Mergers & Acquisitions are a popular form of growth and profitability for companies in the printing and packaging industry.
The packaging market is growing. Especially now in times of Corona, when hygiene measures and online trading are a top priority, packaging is more in demand than ever. That is why it is all the more important for the printing and packaging industry to work profitably and to meet the ever new demands of the market.
Printing and packaging industry on the road to success
Online trading is booming worldwide. Goods have to be transported – safely and packaged. The following applies: both the expectations of the industry and ours as end users must be met. After all, household appliances, computers, beverages, food, cosmetics and healthcare, including pharmaceutical products, should reach us well protected and neatly packaged.
Packaging is important – how important is shown by the figures on the volume distribution of packaging:
- Approx. 40% is industrial packaging
- 60% on packaging for end consumers
Trade and demand grow
If (online) trade is booming, demand in the printing and packaging industry will grow. On average, this growth is slightly above GDP, averaging 3 – 4% per year on a global basis.
The growth distributions are different depending on the degree of saturation in the country:
- Asia grows between 6 – 8%
- Central America between 4 – 6%
- Europe approx. 2%
- North America 1 – 2%
Growth driver for the printing and packaging industry
Packaging determines our everyday life. Packaging is a valued all-rounder: If the transport box serves as a safe place for goods on their travels, packaging also influences our consumer behavior. Appealingly printed, they are the most important communication channels of a brand – if these were omitted, then for us consumers relevant information such as ingredients or product recognition would be dispensed with. Packaging is more in demand than ever.
What is triggering this industry to grow?
In addition to increasing urbanization and an improved standard of living, it is the higher income level that is driving the online trade and shipping of products. The number of single households is increasing – more goods are ordered per household. Smaller packaging volumes in particular are more in demand than ever.
Furthermore there is a surge of innovative convenience packaging, optimally developed for the fast-moving demands of daily lives:
- resealable
- Suitable for microwaves
- sustainably produced
- environmentally friendly in printing, disposal and recycling1)
Areas such as food safety and shelf life through packaging are also constantly driving developments in this branch of industry.
Packaging industry
What can be observed is that in times of crisis the printing and packaging industry decouples from GDP. Let’s take a look for example back to the financial crisis of 2008, the part of the printing and packaging industry that mainly serves consumer goods developed with a growth rate of approx. 2%.
The same thing is happening now in the Corona era: The food, cosmetics, beverages and corrugated cardboard for shipping boxes are enjoying strong growth. In contrast to 2008, the demand for consumer goods such as computers, screens, etc. has increased significantly. The paper packaging industry in Germany generated approx. 46.2% of the total turnover of the German packaging industry in 2019.2)
Crisis stability as an opportunity for corporate development
The developments in the printing and packaging industry are very promising: The crisis stability offers many opportunities for investors and private equity funds to invest in a segment with stable growth.
Companies in flexible packaging such as Amcor and Bemis have strengthened themselves through the merger in 2019 3), and Constancia and Printpack have also significantly expanded their market positions in recent years through acquisitions.
The same goes for companies that specialize in label printing such as All4Lables and CCL. In the corrugated board area, Smurf Kappa, DS Smith, International Paper and Westrock have already embarked on a future-oriented path.
Suppliers have behaved similarly in recent years: Flint Group and Sun Chemicals have adapted to the markets through acquisitions.
Conclusion: Gains through Mergers & Acquisitions – transactions
Companies must continuously secure and expand their competitiveness. This succeeds if they open up to promising developments and implement them consistently. Mergers and acquisitions are an opportunity to assert yourself profitably in the market tomorrow with a competitive offer.
Many companies in the printing and packaging industry have already recognized this opportunity for more know-how. They take advantage of this opportunity on:
- Expansion through existing products
- Development of products, new technologies, processes, patents
- Maintaining and strengthening competitiveness
- the option to increase sales and profits
Mergers in particular open up opportunities for restructuring, rationalization and expansion of the product range. An expanded product portfolio improves competitiveness – sales and profits can be increased.
With a takeover – provided the approval of the antitrust authorities – competitors will disappear from the market. The competition is reduced, a sharp increase in the acquisition of new customers is possible.
Mergers & acquisitions are promising developments for companies in the printing and packaging industry. In this way they can adapt to new processes, continue to operate profitably and assert themselves in the market.
Source:
- https://www.interpackalliance.de
- https://de.statista.com
- https://www.packaktuell.ch – News | May 31, 2019
Recommendations:
- https://www.neue-verpackung.de/65320/das-m-a-jahr-2019/ – Technical article 01/20/2020. Jens Freyler. M & A Knox – Experts in Print & Packaging
- https://www.interpackalliance.de/
- Corona beeinflusst die Zukunft der Verpackung
