the postwar era’s boom in demand. An important part of the company’s success came with its increasing vertical integration—before long the company controlled not only its production and distribution, but also had acquired the harvesting rights to a growing area of cork oak forests and plantations.

Yet Amorim’s biggest innovation at the time came with the diversification of the company’s operations. Manufacturing of cork stoppers produced a great deal of scrap cork—as much as 75 percent of the raw crop. Much of the waste cork was made up of dark cork considered unsuitable for stopper use. As Amorim’s business grew in the 1950s, it found itself confronted with growing levels of scrap cork. The company began to look for ways to make use of its scrap cork.

In 1963, Amorim inaugurated a new factory for the production of cork agglomerates and other crushed cork products, including flooring and insulation, as well as gaskets and other anti-vibration products for the automotive industry. The company then incorporated this new subsidiary as Corticeira Amorim SA. In 1966, the company built a new factory dedicated to the production of thermal and acoustic insulation products, which made use especially of agglomerates made from dark cork.

The 1960s also saw Amorim’s first moves to establish international operations. In 1960, the company opened a trading office in Brazil as it sought entry into the South American market. In 1968, Amorim opened a warehouse and formed a partnership with a local company in Vienna, Austria, and began exporting its cork products to the Eastern Bloc countries. This partnership was followed in the same year by the creation of a joint venture in Hungary, Hungarokork Amorim Rt.

In the 1970s, Amorim began to look beyond Portugal for its raw cork needs. In 1972 the company acquired Comatral (Compagnie Marocaine de Transformation du Liége) in Morocco. By then Amorim had succeeded in transforming the Portuguese cork industry—by the early 1970s, half of the country’s cork exports were now industrial products, rather than the raw cork itself.

Amorim was spared by the Portuguese revolution of 1974 that ended the Salazar dictatorship. Despite the nationalization of most of the country’s industries, the relatively small cork industry was left untouched. Previously the company’s expansion had been hampered by government restrictions. With the installation of a new regime, the company now was able to step up its industrial and international expansion.

In 1976 Amorim moved into Spain, acquiring Seville-based Samec. Then, in 1979, the company launched a new subsidiary, Ipocork, later renamed Amorim Revestimentos, which began producing cork-based paving and covering products. By then Amorim had become one of the world’s leading producers of cork stoppers for wine and port and other products. In 1983, the company added the champagne category with the inauguration of a new subsidiary, Champcork—Rolhas de Champanhe SA.

Company Perspectives:

In the threshold of a new millennium, the major concern of the Amorim Group is the deepening of some of its current priorities: to extend and reinforce the Group both in the national and the international contexts; to ensure the training and motivation of its staff; the respect for Ecology and the Environment.

Diversified and International for the 21st Century

Amorim’s diversification slowly began to expand beyond its core cork business. In 1979, the Amorim family entered the insurance world, setting up Albertina Ferreira de Amorim. That business was followed in 1981 by a major shareholding in Sociedade Portuguesa de Investimento. In 1983, the company formed a trade subsidiary, Comércio de Importa ça o. The privatization of Portugal’s banking industry in the mid-1980s led the company to establish Banco Comercial Portugues.

Amorim’s increasingly diverse holdings led the family to restructure the company in 1988. In that year, a new holding company was put into place—Amorim Investimentos e Participaço es. The companies comprising Amorim’s cork and cork-based production were placed under Corticeira Amorim. That division grew in 1989 with the acquisition of Sweden’s Wicanders Group, a maker of cork flooring products. In 1992, Amorim began a policy of buying up other cork producers and distributors, beginning with Carl Ed. Meyer GmbH in Germany. That acquisition program was to place Amorim in more than 30 countries by mid-decade.

The Amorim holding company meanwhile accelerated its diversification moves, entering the real estate world in 1989 and launching a tourism division with the construction of its first hotel in that same year, followed by the acquisition of a casino one year later. The company also had purchased shares in two textile producers, Veldec and Velpor. Other investments included the launch of Telece—Telecomunicaço es Pessoais, Portugal’s first private cellular phone company, in 1991, and the purchase of a share of Portuguese petroleum leader GALP in 1992.

