Jan 19, 2012
Insight about basic forces in the packaging markets of Europe comes from this story: On January 17th, Britain’s DS Smith (UK) announced it is buying the recycled packaging operations of SCA of Sweden for about $2 billion. The goal of DS Smith, already a jumbo supplier of packaging in Britain and elsewhere, is to win more business from the world’s top consumer goods companies, especially in Northern Europe where its main consumer goods customers already operate. In his statement about the deal, DS Smith CEO Miles Roberts said that customers like Procter & Gamble, Nestle, Kraft, Reckitt Benckiser, and Unilever have encouraged his company to offer more recycled packaging across Europe. The deal will make DS Smith one of the largest corrugated suppliers in Europe, with close to 3 million metric tonnes of capacity.
DS Smith is already a big company, with about 12,000 employee and $4.3 billion in revenues in 2010. The company is best known in the U.K., where it claims to be the top supplier of corrugated board and of recycled paper. The company also is a big corrugated supplier in Europe, especially in France, and it is a supplier in both the U.K. and Europe of bag-in-box packaging and of returnable transit packaging. Besides producing recycled packaging, DS Smith’s green credentials include its role as a leading collector of waste paper in the U.K. for recycling.
SCA (Stockholm, Sweden) is a big wood fiber products company. The corrugated business that SCA is selling off is substantial but not the company’s core focus. That is instead tissue and personal care products, which compete with products of companies such as Kimberly-Clark and Procter & Gamble. These lines will account for 80% of sales going forwardÂ vs. above 50% last year.
Key messages from the above: (1) consolidation of packaging producers is a force in European market; (2) sustainability in packaging is essentially obligatory in Northern Europe for key brands and their partners; (3) DS Smith could be a prospect for current and futures digital packaging solutions. We’ll finish by focusing just on (3), with these points:
- DS Smith’s extensive list of plants include some that have printing operations, in particular for point of sale packaging and for self-standing and other displays.
- Existing digital equipment includes wide format inkjet, via DS Smith’s 2008 acquisition of Multigraphics, a large U.K. sign and display printer ($17 million in 2007 revenues).
- The famous global brands that DS Smith cites as customers, such as Nestle, P&G, and Unilever, want sustainable packaging and they also want short run, targeted print.
Digital presses and wide format printers that can print on recycled media should thus be attractive to DS Smith. The company’s many parts must meet the needs of brands and retailers for sustainable packaging and efficient marketing, and digital printing is a tool to do that.
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