final report printpack 280408 doc - daum

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Final Report

Review the European Strategy of Printpack as it expands into mainland Europe

April 30th, 2008

Prepared by International Business Group 01

Ekene Ogbechie

Caroline Dillard

Woosik Jeung

Valdemir Oliveira

Oswaldo Mendoza

Surasak Wattanayakorn

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Executive Summary We interviewed 24 potential customers (companies) in Poland and Germany, 5 potential competitors in

Germany and 2 trade institutions in Germany.

Cost driven customers: 7 out of 11 companies across all product segments in Poland mentioned that cost is

the key factor, given that quality is met. The flexible plastic packaging market in Poland from multinationals

in confectionery, dried processed foods, and pet foods is estimated at 82 Million Euros per annum. Annual

potential sales for Printpack are estimated at 8.8 Million Euros, or 10.8% market share from these segments

in Poland.

Service oriented customers: in Germany 3 out of 7 small national customers quoted services as the key

factor in choosing flexible packaging1 suppliers. Segment sales for Printpack could be 2-16 Million Euros per

year. In Poland, none of the 11 companies interviewed quoted services as the key factor in choosing flexible

packaging suppliers.

Product innovation oriented customers: in Germany multinational customers such as Nestlé and Ferrero

look for enhanced and innovative products. We estimate spending on flexible plastic packaging by

multinational customers in the pet foods, confectionery, bakery goods (biscuits and breakfast cereal)

segments as 308 Million Euros per year. Printpack share uncertain, but may resemble previous segment.

Value requirement

Segment Market size * Target customer Estimated

spending ** Number of

customers***

Potential sales volume for Printpack

Low Cost Confectionery, dried

processed food and pet foods in Poland

€ 138 m Multinational customers in

Poland

€ 82 m for multinational

customers 16 € 8.8 m

Service solution

Confectionery, breakfast cereal, biscuits and pet

foods in Germany € 652 m

National customers in

Germany

€ 298 m for national

customers 51 € 2-16 m

Product Innovation

Confectionery, breakfast cereal, biscuits and pet

foods in Germany € 652 m

Multinational customers in

Germany

€ 308 m for multinational

customers 13 € 2-16 m

* of flexible plastic packaging in selected segments **on flexible plastic packaging from target customer *** A customer is here defined as a branded company operating in the defined segment.

1According to Euromonitor 2007 flexible packaging report, flexible packaging consists of stand-up pouches, flexible plastic,

aluminum foil, flexible paper and blister and strip packs

iii / 235

Based on these segments of customer value requirement, we suggest three possible strategic options for

Printpack:

A] low cost provider in Poland

B] service solution provider for national companies in Germany .

C] product innovator for multinational units based in Germany.

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Table of Content

1. Introduction .............................................................................................................................................. 6

3.1 Customers ............................................................................................................................................ 9

3.2 Supply chain....................................................................................................................................... 18

3.3 Competitors ....................................................................................................................................... 19

4. Key Findings ............................................................................................................................................ 23

4.1 Customer insights from Poland ......................................................................................................... 23

4.1.1 Market trends ........................................................................................................................ 23

4.1.2 Environmental concerns ........................................................................................................ 28

4.1.3 Decision-making process ....................................................................................................... 29

4.1.4 Current suppliers ................................................................................................................... 30

4.1.5 Customer’s flexible packaging requirement.......................................................................... 32

4.1.6 Business discussion................................................................................................................ 34

4.2 Customer insights from Germany ..................................................................................................... 37

4.2.1 Market trends ........................................................................................................................ 37

4.2.2 Environmental concerns ........................................................................................................ 38

4.2.3 Decision-making process ....................................................................................................... 39

4.2.4 Current suppliers ................................................................................................................... 41

4.2.5 Customer’s flexible packaging requirement.......................................................................... 42

4.2.6 Business Discussion ............................................................................................................... 44

5. Supply chain analysis .............................................................................................................................. 46

5.1 Key Findings ....................................................................................................................................... 46

5.2 Supply Chain Management ............................................................................................................... 47

5.3 Sourcing of raw materials .................................................................................................................. 53

5.4 Technology ........................................................................................................................................ 60

5.5 EU legislations ................................................................................................................................... 65

5.6 Business Discussion ........................................................................................................................... 74

6. Competitive landscape analysis .............................................................................................................. 77

6.1. Competitive landscape in Europe ...................................................................................................... 77

6.2. Competitive landscape in Poland ...................................................................................................... 80

6.3. Competitive landscape in Germany .................................................................................................. 97

7. Recommendations ................................................................................................................................ 111

7.1. Low cost provider ............................................................................................................................ 111

7.2. Service Provider ............................................................................................................................... 114

7.3. Product innovator ............................................................................................................................ 115

(Appendices on the next page)

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Appendix PSD1 Project scope and deliverable agreement ........................................................................... 117

Appendix MCUST1a 42 product segments screening or top 5 countries in Eastern and Western Europe . 119

Appendix MCUST1b Ranking scores of category size, growth and percentage of flexible packaging .......... 120

Appendix MCUST1c Total weighted score by countries ................................................................................ 145

Appendix MCUST2 Fit with Printpack’s capability ......................................................................................... 147

Appendix MCUST3 Further screening on the 11 product segments in Western and Eastern Europe ......... 148

Appendix MCUST4 Market share of companies that operate within the three selected product segments in

Poland and Germany ..................................................................................................................................... 149

Appendix CUST1 ............................................................................................................................................ 153

Appendix CP1 ................................................................................................................................................. 155

Appendix CP2 ................................................................................................................................................. 156

Appendix CP3 ................................................................................................................................................. 158

Appendix CP4 ................................................................................................................................................. 159

Appendix CG1 ................................................................................................................................................ 162

Appendix CG2 ................................................................................................................................................ 163

Appendix CG3 ................................................................................................................................................ 164

Appendix S25 Low Cost providers ................................................................................................................. 165

Appendix S26 Projection on PE prices ........................................................................................................... 166

Appendix S27 Radar Map .............................................................................................................................. 167

Appendix S28 Printpack current suppliers .................................................................................................... 168

Appendix S29 Printpack Europe Ltd (UK) Financial Data ............................................................................... 169

Appendix 2 Questionnaire ............................................................................................................................. 170

Appendix 3 Interview Minutes ...................................................................................................................... 186

Appendix 4 Budget ........................................................................................................................................ 222

Appendix R1 Poland market potential of flexible plastic packaging and potential sales .............................. 223

Appendix R2 Benchmarking calculation in Poland ........................................................................................ 227

Appendix R3 Market potential of flexible plastic packaging and potential sales in Germany ...................... 229

Appendix R4 Benchmarking calculation in Germany .................................................................................... 234

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1. Introduction

This report has been prepared for Richard Lumley, marketing and product development director at

Printpack, UK by a group of 6 MBS students working from January 24th to April 7th 2008. The terms of the

project scope and deliverables are described in appendix PSD1. Appendix 4 analyses the actual spend of

£12,209 (as of 26 March 20082) against the budgeted £15,180.

2 Most up to date records received from the finance office.

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2. Background and situation

Capabilities and industry activities

Printpack UK is a flexible packaging converter. Its current technological capabilities include printing

(rotogravure and flexographic), slitting and lamination. In the US, the technological capabilities include

printing, thermoforming and specialty packaging (including shrink labels). Printpack recently expanded its

capabilities to the manufacture of flexible packaging when it acquired the US Seal-it, a leading converter of

PVC, polydactyl acid (PLA) and PET films in January 2007.

Expanding capabilities through acquisitions

Over the past 8 years, Printpack Inc. has extended its capabilities in the US by acquisition.

� In 2001, Printpack acquired Independent Packaging.

� In 2003, Printpack acquired the thermoforming operations of Amcor in Newport News, Virginia and

also acquired Amcor's specialty packaging plant in Newport News, Virginia.

� In 2005, Printpack acquired the assets of PBM Plastics, a technology leader in the manufacturing of

thin-wall, deep draw, thermoformed plastics

� In 2007 Printpack acquired Seal-it, a leading a US converter of PVC, polydactyl acid (PLA) and PET

films.

Geographic concentration

As a subsidiary of Printpack Inc, Printpack UK currently benefits from its parent company’s large North

America footprint, with 22 plants in the US and 2 plants in Mexico. Printpack Inc stands to be the second

largest US flexible packaging manufacturer and has annual revenue of over $1 billion. In Europe, Printpack

currently operates 2 plants in the UK, (Bury, Lancashire and Saffron Walden, Essex). To increase its

European presence, Printpack is currently constructing a new manufacturing plant in Poland which is due to

open in 2009. This move is particularly good for Printpack considering that its business is concentrated in

the US, which is currently experiencing an economic downturn.

Customer Portfolio

Printpack UK currently serves customers in the food industry, with 12 of its 33 customers accounting for

96% of its revenue. This portfolio of customers operates in the biscuit, snacks, confectionery and labels

segments.

The project

With the view on expanding manufacturing capability into mainland Europe, the Leadership Team of

Printpack UK in partnership with the Launch Institute is embarking on a new strategy review process to

determine its European strategy. It is in this context that the MBA Manchester Business School IB group 1

has been invited by Printpack UK on the project (see appendix PSD1 for project scope and deliverable

agreement).

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In this process, Printpack UK leadership team worked in four sub-teams to gather and analyze information

about Printpack’s customers, competitors, up-stream value chain and company realities. As MBA team, we

joined the project by organizing ourselves according to Printpack’s internal teams. Each two of us

integrated one of the three Printpack teams Customer, Competitors and Upstream Value chain, areas of

the process on which Printpack invited us to bring our inputs.

The first phase of this process was to perform a detailed analysis of the business environment in the three

focus areas: supply chain, competitive environment and customer environment. We also identified

profitable geographic markets and product segments for flexible packaging materials in mainland Europe.

In order to support this market analysis, we also carried secondary research in the supply chain and

competitive landscape. The recommendations from this project are intended to provide Printpack with

insights into focus areas for strategic development and into evaluating the following:

� Potential market share and expected sales volume in a given geographic market and product

segment

� Competitive landscape in terms of revenue, profitability and capability

� Supply Chain Management - Sourcing Plan, Management System, Technology Management,

European Legislation

Considering the scale of the study, we believe that the organization of the MBA group in sub-teams brought

several benefits to the project. Firstly, we avoided disrupting Printpack process already underway. Secondly,

we quickly integrated with Printpack sub-teams allowing us to give contribution at the beginning of the

project. Thirdly, we could also develop a more in-depth review about the topics related to each sub-team

sections.

