Constantia Flexibles is investing heavily in its global operations to support growth in both the flexible packaging and label markets. David Pittman reports
There have been a number of major merger and acquisition investments made in the packaging market in recent times.
This has included the purchase of Contego Cartons, A&R Carton and ExxonMobile Chemical’s global BOPP film business.
Nicholas Mockett, of corporate finance house Moorgate Capital, outlined some of the drivers for this activity in the last issue of Packprint World. He wrote of Porter’s Five Forces, an analysis tool that draws upon industrial organization economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market: rivalry, the threat of substitutes and new entrants to the market, and supplier and buyer power.
‘Most segments of the packaging industry have very low industry concentration levels compared with other similar industries,’ said Mockett. ‘The exceptions are glass and metal, which are more concentrated, probably reflecting the maturity of the product and the capital intensiveness of the process.
‘These types of product tend not to be heavily printed and form part of the label market supply chain, whereas flexible and fiber-based packaging are more integrated with print.’
Amongst those making acquisitions in the packaging space, Constantia Flexibles, headquartered in Vienna, Austria with some 8,000 employees in more than 50 Group Companies around the globe has been one of the most prolific.
This has included its purchase of the Spear Group, cementing its excellent place in the labels market, and investments in growth markets, such as India and Latin America, by taking a controlling stake in Parikh Packaging and buying all of Globalpack, a leading flexible packaging and folding carton company in Mexico.
Of the Spear purchase, Alexander van ´t Riet, executive board member for labels at Constantia Flexibles, said, ‘Spear constitutes an excellent addition to our existing labels business. It will open new roads to attractive markets in the Americas and Africa and especially to the fast-growing premium beer markets around the world, where pressure-sensitive labels are key to success.’
Thomas Unger, chief executive officer Constantia Flexibles, said, ‘We will be able to serve our customers even better together with Spear, a leading beverage labels business with a highly attractive, global, blue-chip customer base.
Of the Globalpack purchase, Unger said, ‘With this transaction we significantly strengthen our market position in North America and will get access to the growing markets in Central America.’
The company is targeting growth across the world, through both organic means and acquisition activity. The key flexible packaging markets around the world that will be central to Constantia's future include Asia, the Middle East and Africa, North and South America, and the CEE region. This will be achieved through both organic and acquired growth.
The growth of the Constantia Flexibles business will be supported by changing demographics and trends amongst consumers around the world. In terms of markets, there are some key trends that will shape the future, such as: global population growth; the rise of middle classes in emerging markets, with increased demand for packaged consumer products; longer life expectancies, with increased pharmaceutical consumption and packaging requirements; smaller households; smaller sized packaging; and the substitution of rigid packaging for flexibles.
Flexible packaging products will also alter, as the market demands enhanced barrier and mechanical properties, more sustainable products and packaging that permits brand differentiation.
The underlying M&A activity is creating companies that can offer products and services to match this demand through a worldwide, one-stop-shop proposition for brand owners, with different products and systems utilized in bases around the world to deliver consistent package and label printing.
This will support both their growth, and that of the likes of Constantia Flexibles.
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