Cork remained at the center of the Amorim empire, however. By the end of the 1990s, the company was not only the world’s largest maker of corks and cork stoppers, it also had captured 75 percent of the world’s cork flooring market and 95 percent of the market for cork gaskets. Yet corks and stoppers remained its chief revenue generator. In 1993, the company began development of a new system for cleaning and producing cork that aimed at eliminating the chemical TCA (2–4–6 Trichloroanisole), which had long plagued the wine industry—minute amounts of TCA were enough to taint wine and destroy its flavor. An estimated one in 12 bottles of wine was said to be “corked” by TCA.

The TCA problem came to a head in the late 1990s as the wine industry—led by the large supermarket chains—began looking for alternatives to the traditional cork-based stopper. The introduction of new cork type based on synthetic materials presented an immediate challenge to Amorim. While producers and purchasers of high-end wines and champagnes continued to insist on traditional cork stoppers, a growing number of wine growers, bottlers, and distributors—especially in the “new” wine markets of California, Chile, Australia, and elsewhere—were adopting synthetic stoppers, and even screw-caps (which were acknowledged as the best way to seal a bottle of wine). This development was aided by widespread consumer indifference—the majority of consumers barely noticed whether a stopper was cork or synthetic. Many wine drinkers were barely able to recognize the taste of corked wine. Meanwhile, for wines meant to be drunk young, which accounted for the vast majority of the world’s wine production, synthetic stoppers were considered a perfectly acceptable means of sealing bottles. Nonetheless, natural cork continued to be considered a requirement for wines expected to age in their bottles for many years.

Amorim fought back, leading research efforts to understand TCA and to develop means of eliminating the chemical from its corks. In 2000 the company opened a new state-of-the-art production facility that the company claimed was able to eliminate TCA entirely. The company also continued to boost its position as market leader, through such acquisitions as Inter Champagne—Fabricante de Rolhas de Champanhe and General Cork, both acquired in 1998.

Key Dates:

1870:: Antonio Alves Amorim establishes a cork stopper production factory for the Lisbon port wine industry.
1908:: Amorim’s wife and children launch a new cork stopper business in Lamas.
1922:: The company is incorporated as Amorim e Irmãos Lda. with the nine Amorim brothers as shareholders.
1935:: A new factory is established in Rossio, placing the company in the heart of the cork oak growing region.
1960:: A marketing and distribution subsidiary is opened in Brazil to enter the South American market.
1963:: The company establishes Corticeira Amorim for production of diversified cork-based products.
1968:: The company opens a warehouse in Vienna, Austria, and a joint venture in Hungary to enter Eastern Bloc countries.
1972:: The company acquires Comatral of Morocco to tap into the cork production industry in that country.
1976:: Samec, based in Seville, Spain, is acquired, adding cork production facilities in the second largest cork production market.
1979:: The company launches Ipocork cork paving subsidiary.
1983:: The company launches a champagne stopper subsidiary, Champcork.
1988:: Amorim forms a new holding company, Amorim Investimentos, regrouping its cork operations under Corticeira Amorim.
1989:: The company acquires cork-flooring producer Wicanders Group, based in Sweden.
1992:: The company acquires Carl Ed. Meyer of Germany and begins a program of acquiring cork distributors and producers in 30 countries.
1996:: A code of practice designed to eliminate TCA tainting is adopted.
1998:: The company acquires Inter Champagne and General Cork, boosting its champagne and technical stoppers production.
2000:: The company inaugurates a new state-of-the-art production facility that claims to enable TCA-free cork production.

“King of Cork” Américo Amorim stepped down from the chairmanship of Corticeira Amorim in 2001, although he remained chairman of the parent holding company. Antonio Amorim, who had been in charge of the company’s Amorim & Irmãos subsidiary and who represented the fourth generation of the Amorim family to enter the business, took over as chairman of Corticeira Amorim. With worldwide production and consumption of wine rising steadily at the turn of the century, Amorim expected to remain an industry fixture.