Yet, the division of the MBA team in sub-teams also brought some challenges, particularly in terms of

information integration into a single uniform document, a challenge not easy to overcome considering the

magnitude of the research presented in each section.

All in all, we believe that we managed to produce a report which provides Printpack a good perspective of

some current industry challenges and a solid source of information for the work yet to do be implemented

by Printpack in their further stages of the programme.

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3. Methodology of research

This section of the report contains our approach to the secondary data analysis and field study and given

that integrated with the customers, competitors and supply chain sub-teams at Printpack, we have

explained our methodology according to these three work streams

3.1 Customers

We used secondary research data to identify the most attractive geographical markets and product

segments for the field research. Our goal from the field study was to understand the purchasing decision

process and factors in choosing a flexible packaging supplier.

� Secondary research

The figure below presents a flow of our secondary data analysis.

Criteria

Top 5 countries each from Western and Eastern Europe

Flexible packaging consumption

24 countries 42 product segments

Market size, growth and percentage of flexible packaging

11 product segments in Western, 16 product segments in Eastern

27 product segments within top 2-3 countries

Printpack’s environment and capabilities

4-5 product segments within 2 countries

Inputs

Outputs

Identification of attractive geographical markets

Selection of potential product segments

Consideration of Printpack’s environment and capabilities

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� Identification of attractive geographical markets

Using the PCI report3 classification, we divided Europe into two geographical regions, Western and Eastern.

Next, in each region, we selected the top five countries with the highest flexible packaging consumption as

shown in table MCU1 and MCU2. The selected countries are as follows: in Eastern Europe - Czech Republic,

Poland, Russia, Ukraine, Turkey; and in Western Europe - Italy, Spain, France Germany and United Kingdom.

Table MCU1 Forecast of flexible packaging consumption in Eastern Europe

Eastern countries Forecast of flexible packaging consumption 2010 US $M

Russia 775

Poland 490

Turkey 490

Czech Republic 155

Ukraine 135

Hungary 122

Romania 118

Slovakia 85

Bulgaria 48

Source: PCI, The World Flexible Packaging Report 2006

Table MCU2 Forecast of flexible packaging consumption in Western Europe

Western countries Forecast of flexible packaging consumption 2010 US $M

Germany 2965

France 2220

United Kingdom 1980

Italy 1270

Spain 895

Sweden 230

Switzerland 200

Denmark 197

Benelux 197

Austria 190

Greece 178

Finland 136

Portugal 131

Ireland 113

Norway 113

Source: PCI, The World Flexible Packaging Report 2006

3 PCI report The World Flexible Packaging report 2006

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� Selection of potential product segments in the top 5 countries.

Next, for each on the top 5 countries in Eastern and Western Europe, we screened 42 product segments

(see appendix MCUST1a) using the criteria: market size, market growth and percentage of flexible

packaging. With the agreement of Barry Bleasdale the Sales Director of Printpack UK, we deemed these

criteria good indicators of demand for flexible packaging in each category, hence used for the screening

process. Given the different market dynamics in Eastern and Western European, the weighting of each

criterion varied by region. The criterion, percentage of flexible packaging, was given the highest weighting

in both Eastern and Western markets because it best indicates demand potential, although the Eastern

European region got a higher weighting to compensate for its smaller market size4. On the other hand,

given that the market in Western Europe is relatively mature and stagnant, market size and market growth

were deemed more important for Western Europe. Therefore, the weightings given to the criteria market

size and market growth in Western Europe were higher than those in Eastern Europe5 . It is important to

note that the weightings of these criteria were agreed with Barry Bleasdale.

Table MCU3.1 The weightings given to each of the criterion.

Criteria Western Europe Eastern Europe

Market size in 2007 ($US Million) 35% 20%

Average market value growth 2007 - 2010 25% 20%

% of flexible packaging 40% 60%

Source: MBS Project team’s and Printpack’s agreement

Based on the criteria given in table MCU3.1, in the top 5 countries in Eastern and Western Europe, the

market size, market growth and percentage of flexible packaging for 42 product segments were ranked by

values. From this ranking, a score from 1 to 10 was given to each value. See appendix MCUST1b for details.

Next, the total weighted score was calculated by multiplying the scores given to each criterion with the

weighting of that particular criterion. See appendix MCUST1c for details

Next, the total weighted scores for all product segments in Eastern and Western Europe were ranked. We

used a total weighted score of 30 as a cut-off to select product segments for the next screening process. In

Western Europe, however, we included chilled processed food and wipes6 which had a score just below 30

to the pool of product segments. See appendix MCUST1c for details.



6 Chris Deamon of Printpack informed us during the supermarket visit to Tesco Bury, that Printpack UK is

interested in these product segments.

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This process resulted in the following 11 product segments in Western Europe and 16 product segments in

Eastern Europe, as shown in table MCU4.

Table MCU4 Selected product segments in Eastern and Western EU

Product segments in Western EU Product segments in Eastern EU

Confectionery Confectionery Ice cream Sweet and savoury snacks Sweet and savoury snacks Bakery products Cheese Nappies/diapers/pants Bakery products Toilet paper Toilet paper Chilled processed food Nappies/diapers/pants Kitchen towels Incontinence products Tissues Dog and cat food Sanitary protection Chilled processed food Dried processed food Wipes Wipes Ice cream Incontinence products Snack bars Cheese Frozen processed food Paper tableware Dog and cat food Source: Underlying data from Euromonitor database and MBS project team’s

analysis

� Consideration of Printpack’s environment and capabilities

To determine the most attractive product segments from the short-list above, two key factors were

considered:

1. Impact of market environments in Eastern and Western Europe on Printpack

2. Fit with Printpack’s current capabilities

The pros and cons analysis on table MCU5 highlights the impacts of the market environments in Eastern

and Western Europe on Printpack.

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Table MCU5 Market environments in Eastern and Western Europe

Western Europe Eastern Europe

Pros

• Established relationships with international and pan-European customers

• Local market knowledge

• Growing and under-exploited product segments

• Increasing presence of international and pan-European customers

Cons

• High cost pressure

• Mature product segments with low growth

• Relocation of some international customers to eastern Europe

• Limited market knowledge

• No established relationship

Source: Discussion with Printpack’s Leadership team (21

st to 22

nd of March 2008),

Stanley Sacharow (April 2006) “Global Giant”, www.pffc-online.com, pg 44-50,

Frost & Sullivan (December 2005) “Western European Markets for Plastics in Flexible Food

Packaging”, www.frost.com, B687-39, Joanne Hunter (September 22 2005) “Flexible pack prices must be

increased” Packaging magazine, Vol. 8 Issue 17

From the analysis above, we suggested that the attractive product segments in Western Europe for

Printpack will be product segments that are less commoditised. We believe that it is likely that packaging

within these product segments adds a significant amount of value to the product line and, as a result, there

is less pressure on the cost of packaging materials.

On the other hand, due to Printpack’s limited market knowledge and relationships in Eastern Europe, the

attractive segments there are those which are served mainly by multi-national companies, as Printpack can

leverage on its existing relationships in the US and the UK.

With regard to fit with Printpack’s capability this information was obtained in-house, i.e. from the company

itself. See appendix MCUST2 for more details

The 11 product segments in Western Europe were considered in view of the likelihood of being a

commodity and fit with Printpack’s capabilities, while in Eastern Europe, the 16 product segments were

considered in view of the number of multinationals companies in that segment and fit with Printpack’s

capabilities. See appendix MCUST3 for more details. The results of the analysis are shown in figure MCU6

and MCU7 below.

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Figure MCU6 Eastern Europe (Source of data: MBS project team’s analysis)

Figure MCU7 Western Europe (Source of data: MBS project team’s analysis)

Further to this analysis, Printpack’s senior management made the decision for us to explore three product

segments in two markets: Confectionery, Dried Processed Food and Dog & Cat Food in Poland, and

Confectionery, Bakery7 and Dog & Cat Food in Germany.

� Field Study

To understand the profitability of Confectionery, Dried Processed Food and Dog & Cat Food segments in

Poland, and Confectionery, Bakery and Dog & Cat Food in Germany, we used a set of 37 questions

(appendix 2), consisting of open and closed questions to explore the following during the field study:

7 Bakery products consist of baked goods, biscuits and breakfast cereal subsectors based on the definition of Euromonitor.

HighLow

High

Low

Fit with Printpack capability

Toilet paper

Wipes

Incontinence productNappies/Diapers/Pants

Confectionery

Ice cream

Cheese

Snack

Chilled processed foods

Dog and cat food

Bakery products

Sanitary protection

TissueKitchen towel

Paper tableware

Dried processed foods

Pre

senc

e of

mul

tinat

iona

l com

pani

es

HighLow

Low

High

Fit with Printpack capability

Com

mod

ity

Toilet paper

Wipes

Incontinence product

Nappies/Diapers/Pants

Confectionery

Ice creamCheese

Snack

Chilled processed foods

Dog and cat food

Bakery products

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- Printpack’s potential customers’ business needs

- Competitive landscape for Printpack

- Decision-making process of Printpack’s potential customers

- Business volume of Printpack’s potential clients.

As shown in table MCU8, we contacted 45 out of 75 companies in Poland and all 72 companies in Germany

across the product segments listed above. It is important to note that the 30 companies that were not

contacted in Poland had a very small market share - about 0.1%.

Table MCU8 Number of companies that we contacted and interviewed in Poland and Germany

Poland Confectionery Dog and

cat foods

Dried processed

food Total

Number of companies that we contacted 21 10 14 45

Number of companies that participated in the interviews 5 3 3 11

Number of interviewees 7 3 4 14

Germany Confectionery Dog and

cat foods

Bakery Total

Number of companies that we contacted 23 5 45 73

Number of companies that participated in the interviews 5 1 7 13

Number of interviewees 6 1 7 14

Source: Field Research

In Poland, the 11 companies interviewed account for a cumulative market share of 26.30%, 3.4% and

31.52% in confectionery, dog & cat food and dried processed food respectively, while in Germany, the 13

companies interviewed in confectionery, dog and cat food and bakery account for a cumulative market

share of 26.78%, 1.79% and 5.31% respectively. The table MCU 9a & 9b below highlights the sample size of

our primary research and appendix MCUST4 provides more details on the market share of companies that

operate within the three selected product segments in each of Poland and Germany.

