Plastic or glass packaging?
A former Finance and Divisional C-level executive at Berry Global Group discussed the impact of Berry Group acquiring the European-based RPC Group with regards to strategy and expansion. He suggested that although the US market for Berry Group had seen a plateau in the amount of plastic being produced, there would likely be more of an opportunity for expansion in Europe, India, and other developing countries “as they push more towards the middle class.” The former executive continued by discussing future options for plastic suppliers, saying that millennials “don’t care” whether a product is made from glass or plastic, so there is a significant opportunity for the RPC Group in Europe to reproduce products using recyclable plastic packaging instead of glass. The specialist noted that there is “constant price pressure” on companies and that undeniably the swap to plastic could help businesses reduce costs.
The specialist explained that, with the acquisition of RPC Group, the company would have a base of operation in Europe enabling them to operate more effectively in markets that are further afield and less accessible from the US, such as India. He said that “Berry was shipping a lot of healthcare bottles over to India to get filled and then the bottles would come back” to the US. Instead, he suggested that in future RPC Group could build a healthcare packaging complex to both produce healthcare bottles and fill them in the same facility. The specialist said that effectively, this would mean that “…you can get synergies and just go into one.”
A former VP and General Manager at Owens-Illinois discussed the advantages of glass as an alternative to plastic, especially considering the recent environmental pressures on plastic manufacturers. The specialist said that he wasn’t sure if the campaign was “enough to swing people out of plastic,” but that if companies were to change to glass, the main goal would then be to keep them using glass “because once they [stop using glass], you’ll never get them back. It’s too hard.” And, currently, the only businesses that are “truly committed to glass” appear to operate in the spirits and wine industry, the latter of which has been “booming” recently. Although there was previously a surge in popularity and production of craft beer, the “lustre of [the product] is starting to wear off.” Considering most glass manufacturing plants “were built around servicing the beer industry,” the specialist wondered how easy it would be for plants to “retool” as wine, spirit or food-bottle manufacturers. He anticipated plants around the beer category would continue to close unless they could adapt to changing demand.
Bringing new products to market
The introduction of cannabis and “new age” drinks has been a key area of discussion across a number of Third Bridge Forum’s interviews. As we discussed in our report on Healthcare, Canada and a number of North American states are becoming more lenient in their regulations surrounding cannabis. With this, there has been a reduction in regulations for edibles and drinkable products made from cannabis, which has increased interest in the burgeoning industry. The former VP and General Manager at Owens-Illinois said that cannabis is going to be the “next big thing” in packaging. However, a Managing Partner at The Glass Container Advisory raised concerns as to how the products would be packaged and marketed. While he acknowledged that glass tends to be associated with a “premium image,” he said it was still unclear how cannabis products would be promoted. The former VP also considered whether cannabis would be a “share robber” and take market share away from the “Coke [Coca-Cola] and Pepsis of the world,” or whether it would create a “whole new share pie.”
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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