Principal Subsidiaries

Alcorex - Sociedade Tecnica de Corticas, Lda; Amorim & Irmäos (Madeira) Inv. E. Part. Fin. S.A.; Amorim & Irmäos II, Ind. e Comércio de Cortica, S.A.; Amorim & Irmaos, S.A.; Amorim & Irmäos SGPS, S.A.; Amorim & Irmäos Servicos, S.A.; Amorim & Irmäos-IV, S.A.; Amorim & Irmäos-V, S.A.; Amorim (U.K.) Ltd.; Amorim Argentina, SA; Amorim Benelux BV; Amorim Cork Australia, Pty. Ltd.; Amorim Cork Deutschland GmbH & Co. KG; Amorim Cork Distribution Netherlands, BV; Amorim Cork Internacional S.A.; Amorim Cork Italia, Spa.; Amorim Cork, GmbH; Amorim Corks America; Amorim Deutschland, GMBH; Amorim Flooring (Switzerland) AG; Amorim Flooring Austria GesmbH; Amorim Flooring Denmark A/S; Amorim Florestal - Comércio e Exploracao, SA; Amorim Florestal Espanha, SA; Amorim France S.A.; Amorim Iberica Decoracao, SA; Amorim Industrial Solutions - Industria de Cortica e Borracha I, S.A.; Amorim Industrial Solutions - Industria de Cortica e Borracha II, S.A.; Amorim Industrial Solutions Inc.; Amorim Industrial Solutions, SGPS, SA; Amorim Isolamentos S.A.; Amorim Plus- Aglomerados de Cortica S.A.; Amorim Revestimentos, SA; Amorim Sverige AB; Amorim Wood Supplies, GmbH; Amorona-Sociedade de Investimentos, SA; Aplifin-Aplicacoes Financeiras, SA; Auscork Holding, GMBH; C.D.M.-Composite Damping Material, SA; Carl Ed. Meyer Korken GmbH & Co.; Champcork S.A.- Rolhas de Champanhe, SA; Comatral-C. Marocaine de Trasnf. du Liege, SA; Cork International; Cork Producers, Suppliers & Co., Ltd.; Corkline Services, AG; Cortam - Corticeira Amorim Maroc, SA; Corticeira Amorim Algarve Lda.; Corticeira Amorim Industria S.A.; Cortrade Cork Trading, AG; Drauvil Europea, SL; F.P. Cork; Ginpar S.A.; Goma Cork Trading, AG; Hungarocork Amorim, RT; Industria Corchera, S.A.; Infocork -Comércio e Servicos, Lda.; Infocork USA, Inc.; Inter Champanhe-Fab. de Rolhas de Champanhe, S.A.; International Cork Services, AG; Irmorim Imobiliaria, SA; Itexcork-Ind. de Transf. e Exportacao de Cortica Lda.; KHB Kork Handels Beteiligung GmbH; Korken Schiesser GMBH; Labcork-Labo-ratorio Central do Grupo Amorim, SA; Lusoliege SARL; Manuel Pereira de Sousa; Moraga-Comércio e Servicos, SA; Ofequipa-Manuntecao e Equip. Industrias, Lda.; Osi-Or-ganizacao e Sistemas Informaticos Lda.; Portocork America, Inc.; Portocork Internacional S.A.; Portocork South Africa, Ltd.; Praemium Cork Holding, GMBH; Prataplas-Industria de Plasticos, Lda.; Proli SARL; Raro-Industrias e Comercializacao de Cortica, SA; Real Cork Trading, AG; S.A. Maison Pairot; S.A.M. Clignet; S.C.I. Friedland; Salco Industrial Corchera, SL; Société Fabrique Liege de Tabarka; Sopac - Soc. Por-tuguesa de Alom. de Cortica, Lda; Vasconcelos & Lyncke Australia Pty, Ltd.; Vasconcelos & Lyncke Lda.; Victor Y Amorim, SRL.