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Table MCU9a Sample size coverage in Poland

Confectionery % Value contribution8

Total number of branded manufacturers in the market 32 88.50%

Total number of branded manufacturers that we have interviewed 5 26.30%

Dog and cat foods % Value contribution



Dried processed food % Value contribution


Total number of branded manufacturers that we have interviewed 3 31.52% Source of data: Euromonitor

Table MCU9b Sample size coverage in Germany

Confectionery % Value contribution9



Dog and cat foods % Value contribution



Bakery % Value contribution


Total number of branded manufacturers that we have interviewed 7 5.31% Source of data: Euromonitor

The interviewees in Poland consisted of 10 in purchasing, 2 in packaging development and 2 in marketing,

while the interviewees in Germany consisted of 11 people in purchasing, 2 in packaging development and 1

in trade marketing.

Furthermore, to better understand how flexible packaging materials are used across each of the three

product segments, we conducted two supermarket visits10 in Poland and in Germany. A brief description of

these supermarkets is provided in table MCU10.

8 Private label companies make up the rest of the percentage value contribution.

9 Private label companies make up the rest of the percentage value contribution.

10 Our visit to the supermarket was not to carry out any formal observation but to get a feel for the common type of

packaging used in Poland and Germany.

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Table MCU10 Description of supermarket visits

Country Name Store Format Description of the visit

Poland

Auchan is the third largest food retailer in Poland.

Hypermarkets. This is the biggest format of food retailing and account for 15.2% of retail sales. Auchan has the largest market share of 23.7% in retail sales from the hypermarket format

We visited a hypermarket in Lodz and observed 7 aisles across confectionery, dried processed food and dog & cat food. Each aisle consisted of 5 shelves on either side

Carrefour is the fourth largest food retailer in Poland.

Same as above. Carrefour has the fourth largest market share of 17.9% in retail sales from the hypermarket format

We visited a hypermarket in Warsaw and observed 4 aisles across confectionery, dried processed food and dog & cat food. Each aisle consisted of 4 shelves on either side.

Germany

Lidl is the number two grocery retailer in Germany with 11. 3% market share

Discount store This is the biggest format of food retailing and account for 29% of retail sales. Lidl has the largest market share of 22.9% in retail sales from the discount store

The Lidl discount store we visited was in Frankfurt. We observed 2 aisles across confectionery, dog & cat food, bakery goods (i.e. cereals and biscuits). Each aisle consisted of 4 shelves on either side.

Rewe is the number three grocery retailer in Germany with 10.7% market share.

Supermarket Like the discount stores, supermarket is also the biggest format of food retailing and account for 29% of retail sales. Rewe has the second largest market share of 29.7% in retail sales from supermarket

The Rewe store we visited was in Frankfurt. We observed 4 aisles across confectionery, dog & cat food, bakery goods (i.e. cereals and biscuits). Each aisle consisted of 4 shelves on either side.

Source: Euromonitor Retailing and Field research

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3.2 Supply chain

Before the IB project started, Printpack UK established Four Printpack Strategic Teams which consisted of:

� European Customers

� European Competitors

� Printpack Europe Realities

� European Upstream Value Chain

After having several workshops and discussion with Printpack Strategic Teams, IB Group I decided to follow

the existing structure of Printpack Strategic Teams which wanted to share MBA’s Insights in order to

provide external views on its strategy. Thereby, IB Group I formed into 3 sub-teams, and, due to the lack of

human resources, work in relation to Printpack Europe Realities was shared by 3 sub-groups.

As a sub-group of IB, the Supply Chain Team tried to identify and gather important strategic information in

the 4 categories given in the previous work: Supply Chain Management, Sourcing Plan, Technology, and

Corporate Social Responsibility and Carbon Foot Print. The main objective of the Supply Chain Team was to

identify Printpack competencies comparing with industry best practice and to suggest a future business

direction. Research output was feedback into the Market Analysis.

Both primary and secondary research methods were used to tackle several disciplines in the supply chain

part. In the first place, desk research was important in order to organize field research results. And secondly,

an in-depth analysis on current Printpack supply chain based on both Printpack realities and interviews

were done.

Existing scholastic background was used to suggest business best practices. Field interview backed up those

theoretical ideas we acquired from desk-top research. Consequently, the development of a suitable

assessment within Germany was initiated. In order to acquire our practical knowledge to encompass an

accurate outcome, some key questions were asked during the interviews.

The interviews were conducted directly with film suppliers, a trade association and a research institute.

Finally we consolidated the findings found in the desk research in conjunction with books and with the

field research in the countries selected.

The table SA contains a summary of field research. Interviews were carried out with 5 suppliers: 1 high

branded and 4 middle branded. Most low and middle cost suppliers prefer to locate in Germany, as it has

19 / 235

25% of market share11 in the flexible packaging industry in EU. Through the interviews we found several

new trends in the market which are explained in the chapter of Supply Chain Analysis. An interview with a

German Association for Plastics Packaging and Films (IK) was useful in understanding an overall industry

situation in Germany. The most insightful interview was carried out with Fraunhofer Institute for Flexible

Packaging and Materials.

Field Interviews

Table SA. Primary Research broad outcome

Category Company Interviewee Major Questions Location

Suppliers

Toray Gmbh Yoosu Ahn � View on trends in the flexible packaging industry

� Capability of suppliers � Purchasing policy � Contacts with potential customers

(Printpack’s competitors) � Coverage of their network

Eschborn

SKC Mike Kwon Frankfurt

Kolon JK Lee Frankfurt

Saehan Industries GmbH

Taejoon Park

Eschborn

LG Chem (Resin) Jeff Kim Eschborn

Research Institute

Fraunhofer-Institut

Roland Franz, Chansuk Yoon

� Views of the industry trends � Critical success factors � Regulations and Insights about flexible

packaging � Contacts with customers � Coverage of disciplines

Freising (Munich)

Packaging Association

IK Ms Ljubic

� Their views of the industry trends � Critical success factors in the country � Regulations related to the industry � Insights about flexible packaging

Bad Homburg (Frankfurt)


3.3 Competitors

The analysis of competitors aims to support Printpack’s plan to expand into mainland Europe by offering

insights on the competitive landscape, particularly in Poland and Germany.

By focusing our study on these countries, we were able to integrate findings from our assessment of the

company’s financials with evidence obtained from desk research and field work leading to a more robust

understanding of the environment

Ultimately, the section aims to offer illustrations and evidence based on the analysis of companies of the

sample in order to support the final recommendations of the group to Printpack, namely: (a) as Low Cost

Provider (b) as Solution Provider and (C) as product innovation.

11 . Euromonitor International : Global Market Insight (July 2005)

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The analysis was implemented in two stages:

1. Phase I: The objective of this phase was to identify organizations with outstanding financial

performance relative to their peer companies of the sample between the years 2001 and 2006.

Our assumption is that a distinctive business model underlies the capability of a given company to

generate superior results over an extended period of time.

2. Phase II: The objective was to search for any singularity supporting outperforming companies. In

our attempt to verify the existence of an underlying business model or market strategy, we

investigated a wide range of articles in specialized media and companies’ websites, cross-matching

findings with results obtained from our field research.(See part 3.1 and 3.2 of this report and

appendix S25-S29).

The Figure C1 below shows each stage of the competitive landscape study:

Figure C1

¹Ultimate Sample *: Subject to changes according to analysis done

Identification of Identification of

superior superior performanceperformance

Printpack

PCI Report

Amadeus

Field Research Sam

ple

: 8

35

case

Eu

rop

e

Scre

en

ing

I

Ultimate Sample¹

Poland: 36 cases

Germany: 95 cases

NA

CE C

ode

Sample

N°of Cases:

Europe: 235

Poland: 46

Germany:115

Outliers

Screening II

12.0010.008.006.004.002.000.00-2.00

Profit Margin (%) 2006

175,000

150,000

125,000

100,000

75,000

50,000

25,000

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6 t

h

Eu

ro

In-depth analysisof outperforming

companies

Specialized

Media

Company’s

Website

Field Researchinputs Identification of

distinct characteristics

Conclusions / Recommendations


Ph

as

e II

Ph

ase

I

¹Ultimate Sample *: Subject to changes according to analysis done

Identification of Identification of

superior superior performanceperformance

Printpack

PCI Report

Amadeus

Field Research Sam

ple

: 8

35

case

Eu

rop

e

Scre

en

ing

I

Ultimate Sample¹

Poland: 36 cases

Germany: 95 cases

NA

CE C

ode

Sample

N°of Cases:

Europe: 235

Poland: 46

Germany:115

Outliers

Screening II

12.0010.008.006.004.002.000.00-2.00


175,000

150,000

125,000

100,000

75,000

50,000

25,000

0

VEREINIGTE PAP

SEALED AIR VER

DETTMER VERPAC

SEALED AIR VER


TILLMANN VERPA

MOOSMANN GMBH

GIZEH VERPACKU

DY-PACK VERPAC

CPC HAFERKAMP

AVI GESELLSCHA

MONDI PACKAGIN


ALCAN ALUMINIU

WALKI GMBH

UPM RAFLATAC G

UPM - KYMMENE

HAENDLER & NAT

SAFIC - ALCAN

D

AB

C

Op

era

tin

g

Reve

nu

e 2

00

6 t

h

Eu

ro

12.0010.008.006.004.002.000.00-2.00


175,000

150,000

125,000

100,000

75,000

50,000

25,000

0

VEREINIGTE PAP

SEALED AIR VER

DETTMER VERPAC

SEALED AIR VER


TILLMANN VERPA

MOOSMANN GMBH

GIZEH VERPACKU

DY-PACK VERPAC

CPC HAFERKAMP

AVI GESELLSCHA

MONDI PACKAGIN


ALCAN ALUMINIU

WALKI GMBH

UPM RAFLATAC G

UPM - KYMMENE

HAENDLER & NAT

SAFIC - ALCAN

D

AB

C

Op

era

tin

g

Reve

nu

e 2

00

6 t

h

Eu

ro

12.0010.008.006.004.002.000.00-2.00


175,000

150,000

125,000

100,000

75,000

50,000

25,000

0

VEREINIGTE PAP

SEALED AIR VER

DETTMER VERPAC

SEALED AIR VER


TILLMANN VERPA

MOOSMANN GMBH

GIZEH VERPACKU

DY-PACK VERPAC

CPC HAFERKAMP

AVI GESELLSCHA

MONDI PACKAGIN


ALCAN ALUMINIU

WALKI GMBH

UPM RAFLATAC G

UPM - KYMMENE

HAENDLER & NAT

SAFIC - ALCAN

D

AB

C12.0010.008.006.004.002.000.00-2.00


175,000

150,000

125,000

100,000

75,000

50,000

25,000

0

VEREINIGTE PAP

SEALED AIR VER

DETTMER VERPAC

SEALED AIR VER


TILLMANN VERPA

MOOSMANN GMBH

GIZEH VERPACKU

DY-PACK VERPAC

CPC HAFERKAMP

AVI GESELLSCHA

MONDI PACKAGIN


ALCAN ALUMINIU

WALKI GMBH

UPM RAFLATAC G

UPM - KYMMENE

HAENDLER & NAT

SAFIC - ALCAN

D

AB

C

Op

era

tin

g

Reve

nu

e 2

00

6 t

h

Eu

ro

In-depth analysisof outperforming

companies

Specialized

Media

Company’s

Website

Field Researchinputs Identification of

distinct characteristics



Ph

as

e II

Ph

ase

I

In phase I, we build a sample using different sources. To the list of 33 competitors given by Printpack

representing 325 subsidiaries available in Amadeus, we added companies from PCI report, Amadeus

database and from our field research in Poland and Germany, totaling 835 companies. Before starting our

21 / 235

analysis, we excluded non-related cases outside the packaging industries, using NACE code classification12

as a reference (appendix CG1). At this stage, and considering Printpack’s interest in obtaining an European

overview, we selected a sub-group of competitors from Europe in total, 23513 subsidiaries, whose results

were grouped according to the Corporation they belong to in order to identify the spread of each

corporation in Europe(see appendix EC1 for a complete list of countries).

