THE INTEGRATION INQUISITION

“I think a lot of consumers are really trying to make those decisions when they’re at the shelf or when they’re purchasing online. They want to know, ‘Where is this coming from?’ ‘How far away is it?’ ‘Is the packaging recyclable?’”

—Kristi Duvall, vice president of sales, The BoxMaker Inc.

extra material to register colors. Your fi rst sheet is available with a digital print job.

Sustainability

Another top-of-mind consideration, and concern, for consumers today is sustainability. Th ese concerns are rising as online ordering has become more prevalent.

“Today, we are seeing strong consumer demands for reductions in packaging waste by decreasing the amount of packaging material, sustainable and environmentally friendly products, brand recognition or a relationship with the brand, and a positive overall food experience,” says Barrieau. “An alternative to adhesive labels and sleeves, adhesive-free labeling and automatic sleeving using ultrasonic technology allows users to meet all of these demands,” she says.

“Ultrasonic banding uses a minimal amount of packaging materials and has the ability to switch between recyclable paper or plastic material or a compostable fi lm, meeting consumer demands for a sustainable solution,” Barrieau says. “Additionally, ultrasonic banding allows for stunning graphics to be printed directly on the label or sleeve, allowing for easy brand recognition and contributing to a positive experience with the product.”

Th e ebb and fl ow of consumer demand for online access when buying food and beverage brands has certainly created challenges—but it has also illuminated new opportunities for brands and the boxmakers they turn to for effi cient, eff ective, and sustainable packaging solutions.

The Pandemic Difference

For some brands a suddenly more digital environment has off ered benefi ts they might not have immediately anticipated, Duvall notes. For instance, she says, “I think it’s been easier for smaller brands to get noticed because they’re not having to fi ght for the same kind of shelf space that they get squeezed out of at a large retailer.”

In the digital world, she says, small to midsized brands are getting notices on social media through channels such as Instagram and TikTok, where they can do some interesting and fun things—they can take more risks to see if they could potentially capture a diff erent audience. “I think a lot of brands took advantage of that,” she says. Even today, she says, the brands that haven’t done that kind of experimentation still have the opportunity to make changes and connect with consumers in a diff erent way. “It’s still evolving.”

Looking Forward

Looking ahead, Duvall predicts that some of the larger brands are going to begin replicating some of the creativity and experimentation that small to midsized brands have been leveraging during the pandemic. “Th e smaller brands are getting recognized, and there’s a lot of focus,” she says.

Duvall predicts that there will also be a continued focus on buying local and sustainability: “I think a lot of consumers are really trying to make those decisions when they’re at the shelf or when they’re purchasing online. Th ey want to know, ‘Where is this coming from?’ ‘How far away is it?’ ‘Is the packaging recyclable?’”

Even e-commerce behemoth Amazon has taken note of these concerns and has begun off ering “frustration-free packaging” and delivery options for consumers who prefer to bundle multiple orders into single shipments to save costs and minimize environmental impacts.

Making an impact will continue to be important for food and beverage companies, Duvall notes, pointing out that one trend that is likely to continue is creating packaging that will be saved rather than tossed out—packaging that becomes part of the product which, she says is already a trend in Europe. Brands, she says, are thinking diff erently about their packaging. “Long after my product has been used, could this box that it shipped in be used in some other form? Could it become a piece of furniture, or some sort of holder, or a keepsake, or is it personalized with a person’s name on it?”

As smaller food and beverage brands are gaining a toehold during the pandemic, larger brands are beginning to follow their lead to get attention both on product shelves and on doorsteps. Th is heightened demand and hybrid environment is creating both challenges and opportunities for packaging that is impactful, cost-eff ective, and environmentally friendly. 

Lin Grensing-Pophal is a Wisconsin-based freelance writer and a frequent BoxScore contributor.

When a joint venture or acquisition is on the table, decision-making must be guided by several key factors

By M. Diane McCormick

In an age of uncertainty, plotting for strategic growth demands a sharp eye for opportunity and capacity. Businesses best positioned to emerge from the pandemic with a growth mindset are those that apply a smart approach to joint ventures, acquisitions, and vertical integration.

