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  • 11 Nov 2020

Editor's note: Let’s not lose the entrepreneurial spirit

Editor's note: Let’s not lose the entrepreneurial spirit

The entrepreneurial spirit of the label industry is rightly celebrated. The industry has historically been driven by small companies founded by innovative individuals. A large majority of label converters today continue to fit this profile, and the pages of every issue of L&L are awash with their stories.

According to the consultancy LPC, of the 2,000-2,200 label converters in the US, 85 percent have a turnover of under 10m USD. L&L and Labelexpo’s own database, meanwhile, shows 80 percent of converters globally have a turnover of below 3-5m USD.
This profile has its advantages. Decision-making, unencumbered by multiple layers of management structure, can be agile; being embedded in local communities allows personal relationships to drive success. 

But as global brands increasingly seek label suppliers who can offer the same quality of production and excellence of service to their customers around the world, it is natural that mergers and acquisitions accelerate, creating global converting groups with huge international footprints and turnovers to match. 

“It was a frequently cited dream of many Latin American converters I visited to be acquired by a global converting group”

When I was based in Argentina, covering the Latin American market for this magazine, it was a frequently cited dream of many converters I visited to be acquired by a global converting group. It was seen as the ultimate vindication of their professional success, and would provide a bumper pay day to be enjoyed in retirement. Fernando Aravena, the Chilean label industry entrepreneur, was regarded as a local hero for founding and then selling so many converting operations it was almost impossible to keep track.

As Andy Thomas-Emans points out in his column in this issue, most smaller converters are successful precisely because of the personal business relationships their owners and managers have built up, often on a hyper local level. ‘Simply adding them to a bigger group may make them more efficient – by allowing pooling of procurement for example – but if the founders are let go, those personal relationships can no longer simply be taken for granted by a new team of corporate customer relationship managers.’

Converter consolidation continues apace. But it is interesting to note that the new generation of converting groups being established in recent years – such as All4Labels Group and Optimum Group – are leveraging, as Thomas-Emans writes, ‘the advantages of global scale with those of local engagement, where customers continue to engage with known and trusted sales teams’. 

Global scale and local engagement. When it comes to mergers and acquisitions, this seems to be the recipe for success.  

ABOUT THE AUTHOR

James Quirk is group managing editor of Labels & Labeling.

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