In Poland and Germany, analyses were conducted at subsidiary level only as it was necessary to isolate

cases of subsidiaries outside the packaging industry. We could also focus more on revenue below 200

million Euros, allowing us to adjust analysis to Printpack realities in UK. In addition, analysis at subsidiary

level facilitates the identification of technological capabilities supporting the company’s performance.

In Germany, the total number of subsidiaries was reduced to 115. The next step was to exclude non-related

segments14 and outliers, companies with Operating Revenue above 200 million Euros. This procedure

reduced the sample size to 95 companies, our ultimate sample. For those subsidiaries in Poland, the first

short listing reduced the sample to 46 and the second short listing reduced the sample to 36.

As can be seen from table C1, analyses were conducted between 2001 and 2006 based on the following

indicators: Table C1

12

12

NACE Code stands for Nomenclature Générale des Activités Économiques dans I`Union Europeenne and it is the European Standard code for Industry Classifications. Introduced in 1970 and revised in 1990 and 2002, our current version. Source: Thomson’s Ellis Publications

13 In order to have an Overview on Europe and, considering that an internal team of Printpack had already been working on the

analysis of 33 competitors, we decided to focus on the same companies. The number of subsidiaries generated from this list of 33 Groups, however, was originally 325 further reduced to 235 companies, after the exclusion of subsidiaries of companies specialized in non-related industries.

14 Cases of companies in packaging but in segments not related to Printpack interests, such as automobile, construction and

electronics.

a) Date of Incorporation

b) Number of Employees

c) Operating Revenue / Turnover in Euros

d) Profit Margin

e) Current Ratio

f) Return on Shareholder’s funds

g) Solvency Ratio

h) Costs per Employees/Operating Revenue

22 / 235

The variables studied were: (a) date of incorporation, which shows how long the subsidiary has been

operating (b) Number of employees, as a useful measure of the magnitude of the subsidiary’s operation (c)

Operating Revenue as a good measure of effective revenue generation, an indication of commercially

effective expansion and perhaps the most important variable, (d) Profit margin, that gives an indication of

the subsidiary’s capability of operating profitably. The other variables (e) Current Ratio, (f) Return on

Shareholder’s funds,(g) Solvency Ration and (h) Costs of Employees per Operating Revenue were eventually

used in order to complement analysis.

Note about Growth:

In figure C6 we will be looking at the growth rate in terms of Profit and Revenue between 2001 and 2006.

The methodology applied here to identify growth is getting the average of sub-periods of three years as

below:

Figure C6

One benefit of using the average method to calculate growth is that we could avoid losing too many cases

when information is simply not available. Another benefit, and perhaps the most important one, is that by

looking at changes between two periods rather than changes in a specific year we avoid the risk of getting

extreme values resulting form isolated events. Hence we analyze the growth rate between the first and

later period of the last six years (2006 – 2001).

Average Number

2004, 2005 and 2006

Average Number

2003, 2002 and 2001

Growth

rate

23 / 235

4. Key Findings

This section presents the insights generated from the field study as well as from desk research.

4.1 Customer insights from Poland

As mentioned in the introduction, the part of the aim of the project is to provide Printpack with insights

into evaluating the following:

� Potential market share and expected sales volume in a given geographic market and product segment

� Number of potential accounts required to achieve the expected sales volume

To these ends, the 14 interviewees in the 11 companies gave diverse responses on market trends,

environmental concerns, the decision-making process, current suppliers and product requirements. In

order to make more sense of the data, we aggregated the response by category, by market share and by

company type i.e. (multinational vs. local) in order to explore common responses across the above subject

areas. See appendix CUST1.

4.1.1 Market trends

Two out of the five companies interviewed from the confectionery segment stated that the future growth

of the sugar confectionery segment will come predominantly from jellies & chews. Since jellies and chews

are packed in flexible materials, this creates an opportunity for Printpack. From the field study, we also

picked up that manufacturers tend to use the packaging of the jellies and chews rather than the products

themselves, as a way to differentiate their brands. This finding is in line with information as suggested by

Euromonitor Sugar Confectionery 2007. As illustrated in graph CU1, the sub-sector; pastilles, gums, jellies

and chews is growing at a rate of 13.7% per annum (CAGR) in volume terms.

24 / 235

GRAPH CU1 Volume sales and growth in sugar

confectionery '02 to '07

-5.00

0.00

5.00

10.00

15.00

20.00

Sta

ndar

dm

ints

Pow

er m

int

Boi

led

swee

t

Pas

tille

s,gu

ms,

jellie

sT

offe

es,

cara

mel

s &

Med

icat

edco

nfec

tione

ry

Lollip

ops

Liqu

oric

e

Oth

er s

ugar

conf

ectio

nery

Subsectors

To

nn

es '000

Perc

en

tag

e (

CA

GR

)

Volume sales perannum

Volume growth perannum

Underlying data source: Euromonitor Sugar Confectionery 2007

From the 5 companies interviewed in the confectionery segment, only a niche confectionery company

stated that chocolate box assortments (pralines) and chocolate wafers have enjoyed good growth over the

last few years, although this may soon slow. Again, this insight is in line with our findings from Euromonitor,

and as suggested below in graph CU2 count lines (these include chocolate wafers) and box assortment

(praline) experienced the greatest growth from 2002 to 2007: 12.3% and 6.78% per annum respectively.

GRAPH CU2 Volume sales and growth in chocolate

confectionery '02 to '07

0.00

20.00

40.00

60.00

80.00

Tab

lets

Cou

ntlin

es

Bag

ged

selfl

ines

/sof

tline

Box

edas

sort

men

ts

Sta

ndar

d bo

xed

asso

rtm

ents

Tw

ist

wra

pped

Sea

sona

lch

ocol

ate

Cho

cola

te w

ithto

ys

Alfa

jore

s

Oth

er c

hoco

late

conf

ectio

nery

Subsectors

To

nn

es '000

0.00

4.00

8.00

12.00

16.00

Perc

en

tag

e (

CA

GR

)

Volume sales per annum

Volume growth per annum

Underlying data source: Euromonitor Chocolate Confectionery 2007

Wafers are packed in flexible materials, thus this growth offers future volume for Printpack in this

subsector. Box assortments, on the other hand, are packed in cartons, thus offering no opportunity to

25 / 235

Printpack. Moreover, within the box assortment subsector, substitution from carton to flexible packing

material seems unlikely. This was suggested by the Marketing Director of a niche confectionery company

who said: “Cartons give our Pralines the premium look they deserve”.

The supermarket visit to Carrefour and Auchan confirmed the fragmented nature of the chocolate

confectionery market in Poland, as highlighted by Euromonitor in graph CU2. We observed15 a high

proportion of boxed assortments on the confectionery aisle.

GRAPH CU3 Volume sales and growth in gum confectionery

'02 to '07

0.001.002.003.004.005.006.007.008.009.00

- Sugarisedgum

- Sugar-freegum

- Functionalgum

Bubble gum

Subsectors

To

nn

es '000

-10.00

-5.00

0.00

5.00

10.00

15.00

20.00

Perc

en

tag

e (

CA

GR

)Volume sales per annum

Voulme growth per annum

Underlying data Source: Euromonitor Gum Confectionery 2007

Sugar-free gum accounts for 84.4% of the retail sales volume, as shown in the graph CU3 above. However,

this subsector is growing at a rate six times slower than functional gums. In spite of the high growth rate of

14.37% per annum enjoyed by functional gum, this subsector accounts for only 7.3% of the sales volume of

gum confectionery. Unfortunately, we were unable to secure an interview within the gum confectionery

segment, and as a result we do not have field study insights to confirm or refute this secondary research

finding.

We observed during supermarket visits that a significant proportion of gums use flexible packaging,

including flexible bags.

15

Our visit to the supermarket was not to carry out any formal observation but to get a feel for the common type of packaging used in Poland and Germany.

26 / 235

GRAPH CU4 Value sales and growth in dog & cat food '02 to'07

050

100150200250300350400450

Wet dogfood

Dry dogfood

Dogtreats and

mixers

Wet catfood

Dry catfood

Cat treatsand

mixers

Subsectors

PL

N m

illi

on

0

2

4

6

8

10

12

14

Perc

en

tag

e (

CA

GR

)

Value sales per annum

Value growth per annum

Underlying data source: Euromonitor Dog and Cat Food 2007

From the interviews conducted with 3 companies in the dog and cat food segment, no insights or opinions

were given on the growth of specific subsectors. But according to Euromonitor Dog and Cat Food 2007, see

graph CU4 above, dog treats and mixers experienced a strong growth of 10.6% per annum from 2002 –

2007. It is suggested by the report that this growth is likely to continue. Dog treats and mixers account for

just about 5% of sales value of dog food in Poland, in contrast to dry dog food, which accounts for about

65% of sales value. Similarly for cat food, cat treats and mixers show strong growth but account for a very

small portion of total sales. Wet and dry cat food account for 50% and 47% of the total sales value of cat

food and have a similar growth to cat treats and mixers.

We observed from the supermarket visits that a high proportion of dried dog and cat food use flexible

packaging materials and the insights from the interviews with Cargill and Promivi suggested that the Polish

dog and cat food market is shifting from tin can to small flexible pouches and aluminum cans. This shift

towards small flexible pouches seems an opportunity for Printpack.