“It’s very hard to grow organically,” says Gene Marino, AICC chairman and executive vice president of Akers Packaging Service Group. “Th ere are not new companies that wake up today and decide they’re in need of fi nding boxes. Sometimes, your ability to acquire a really good ongoing concern in a market or space you’re interested in can be benefi cial to growth.”

Joint Venture vs. Acquisition

To enter into a joint venture or to fl at-out acquire a business? Th at is the question.

Th e growth-oriented nature of horizontal acquisitions can strengthen an individual company’s control over supplies while also creating effi ciencies and geographic strategies that cut down on lead time. In acquisitions, personnel from the purchased business might retain daily operational responsibilities, but the complex decisions

“All suppliers have struggled the past year. Integrating and having more control of our supply was a distinct benefi t for Welch. We have certainly benefi ted from having input or control rather than being at the mercy of the free market.”

—Scott Welch, founder and president, Welch Packaging

remain in the hands of the buyer, says Marino—“whether or not to make signifi cant capital investment, whether or not to divest of a business line or a unit, whether or not to distribute capital, whether or not to take on additional capital or additional debt.”

No matter the rationale behind an acquisition, the key to avoiding trouble is adhering to “a clear set of strategic must-haves and nice-to-haves in terms of how you go to market or fi nd what fi ts you best,” says Marino. “It’s not just doing it for the sake of doing it, because then, you wind up simply spending a lot of capital and increasing the complexity of your business. It really is going to depend on what you’re focused on trying to accomplish by virtue of an acquisition.”

Joint ventures among two or more players can take multiple forms—perhaps a 50-50 or 60-40 split in fi scal and management duties of a newly purchased or created asset. Th ere are no rules that dictate the split or which entity runs and manages the venture on a daily basis. “It’s an element where both companies are potentially contributing something to the business, and they choose to eff ectively share resources, share operations, and ultimately share the profi ts and losses of that entity,” says Marino.

Resources and expertise came into play with Welch Packaging’s newest joint venture, initiated in early 2021. Th e Indiana-based company was already stocked with capabilities in corrugating, retail packaging, custom boxes, and packaging boxes when it entered into a deal adding a corrugated sheet feeder, acquired from bankruptcy proceedings in Ohio, to support its box plants.

Th e acquisition also included a small medium mill, “an added benefi t, as we wanted to understand that type of operation,” says Scott Welch, founder and president of Welch Packaging.

To further that eff ort, Welch Packaging took a joint venture partner that knew the mill side of the business. Th e partner provides the expertise needed for a successful fi rst foray into mill operations that support the corrugator, as well as serve as a supplier for external customers.

Th e new entity that emerged is now called Green Meadows Paper Co. “We have invested heavily in both the sheet feeder and the mill to improve the product quality from both operations,” says Welch.

Welch notes pros and cons to integrating operations. On the con side, the internal customer is “at the mercy of the vertical supplier,” subject to disruption along the entire chain if something goes wrong with service, quality, or any other element.

On the other hand, integration off ers the ability to control cycle time and quality, plus the freedom to innovate with products. Costs come down, too, through synergies in administration, freight, and talent management.

Th e Green Meadows mill is a recycled paper processing mill with “a nice niche,” Welch adds. “We intend to keep it small and focus on strategic customers that value the products and service experience that we will deliver.”

Th e mill joint venture dovetails with Welch Packaging’s focus on serving as a high-performing local converter. In that atmosphere, producing as well as buying sheets contributes to “a competitive advantage,” Welch says. “Every supplier has a unique proposition to the market, and we feel fortunate to optimize everyone’s strength as well as streamline our operation.”

Strategic Integration

Industry insiders agree: Integrating corrugating capabilities into boxmaking isn’t a universal solution to the challenges of supply chain, but it helps.

Welch Packaging’s full-sized corrugator runs only about half of the company’s volume needs, so two partners, plus the Green Meadows sheet feeder, provide the rest.

Internal integration of corrugating capabilities creates redundancy and enhances fl exibility by adding more options for every situation. A supplier can’t deliver, just when a major customer needs a shipment? Divert trucks from a less urgent route. A COVID-19 outbreak forces a supplier to shut down a shift? Step up production in-house to cover the diff erence.

“Th e beauty of having your own corrugator is that you can allocate the product across the system to complement and leverage with your suppliers,” Welch says. “You have all that optimization you can achieve by having those partners,