Why a hidden champion does not always have to be world market leader

What exactly is a hidden champion? What are its characteristsics?

One product. One market.

Hidden champions usually belong to the category of owner-managed companies or family companies. They are medium-sized enterprises, not listed on the stock market and are therefore largely unknown. By focussing consistently on a small market segment or specialising in a single product area, they avoid intense competition and price wars, especially with larger companies. By having a very narrow product range, they deliberately take the risk of “placing all their eggs in one basket”.

They are noted for focussing on the wishes and requirements of their customers as there is often a strong level of mutual dependency. This close link increases the pressure to be an innovator to support the success of customers.

Progroup: Success with a low profile

If the characteristics of hidden champions and Progroup are superimposed, you will be surprised to find plenty of shared attributes. However, you will also see a number of striking differences which shape the particular character of the company.

Progroup does in fact make very few public appearances. Its promotional advertising is limited to the relevant trade media from the paper and corrugated board industry.
Progroup carefully hones a clear and technical image that covers its communications as well as the design of its plants and vehicles. Progroup also has a low profile in the financial sector. The company is not listed, the shares are in the hands of a family holding company and to a small extent are held by two solid capital investors. They are convinced that Progroup will be “Consistently successful”, resulting in secure prospects for the future.

Organisational leader, technology leader, cost leader

Progroup caters in the market for a precisely defined commodity, corrugated board. Like in all commodity markets, there are constant overcapacities, many providers and few differences between products. In these markets, a company is only successful if it is the market leader. Progroup therefore pursues a consistent growth strategy with state-of-the-art technology, perfectly optimised processes and low costs. For example, Industry 4.0 has long been reality at Progroup: State-of-the-art machinery that operates itself and thus generates a high level of output with equally high quality but only requires a small number of staff to supervise it. The per-capita productivity of the around 1,100 employees is four times as high as the normal level in the industry.

Consistently successful

Progroup’s competitors are often listed companies, some of which operate worldwide. Progroup has today risen to become number four in the European corrugated board market and is thus in no way “hidden” from its competitors.
In the sheetboard market segment, Progroup’s market share in some countries in its core region of Central Europe is between 30 and 60 per cent.

Challenging conventional ideas

For hidden champions, it is typically the little “revolutions”, the consistent improvements that make them so successful. And so at Progroup innovation also carries on in product development. The Next Generation Products are one example of this.
A successful investment was made in a technology to produce lighter containerboard and corrugated sheetboard with improved, but at least consistent quality. This resulted in much lower demand for raw materials and energy use and therefore lower emissions. As a result, Progroup was able to meet the specifications of the “Road Map 2050” for reducing emissions in the paper industry prematurely and in an exemplary way.

What else is required to become a hidden champion?

The bottom line is not much. If you take the definition very literally, then it is just that Progroup does not lead any global market. But the company is regarded as the technology leader globally in the areas of paper and corrugated board production. Progroup’s production facilities for paper and corrugated board have broken more or less all world records for production. A company that manages in 25 years to jump from nowhere to fourth place in the European corrugated board market is definitely worthy of being called a champion.