27 / 235

GRAPH CU5 Volume sales and growth in dry

processed food '02 to '07

0.0020.0040.0060.0080.00

100.00120.00140.00

Ric

eD

esse

rt M

ixes

Drie

d re

ady

mea

ls

Deh

ydra

ted

soup

Inst

ant s

oup

Drie

d pa

sta

Plai

n no

odle

s

Cup

s/bo

wl i

nsta

n...

Pouc

h in

stan

t no.

..

Subsectors

To

nn

es '000

-4.00-2.000.002.004.006.008.0010.00

Perc

en

tag

e (

CA

GR

)

Volume sales perannum

Volume growth perannum

Underlying data source: Euromonitor Dried Processed Food 2007

According to Euromonitor Dried Processed Food 2007, the convenience trend and growing acceptance of

foreign cuisine is driving the growth of dried processed food overall, with pouch instant noodles showing

the fastest growth of 8.7% per annum in volume terms. Nonetheless, rising health awareness is having a

negative impact on some categories, such as dried ready meals and dehydrated soup. This convenience

trend was confirmed during our interview with Delecta, a niche company in the dried processed food

segment.

Unilever mentioned that it enjoyed good growth from products in the pouch format and also from the

Knorr brand. This firm, which holds approximately 21% of the dried processed food segment in Poland,

mentioned that it has changed its packaging format in the dry soup subsector from carton boxes to plastic

euro-containers and buckets. Although the reason was not stated, we believe that this new packaging

format may perhaps give the dry soup a fresher look, in response to the growing health awareness amongst

Poles16.

A close examination into substitution opportunities with these potential customers reveals the following in

table CU6:

16

Source: Euromonitor Dried Processed Food 2007

28 / 235

Table CU6 Substitution Opportunities in Poland

Company Description Substitution Reason

Cadburys Large multinational in the chocolate confectionery segment

Moving to biodegradable

Strategic decision by the Company

Hfp

Small local company in the dried processed food segment

Moving from cartons to flexible packaging materials

To enhance its appearance on the shelf and for better storage and transportation

Unilever Large multinational in the Dried food segment

From cartons to plastic buckets and euro-containers

Unwilling to state

Mieszko Small local company in the chocolate and sugar confectionery segments

From PVC to OPP Unwilling to state

Delecta Small local company in the dried processed food segments

From stick-on label to shrink labels for glass jars

Unwilling to state

Source: Euromonitor Company Profile and Field research

It would have been interesting to know which product lines will undergo these packaging changes. Unilever

and Mieszko, however, were the only companies that were willing to reveal such information: dry soup and

twist wrap respectively.

In Poland, dry soup accounts for 2.5% of the sales volume in the dried processed food sector and has a

negative growth rate of 13.6%. Twist wraps, on the other hand, have a positive growth rate of 7.7% and

account for 1.7% sales volume of the chocolate confectionery segment17.

4.1.2 Environmental concerns

On joining the EU in 2004, Poland adjusted its law concerning environmental protection and waste

management to the Act of 11 May 2001 on Packaging and Packaging Waste.18 However, to our surprise,

there was very little concern for the impact of environmental issues on the choice of their packaging

materials. This was evident from the reactions and responses of the interviewees. When asked about

environment issues, over 80% of the interviewees had nothing concrete to say about this subject area. Here

is an example of the typical responses we obtained: the Purchasing Director of a confectionery company

stated that there was "nothing particularly new to mention regarding environmental regulatory changes in

the EU. Most of the EU changes are initiated from the West". Cadbury’s was the only company of the 10

companies interviewed to have environmental concerns as a top priority. And although the interviewee at

17

Euromonitor International: Country Sector Briefing Dried Processed Food and Chocolate Confectionery 2007 18

Source Packaging Poland Euromonitor International: Country Market Insight March 2007

29 / 235

Unilever mentioned that the firm is keen on environmental issues, he could not state the specific measures

the firm was taking to address these issues.

4.1.3 Decision-making process

During the interviews, we tried to explore the following aspects of the decision-making process: who makes

the decision, where the decisions are made, how the decisions are made and when the decisions are made.

We discovered that the purchasing decisions varied according to company type (i.e. multi-national vs.

national). For local companies the purchasing decisions are made by the purchasing manager and the

general manager as in the case of Terravita, Promivi and Hfp. Two multinational companies, Cadbury’s and

Nestlé, make their purchasing decision at a regional level in collaboration with the local purchasing and/or

marketing manager. Cargill makes its purchasing decision on a local market basis while Royal-Canin and

Unilever coordinate their purchasing decisions solely on a regional basis. For all the companies, the typical

project team involves marketing and technology, and in some cases R& D (e.g. Mieszko).

Figure CU7 Customer Requirements in Poland

PRODUCT SEGMENTS

Cadbury's Nestle Ludwig Terravita Mieszko

Royal -

canin Cargill Promivi Unilever Delecta Hfp Frequency

Price differential First First First First Second First First First Second Second 10On-time delivery/ Lead time Third Second Third Second Fourth Third Second Third 8Defective returns Third 1Printing technology Second Second Second Third First First Second Second Third First First 11Flexible Materials Second Second Second Third First First Second Second Third First First 11Enhance product requirement Second First 2Proximity to supplier Second 1Level of flexibility Fourth Second Third Fourth 4Joint projects/collaboration Second Third Third 3Frequency of visits/service Second Third Second 3Payment conditions -long term Second Third Fourth 3Back-up services Fourth 1Source Field Research

4Least

important

32

1Most

important

Confectionery Dog & Cat food Dried Processed Food

Figure CU7 above, illustrates the response given to the questions “What are the most important factors for

your choice of your current flexible packaging suppliers?” and “on a scale of 1 to 3, with 1 being the most

important and 3 being the least important, how would you rank the following factors when choosing a

supplier?” Most of the interviewees mentioned more than three factors; hence the figure above shows a

scale of 1 to 4.

7 out of the 11 companies we interviewed stated cost as the most important factor for choosing a supplier.

Mieszko in confectionery, Royal-Canin in dog & cat foods, Delecta and Hfp in dried process food deemed

30 / 235

the quality of printing and materials as the most important factor. It is interesting to note that these

companies that, with the exception of Royal-Canin, favoured quality over cost are local companies that

operate in niche subsectors. Furthermore, these companies (Delecta, Hfp, Mieszko and Royal-Canin) have

less than 5% of market share. On the other hand, all multinational companies (except Royal-Canin) and

three small (less than 5% market share) local companies consider cost as the most important determinant

for choosing a supplier. We tried to explore the price differential that could trigger a switch from one

supplier to another but because of the complex nature of pricing flexible packaging orders, the

interviewees found the price differential difficult to quantify.

Apart from cost and quality, which ranked as either the first or the second purchasing decision factor, the

interviewed companies also stated factors such as flexibility, lead-time, long-term payment, amongst many

others, as important in the decision process.

We counted the number of companies that mentioned each decision factor. And, as recorded in the

frequency column in the table above, on-time delivery was mentioned by 8 of the 11 companies

interviewed and flexibility was mentioned by 4 of the 11 companies as either the second, third or fourth

most important criteria.

A statement made by the International Purchasing Director of Royal-Canin informed us of the complexity of

the decision-making process, “When we select a supplier we don’t just select a product or work package, we

select the organisation”

4.1.4 Current suppliers

The questions about current suppliers were perceived as sensitive and as a result, 7 out of the 10

companies refused to answer the questions. Table CU8 highlights the preferred suppliers as mentioned or

hinted at by the interviewees.

Table CU8.1 Preferred Suppliers in Poland

Companies Preferred Suppliers

Unilever Alcan, Amcor, Huhtamaki and Constantia

Promivi Zemar

Delecta Huhtamaki for Reiber & Sons19

, Kety and Fiomo for Delecta.

Mieszko Constantia (hinted)

Nestle Kety (hinted)

HFP Mondi


19

Reiber & Sons is the parent company of Delecta

31 / 235

The companies that refused to give information of their current flexible packaging suppliers were more

inclined to state whether they had heard of a supplier or not. Companies within the confectionery segment

stated that they had heard of Ergis, Kappa, Mondi, Strenzo, Constantia, Kety, Amcor, Alcan, Wipak, United

Flexibles and Huhtamaki, while companies in the dried processed food segment stated that they had heard

of Huhtamaki, Alcan, Kety, and Mondi. The interviewees in the dog and cat food segment mentioned that

they had heard of United Flexibles, Bemis, Nordenia, Alcan, Amcor and Mondi. All companies interviewed,

with the exception of Unilever, Hfp, Ludwig and Cargill, had heard of Printpack and, in fact, the interviewee

from Cadbury’s mentioned that they had had dealings with Printpack in the past.

Constantia Alcan Amcor Mondi Huhtamaki Nordenia Bemis Kety Wipak

United

Flexibles

Other (mentioned at least

once)

Dried processed food once once once once

Confectionery twice thrice thrice twice twice thrice once once Ergis, Kappa

Dog & Cat food twice once once once once once

Kappa, Other: Glaskon, Topan, Takigawa, Sokar, US (Kilplastic, ALuflex, Rotoplast, Veriplast)


Table CU 8.2 Flexible packaging suppliers that have been heard of by the interviewees

The location of current or potential suppliers did not appear to be of much concern to 9 of the 11

companies interviewed. Cadbury’s, Royal-Canin and Unilever were the only companies that mentioned that

the location of the suppliers’ plant could influence their choice of supplier. The statement captured during

the interview with Cadbury’s explains the rationale behind this criterion “Yes, the location of the plant is a

key criterion. The idea is to have at least one of the three suppliers close to a plant, particularly to deal with

any contingencies (back-up service).” It would have been interesting to explore the maximum acceptable

distance between their plant and their supplier’s but we did not have sufficient time during the interview to

dig deeper.

All companies stated or inferred that they had very good relationships with their current suppliers. But

when probed deeper, two local companies with a market share of less than 5% in confectionery and dried

processed food segments hinted that they currently have price and flexibility concerns, respectively, with

their current suppliers. Digging deeper into specific details on the key performance levels of their current

suppliers, table CU9 highlights some insights gained during the interviews.

32 / 235

Table CU9 Frequency of supplier visit Lead time

Unilever All preferred suppliers visit the Poznan plant once a year. Unable to provide

Terravita None provided Unwilling to provide

Ludwig Czekolada Suppliers come too often Unable to provide

Cargill Very often at least once per month Unwilling to provide

Promivi Sales reps. don't come to visit. In general; the Purchasing dept interacts with the suppliers via the phone. Promivi audits its suppliers 2/3 times a year or more according to needs.

Unable to provide

Delecta Suppliers’ sales team visit 2-3 times a year. 2 days

Mieszko Number of visits depends on the level of cooperation. The audit of suppliers takes place about twice a year.

Unwilling to provide

Nestle Suppliers for the confectionery segment visit once every 2 to 3 months, and once every two weeks for culinary products

Unwilling to provide

Cadburys Usually once per quarter. Unable to provide

HFP Once in 3 weeks to once every six months This depends on the quality issues that may arise. Usually one person form the supplier usually for an hour or two

Lead time 2 weeks for recurrent orders and 4 weeks for new orders

Royal-Canin None provided Unable to provide


Supplier relationships are not only very good but also very long. The data from the field research suggests

that the length of relationship with suppliers varies, with the minimum being approximately 3 years.

Interviewees from Cadbury’s and Mieszko mentioned that the length of some of their supplier relationships

is up to 10 to 15 years. In most companies across the three segments renegotiation of contracts is usually

after 1 to 2 years, with the exception of Nestlé that renegotiates every 3 months.

With regard to the mode of coordinating transactions with supplier, phone, email and fax appeared to be

used by all the companies interviewed. Nestlé was the only company that mentioned the use of a Vendor

Management Inventory system, which is to be installed this year. Cadbury’s on the other hand did not see

the benefit of using a VMI system in coordinating transactions with their suppliers given that the frequency

of its orders is limited to once a week or sometimes once a month.

4.1.5 Customer’s flexible packaging requirement

Interviewees found it difficult to quantify, without resorting to internal reports20, the volume of flexible

packaging materials used by their company as it varied widely across product lines. Delecta, a small local

company in the dried processed food segment, stated that, in terms of volume, of two products that use

20

All the companies interviewed were unwilling to share data from their internal report.

33 / 235

the largest amount of flexible packaging, Deserts use 2 million pouches annually while cake ingredients use

3 million pouches (normally) and 8 to 10 million pouches (at peak season) during the year. In terms of

weight of flexible packaging materials used annually, Cadbury’s and Mieszko stated that they use over 200

tonnes of flexible packaging annually, while Hfp uses about 50 tonnes annually. To gain insights into how

much the interviewed companies spend on flexible packaging, we asked questions on the cost of flexible

packaging as a proportion of overall cost of packaging. Mieszko and Cadbury’s mentioned that flexible

packaging represents 15 – 20% of all packaging cost; Hfp was only willing to state that 80% of its products

use flexible packaging.

In terms of the preferred type of printing process, rotogravure is the preferred21 choice for all but one of

the companies interviewed. The reason for this preference was often cited as superior printing quality and

the ability of rotogravure printing to carry out complex designs. Flexographic printing, however, was also

found to be commonly used in all product segments, particularly in confectionery. Hfp favours flexographic

printing over rotogravure primarily due to cost reasons; nonetheless, the interviewee from Hfp stated that

rotogravure is used if the design requires such a technique. This interviewee further mentioned that

printing design depends on the design and marketing requirements. Cadbury’s in Poland is currently

undergoing a value optimisation program in its Purchasing Department and this involves moving some of its

rotogravure printing designs to flexographic printing designs. Royal-Canin mentioned that it does not have

a preference between the two types of printing process.

A close examination of the data from the field research suggests Monoweb and Duplex lamination as the

commonly used flexible packaging materials across all categories. Table CU10 below provides specific

details of materials used by each company.

21

Unless otherwise stated, preferred choice of printing means that the company uses that type of printing.

34 / 235

Table CU10 Flexible Packaging Materials Used in Poland

Company Flexible packaging materials

Unilever No answer given

Terravita Laminated foils

Ludwig Czekolada Laminated foils (Silver and gold). In addition, foils and flowpacks from polypropylene PP, OPP most.

Cargill No answer given

Promivi Does not use flexible packaging materials in the Poland plant

Delecta No answer given

Mieszko Laminates for minerals and wafers Simple metalized PVC lamination Monoweb no coating for twists wraps Triplex lamination for hard candies filled with powder

Nestle Cold Seal technology for confectionery Triplex for culinary

Cadburys Duplex lamination 20 OPP/20 OPP for bag Monowebs with coating for small chocolate bars and twist wrap Special monofilm (developed with supplier) for candies Multi-layer lamination not required

HFP Duplex lamination (2 webs)

Royal-Canin The favoured material is triplex metalized PET and PE.

Source: Field research

Finally, it was important for us to understand their sources of information on packaging development. As

gathered from the interviews, the primary source of information is from supplier's update, and internet

searches. It was interesting to hear from Mieszko and Cadbury’s how suppliers provide them with update

through seminars or conferences which the suppliers organise. Four out of eleven companies mentioned

that they attend trade fairs in Poznan, Poland, and in Cologne, Germany.

4.1.6 Business discussion

From the insights above, the customers that use flexible packaging materials in Poland can be segmented

into two customer groups, as shown in table CU11 below, based on their value requirements.

Table CU11Key Drivers for Purchasing by Customer Types in Poland

Cost as a key factor Quality as a key factor

Proportion of sample companies with this preference

64% 36%

Categories Confectionery, Dog & Cat food, Dried processed food

Confectionery and Dried processed food

Types of companies Multinational and National National and 1 multinational

Size of companies Big and small Small

35 / 235

Verbatim

A multinational company with over 10% market share in confectionery ranked the factors for considering suppliers as follows: "Cost (Price), Location, Quality

(number of service claims, etc),

Service( level of interaction with the

supplier)"

A national company that operates in a niche market segment of cake ingredients said "Quality more

important than Price. We are market leaders in

some categories such as Cake mixes, thus cannot

afford to compromise on the quality of our

packaging."


The merits and demerits of serving each of these customer groups will be discussed below.

The customer group in which cost is considered the key factor in the decision-making process consists of 7

of the 11 companies we interviewed. This customer group consists of all multinational companies

interviewed except for Royal–Canin. Since the multinationals in Poland have a significant market share

across the confectionery, dog & cat food and dried processed food category, see table CU12, Printpack can

gain a high volume of business from serving customers within this group. Thus, Printpack would require few

accounts to reach a large business volume. Another advantage of serving this customer group stems from

Printpack leveraging on its US and UK relationships, see appendix R1, with these multinationals. The

insights from the field research suggest that for all multinational companies interviewed except Cargill the

purchasing decisions are made at a regional level.22

Table CU12.1 Number of Multinational Companies and Shares in Poland

Product Segment Number of multinational

companies23

Total market

share Total sales

value (million)

Chocolate confectionery 7 69.56% € 668.8

Sugar confectionery 8 49.53% € 152.6

Gum confectionery 3 93.72% € 203.7

Dog & cat food 5 77.40% € 211.1

Dried processed food 4 33.21% € 169.1

Source of data Euromonitor

Conversely, serving these multinationals in a cost-competitive way could be challenging for Printpack.

Evidence24 suggests that multinational companies are forming strong relationships with high-quality high-

priced film manufacturers in order to reduce premium cost. This leads to the loss in bargaining power on

the part of flexible packaging suppliers 25 such as Printpack, to negotiate on prices with the film

manufacturers or to switch from one manufacturer to another. As a result, competing on cost becomes

difficult. The section on suppliers elaborates on this point.

22

Source field research 23

These numbers include companies that serve more than one segments 24

Source: Interview with Printpack Realities team and with Kraft foods 25

Flexible packaging supplier could either buy or make their own film.

36 / 235

Considering the second customer group highlighted in table CU11, this group of customers that value

quality of material and printing consists of small local companies such Delecta, Hfp and Meiszko, as well as

Royal-Canin, a multinational company. The advantage of serving this customer group is that Printpack can

use its existing relationships with high quality film manufacturers such as ExonMobil and Dupont to service

the needs of this customer group. However, the challenge for Printpack could be that many accounts will

be required to generate a large volume of business, given that these companies that prefer quality tend to

have a small market share. The market share of Delecta, Hfp, Meiszko and Royal-Canin are as shown on

table CU 12.2

Table CU12 Market share of companies that are quality driven

Company Segment Market share

Delecta Dried Processed Food 0.1% (2.67% for its parent

company Riebers & Sons)

Meiszko Chocolate and Sugar

Confectionery 1.27% and 8.51% respectively

Hfp Dried Processed Food 2.73%

Royal-Canin Dog & cat food 1.40%

Source: Euromonitor database

37 / 235

4.2 Customer insights from Germany

4.2.1 Market trends

Based on data from Euromonitor, baked goods form the biggest segment, with a retail value of $US 15.2

billion, followed by chocolate confectionery, sugar confectionery, dog and cat food, biscuits, breakfast

cereal and gum. The growth in these product segments in Germany has stagnated, with growth rate

between -1% and 2%, as shown in graph CU13 below.

Graph CU13: Value sales and growth ’02 to ’07

2.4 2.41.8

0.7 0.7

15.2

6.7 -1%

0% 0%

2%2%

0%

1%

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Baked g

oods

Chocolat

e co

nfect

ionery

Sugar c

onfect

ionery

Dog and c

at fo

od

Bis

cuits

Bre

akfa

st c

erea

ls

Gum

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

Germany - Market sizeat retail in US$ billion in2007

Average growth 02 - 07

Underlying data source: Euromonitor database

According to the insights gathered from the field research26, only 1 out of 13 customers mentioned that in

confectionery, market consolidation among small to middle-sized branded customers is imminent due to

fierce competition in the market. The rest could not give an answer and said that it was beyond their

knowledge; this may be due to the composition of our sample.27

Considering the mature market of confectionery and bakery products in Germany, 4 out of 6 customers

mentioned that the trend in the market is towards giving importance to the attractiveness of packaging or

in-store promotional packs in order to create more sales at the point of purchase. An interviewee from a

multinational chocolate confectionery company stated that it has developed a partnership with a carton

26

In Germany, except for Nestlé and Ferrero, all companies were unwilling to disclose their identities. 27

11 out of 14 interviewees are purchasing managers, 1 is trade manager, 2 are packaging development managers.

38 / 235

supplier to deliver ready-to-shelve packs with attractive designs for promotional purposes. As stated by

Nestlé and a large national company that serves the biscuits sub-sector, most of the growth in

confectionery and biscuits will come as a result of heavy promotions and premium-product-offering sub-

sectors such as chocolate-box assortments and multipack biscuits.

Opportunity for Printpack also lies in the breakfast cereal subsector as existing packaging material is being

substituted by plastic flexible packaging despite the higher cost of material as mentioned by a purchasing

manager in a large national customer in breakfast cereal. The same interviewee also mentioned a

preference for flexible plastic packaging even though the cost of raw material is higher compared to that of

paper. The reason for this preference is higher production efficiency thus less waste/damage and higher

speed. In pet foods, where Masterfoods GmbH leads the market, flexible packaging, especially in pouches,

is increasing owing to superior design and printing quality on flexible packaging compared to paper28.

4.2.2 Environmental concerns

Germany has strict laws regarding waste management and recycling and this puts strong pressure on

manufacturers as well as on distributors and retailers. According to the Closed Substance Cycle and Waste

Management Act29, “packaging shall be manufactured and distributed such that

• Pack volume and weight are reduced to the minimum commensurate with maintaining the

necessary safety and hygiene of the packaged product and ensuring that it is acceptable to the

consumer.

• It may be reduced or recovered and the environmental impact arising from the recovery or

disposal of packaging waste is minimised.

• Harmful and hazardous substances and materials occurring in the emissions, ash or leachate on

disposal of packaging or packaging components are minimised.”

The implications of the law oblige customers in Germany to consider recyclable packaging materials

whenever they can. Discussion with small and medium-size customers in biscuits and breakfast cereals

revealed that even though these companies are highly aware of environmental regulations, the Purchasing

Managers are still reluctant to replace current with recyclable flexible packaging if the cost of the new

material is higher. On the other hand, multinational customers like Nestlé or Ferrero are more willing to

lead the market on this issue.

28

Source of quotation: An interview with a small national customer in pet foods 29

Euromonitor International, Packaging – Germany: Country Market Insight, May 2007

39 / 235

4.2.3 Decision-making process

From the field research, 13 out of 14 interviewees mentioned that decisions are made by the Purchasing

Managers in Germany, regardless of the size of company or type of company i.e. national or multinational.

With regard to the decision-making factors, a summary on table CU1430 highlights customers’ requirements

when choosing suppliers.

Table CU14 Customer Requirements in Germany

Breakfast cereal

Dog and cat food

Nestle'Large

Multinational A

Small national B

Small national C

Large national D

Small national E

Small national F

Large multinatio

nal G

Small national H

Small national I

Small national J

Price differential Third Third First Second Fourth Third Second First Third Second First 11

On-time delivery/ Lead time Third Third Second 3

Printing technology Third 1

Flexible Materials Third Second First First Second 5

Enhance product requirement Second First Third Second 4

Proximity to supplier First First Third Fourth 4

Level of flexibility Second Second Fourth First 4

Joint projects/collaboration First 1

Back-up services Second Fourth Third 3

High switching cost First 1

First Most importantSecondThirdFourth Least important

Frequency

Baked goodsBiscuitConfectionery


Figure CU14 above, illustrates the response given to the questions “What are the most important factors

for your choice of your current flexible packaging suppliers?” and “on a scale of 1 to 3, with 1 being the

most important and 3 being the least important, how would you rank the following factors when choosing a

supplier?” A few of the interviewees mentioned more than three factors; hence the figure above shows a

scale of 1 to 4.

3 out of 8 national customers tend to screen suppliers by looking at the price and quality ratio. Two of them

stated that they will consider a change if the new supplier’s quality is significantly better at the same price

level. From the table CU14 above, apart from price and quality, national customers mentioned proximity to

suppliers (4 times) and level of flexibility (3 times) as key considerations to choose suppliers. In terms of

30

We excluded 3 out of 14 interviewees from the table because 2 of them were not the key decision makers and the other 1 of them was unwilling to state.

40 / 235

frequency of visits to suppliers, a national customer in pet foods stated that technical personnel normally

visit twice per month. Furthermore, from the interview, it was revealed that small to medium national

customers across bakery and confectionery prefer to deal with small to medium suppliers owing to greater

flexibility and intimacy as captured in the statement below.

“There is the hard fact such as percentage in reduction in costs, but we also look at the soft side such as

how we get engaged with the supplier, how they understand our needs, how we communicate with each

other. We want suppliers who can understand our business.”

“I have made business with Alcan and Alcoa in the past, but they are too big for me.”

However, due to the pressure to reduce cost, 3 out of 8 national customers we interviewed stated that

small to medium customers are now more open to alternative flexible packaging suppliers who can provide

cheaper and better quality.

“We are facing pressure from raw material costs such as carton price which increased 30% in the last year,

oil and raw material in general. On the other hand the retailer wants better packaging, high colour

definition. We are in the middle with squeezed profit. So we need to outsource to Turkey, for instance,

where our suppliers such as Alcan have a plant”

On the other hand, multinational companies go for enhancement of product requirement, especially for

premium products. The field study showed that they look for new material types and technologies to help

differentiate their products on the shelf. As stated by Nestlé in confectionery, it is an important factor to

have a supplier who has an advanced research centre to collaborate on the development of new packaging,

as it can be a from of differentiation from other suppliers. Multinational companies also expect to have

more proactive suppliers with regards to collaboration projects e.g. promotional cartons. Moreover,

multinational firms expect more flexibility from suppliers. As an interviewee in gum said:

“They (suppliers) have, in first place to be creative, innovative, then we expected them to be flexible to deal

with short notices and obviously then we look at the commercial part, it has to be commercially viable.”

When asked about the price differential that could trigger a change in suppliers, an interviewee from a

multinational company that operates in the chocolate confectionery segment mentioned that he would

consider new suppliers if the price difference is 5% for large volume and 30% for small volume.

Furthermore, the insights from the field suggest that multinational customers tend to have national

41 / 235

packaging suppliers to deal with small volume and regional suppliers to deal with large volume.

As a consequence of the strict food and packaging safety regulations in Germany all food packaging

companies need to supply products for trial test about 2-3 times before trial purchase can be made.

4.2.4 Current suppliers

5 out of 13 companies in Germany have heard of Printpack. Alcan and Amcor were most mentioned 8 times

followed by Mondi, mentioned 7 times, as companies that interviewees have heard of, which demonstrates

the high level of company awareness amongst German managers. Alcan and Amcor have good levels of

conversion rate between company awareness and current relationship and almost half of the interviewees

claimed to have a business relationship with them. Conversely, we can see from the field research that

though Mondi has strong company awareness in Germany none of the interviewees mentioned having a

relationship with it.

As revealed in the field study, being the most recognised flexible packaging company does not necessarily

guarantee good conversion rates: companies like Constantia enjoy a high conversion rate even though the

company is not foremost in interviewees’ minds, as 5 out of 13 companies stated that they have heard of

the name and currently have a relationship with the firm. This result is probably due to the strong presence

and infra-structure that the company has in Germany. More details about Constantia will be covered in the

competitor section.

When ask about future consideration, there were no particular objections against any company.

Nevertheless, 2 out of 5 companies noted that some large packaging converters are not necessarily the first

option for medium food manufacturers. In the words of a purchase manager: “They are too big for us”.

Bemis was one of the rare cases where the brand is not being considered for future business relationship

but this is because, according to the interviewees from Nestlé, “this company does not act in the flexible

segment”.

Constantia, Huhtamaki, Alcan and Wipak were the companies explicitly acknowledged as being on the list

for consideration for future business partnership.

Location of the plant is not the critical factor for most customers in Germany except for dog and cat foods,

where quality of printing is very important, requiring proximity between suppliers and manufacturers as a

consequence.

42 / 235

In confectionery and biscuits, current flexible packaging suppliers are not located close to a customer's

plant. However, the customer Nestlé prefers to have suppliers within 1,000 Km. Interestingly, some small

national companies have experienced managing foreign suppliers as far as Poland, Denmark and Sweden.

One national customer in sugar confectionery mentioned that he reduced his number of packaging

suppliers from 500 to 5, mainly because of changing cost structure. Out of these five suppliers, just one is in

Germany; the rest are in Italy, Slovenia and Turkey. Plants can be located far away as long as the supplier

can deliver within the target lead-time. A few customers in biscuits and pet foods also stated that the logic

of their plants is based on proximity with retailers or source of material e.g. grain to produce “fresh

biscuits”.

In terms of length of business relationship with suppliers, 80% of our interviewees have been in business

with the same three or four flexible packaging suppliers for 5 – 10 years. In the case of unbranded

customers who supply products to retailers, the contract is worked out on a quantity basis. Once the

products are supplied according to agreed volume, retailers will re-arrange the bidding process. For

branded customers, contracts are renegotiated every one to three years. However, due to growing cost

pressures, contracts are renegotiated after a shorter period. Customers in baked goods stated that

contracts are commonly renegotiated every year in Germany. Nevertheless, a purchasing manager in a

large national biscuit firm mentioned that she preferred to have a 3-year contract as the switching cost, e.g.

time to review new suppliers or cost of cylinder change, was significant.

Most customers prefer to be on the safe side by fixing the price of raw material on a yearly basis. A large

multinational customer in baked goods mentioned that the company would not consider future partnership

with Mondi and Amcor because “they were not capable of fixing prices with their suppliers”.

4.2.5 Customer’s flexible packaging requirement

Volume of flexible packaging materials

The information on the proportion of flexible packaging materials that we got from the field research is

quite varied. For example, sugar confectionery customers estimated the proportion of flexible packaging

between 45-90%, while customers in baked goods estimated theirs as between 40-100%. As the

information collated from the field was disparate, we believe that information from Euromonitor can

provide us with a more concrete idea. Based on table CU15 below, gum contributes the greatest proportion

of flexible packaging materials with a 97% share based on total packaging. However, the material currently

used is flexible aluminium and paper. Baked goods use the largest portion of flexible plastic with an 88%

43 / 235

share, following by sugar confectionery at 61%, chocolate confectionery at 55%, breakfast cereal at 51%,

pet food at less than 50% and biscuits around 45%.

Table CU15: Germany packaging – retail/off-trade in volume (million units)

Chocolate

confectionery

Sugar

confectioneryGum Baked goods Biscuits

Breakfast

cereal

Total packaging 100% 100% 100% 100% 100% 100% 100% 100%

Metal 1% 0% 3% 1% 2% 0%

Rigid plastic 4% 5% 5% 2% 12% 4% 27%

Paper-based containers 11% 15% 4% 2% 11% 3% 21% 48%

Flexible packaging 84% 81% 88% 97% 75% 91% 52% 52% 50%

Stand-up pouches 1% 1% 0% 0% 0%

Flexible plastic 50% 55% 61% 2% 72% 88% 45% 51%

Aluminium foil 12% 18% 0%

Flexible paper 8% 4% 10% 25% 2% 6%

Flexible aluminium/paper 14% 3% 14% 70% 1% 1%

Flexible paper/plastic 0% 0% 2%

Flexible alumnium/plastic 1% 2%

Source: Euromonitor except for Pet foods where we got information from field research

Packaging - Total - historic - retail/off-

trade unit volume - mn units in 2007

Bakery

productsConfectionery Pet foods*

80% of the customers that we interviewed have a strong preference for gravure over flexographic, mainly

because of the superior quality of printing. Some customers consider gravure when requiring a high

printing standard and given a high amount of volume. When the volume is low, they tend to use 9 or 10-

color flexographic printing. Below is a statement made during the interview with a large Pan-European

customer in baked goods, on his strong preference for gravure: “I would never consider changing, because

gravure printing is far better when dealing with high volumes due to consistency of printing quality.”

Apart from superior quality of gravure comparing to that of flexograghic, 2 customers prefer gravure

because of higher efficiency and flexibility to adjust layout design, as stated by the same interviewee in

baked goods: “When using flexographic with high volumes, you would have to change the “sheets” too

often, and this does not work out on the cost side.” Another supporting statement from a small national

customer in sugar confectionery: “99% of my printing is on Gravure. It offers a better quality and it does not

bring problems when you have to make small modifications in the layout. I would change the printing

process if the price is lower but the quality remains the same.”

However, a large national customer in breakfast cereal mentioned that emerging printing processes such as

digital printing can play more important roles in the near future.

45% of companies we interviewed tend towards Duplex Lamination. Most of Nestlé products in

confectionery are in cold seal so it is important for them to look at the technology that the flexible

44 / 235

packaging supplier can offer in the cold seal technological area compatible with their equipment. The

interviewee from Nestlé believes that there is some space for developments in areas such as (a) low

temperature areas (b) close sealing material, synthetic cold seal which is not currently price-competitive (c)

laser sensitive coding (d) individual coding used for promotions - big alpha-numerical with different colours

- 1 item and print colours where you have to scratch to get money.

With regard to source of information on packaging development, 6 out of 10 purchasing managers received

information regarding packaging development through trade magazines, trade shows such as Interpack or

through a technical department within the company. The following websites in table CU16 below were

mentioned by a large national customer in breakfast cereal as a good source of packaging development

information.

Table CU16 Useful websites

http://www.euwid-papier.de/

http://www.verpackungsrundschau.de/

http://www.neue-verpackung.de/

http://www.risiinfo.com/


4.2.6 Business Discussion

Despite slow market growth, Germany is the largest packaging market, with a market size of 23 Billion

Euros in 200431. The Plastic packaging industry is estimated at 40% of the packaging sales value or around

9.2 Billion Euros according to Euromonitor. In terms of location, Germany is also very close to Poland. In

order to enter Germany, Printpack should take into account the recycling environment, and customer value

requirements.

Manufacturers and distributors of packaging can be excused from the redemption (take-back) and waste

disposal obligation if they are licensees of an area-wide collection system. Several of these systems

compete in Germany and coexist with the municipal waste collection systems32.

The DSD approves the allocation of the Green Dot, which defines any packaging marked with it as a

resource and potentially recyclable. The DSD commission’s local waste disposal companies to collect empty

31

Euromonitor, Packaging – Germany: Country Market Insight, May 2007. The figure includes carton, aluminium, plastics, glass, tinplate and others. 32

http://www.logisticstoday.com/displayStory.asp?sNO=5098

45 / 235

packaging marked with a Green Dot for recycling purposes. Manufacturers and distributors who are part of

this system pay for it. Manufacturers include these additional costs in their production of packaging

calculations, which means that they are passed on to the end consumers. Currently these obligations

regarding sales packaging do not apply if the manufacturer or distributor takes part in a system that

guarantees regular collection of used sales packaging from the final consumer.

From our key findings in the field study, companies in Germany can be categorised into two customer

groups according to their value requirements:

1. Those customers that require relationship and intimacy – predominately national companies

2. Those customers that require innovative and enhanced products – predominately multinational

players.

If Printpack are to target national customers that value relationship and intimacy, a certain amount of time

would be required for Printpack to establish a strong presence in the German market. From the field

research, we have found that, given the price is equal, national customers are looking for a much better

quality type of materials. Even if the price of packaging is slightly lower, 3 out of 8 customers we spoke to

are still willing to keep their relationship with current flexible packaging suppliers. However, with the rise of

raw material costs, 3 out of 8 national customers that we interviewed are willing to try new suppliers as far

as they are committed to the required lead-time and quality.

As mentioned by Nestle, collaboration with multinational customers, e.g. R&D, for new material or new

technology in packaging is also the key if Printpack are to target multinational customers. Given the current

limited level of R&D resources and level of product innovation for Printpack UK, the German market will be

very challenging to break into as the strategy involves fundamental changes in Printpack’s resources and

direction.

46 / 235

5. Supply chain analysis

5.1 Key Findings

As the global trend for corporate activity is moving toward supply chain-based partnerships,33 a little more

efficiency in supply chain management (SCM) can create a great effect on a business that competes globally.

Moreover, help in a key function from overseas strategic partners has a great effect under high end

competition. The objective of supply chain management is to meet the requirements of customers by

supplying appropriate products and services when they are needed at a competitive cost .34 To achieve this,

five operations performance objectives must be met – quality, speed, dependability, flexibility and cost. As

table S1 explains, corporate activities are network-based partnership through Supply, Production,

Distribution, and Demand.

This is particularly true for the packaging industry, considering it is in the commodity category with its

heavy dependence on raw materials. If Printpack implements better SCM, it will not only lower costs in

production and in/out logistics, but also produce customer intimacy,35 given that the ultimate goal of SCM

is to maximize value creation while minimizing costs.

In this section, we will begin by examining the industry’s best practice in supply chain management and

then analyse Sourcing plan, Technology, CSR and Carbon footprint.

33

. One example is that the value chain framework quickly made its way to the forefront of management thought as a powerful analysis tool for strategic planning. 34

. Nigel Slack, et al.2006) Operations and Process Management, FT Prentice Hall 35

.M. Treacy and F. Wiersema (1993) Customer Intimacy and Other Value Disciplines, Harvard Business Review, January-February.

Table S1 Objective of supply chain management

Supply

Network

Raw Materials Finance Information Parts

Conversion

Network

Plants Technology Employees’ Management

Distributor Network

Wholesalers Distributors Logistic Centers Retailers Local Facilities

Customers

Prosumers SCR Joint Buying

47 / 235

� Importance of Supply Chain

5.2 Supply Chain Management

� Industry Trend A feature of flexible packaging by supply and demand was that demand had exceeded supply, which made

for a positive growth trend in the past, giving business achievement for many players. However, shifts in

the competitive environment have forced players in the industry to focus more on operational excellence

and services for survival.36 The best way to survive is to cut prices in order to compete. As a result of this

cost reduction strategy, the flexible packaging industry has lost some of its attractiveness and financial

stability.

There are two industry-wide trends: (1) Increasing business integration, (2) New material Introductions,

which are closely related to the SCM. As stated in figure S2 forward Integration develops through raw

material manufacturers such as Alcoa and Reynolds. One of the reasons for this trend is that raw material

constitutes about 60% of the total cost of end prices, giving customers more than one source of supply. The

development of new technology has intensified this trend, thus allowing disruption of the value chain. In all

this, market structure is continuously being re-shaped.

36

. Euromonitor International June 2006, The world market for packaging food, page 3, Kraft food and Unilever Cases

The origin of value added: 60-70% value of all added in the business process comes from

manufacturing with 10-15% of logistic costs. Lead time for materials going through supply chains

are much longer than manufacturing itself.

Increased Uncertainties from environmental factors: The uncertainty in demand, supplying time,

quantity and quality is getting more and more critical. This uncertainty can not be gotten rid of or

absorbed in the manufacturing process.

Difficult Activities from Global Activities: As the business activities get global, the reasonable

management, coordination and control of supply chain gets more effective.

Mass Customization: With the advent of buyers market and Prosumer,1 a company should meet

diverse needs of customers making ordering, production planning, and logistics more difficult

Global Best Practice: Japanese manufacturing systems such as JIT (Just-In-Time) and innovative

practice are universal. Many success stories force business to set up a better system lowering costs

and improving supply.

The Development of Information Technology: IT has made possible a consolidated business process

in a company such as ERP, a full fledged platform for the information sharing and process

innovation.

48 / 235

* Figure S2, Source: American Flexible Package (Euro Monitor 2007)

Through several industry research materials including World Flexible Packaging Trend 2007 published by

PCI and World Packaged Report 06 published by Euromonitor, we can see there have been backward

integrations. One type is executed by plastic packaging firms and the other is by food and beverage firms.

Regarding the back ward integration by packaging firms, Wipack acquired Klockner’s EU flexible film

business. In particular, we have seen many global players in the plastic packaging industry such as Alcan,

Amcor, Bemis etc. acquire raw material producers in order to consolidate their business.

More intense competition has prompted a number of multinationals, notably Unilever and Kraft Foods, to

look to the bottom line by divesting themselves of non-core activities in order to reduce costs. The

objective of this trend is to consolidate business operations. For example Nestlé and Barry Callebaut

entered into a long-term supply agreement which may be called a type of integration.

Table S3 highlights the different levels of skills in the value chain of packaging firms in which production,

stock management and procurement are key factors. As shown in the table, suppliers and customers have

higher competences respectively than packaging companies. These core competences stem from economy

of scale in procurement, manufacturing order management, and logistics. Plastic Packaging Converters

have a relative competence in the packaging arena, but are increasingly losing competence in marketing

and services (Retail, Service Design, Prototyping, Integration, Launch and Revision, CRM, Service Support)

compared to their customers.

Suppliers

• Plastic manufacturers

Packaging Firms

�Packaging converters

�Packaging manufacturers

Major Customers

• Beverage & Food producers

� Direct link - Forward

� Direct link - Backward

49 / 235

Table S3 Skills levels for packaging firm required in the value chain,

Source: Assumption by looking to PCI report and Harvard business review, CC&S case

� Printpack Realities37 When a company plans strategically, the tendency is to focus on identifying the most effective and

profitable way to run the business in the long term. The supply chain needs to have the ability to take into

account the whole supply network.

Over the past years, Printpack’s success was attributed to its development of products with efficiency

following industry trend. Printpack has made efforts to meet its key customers’ specific needs with few

products.38 Over 95% of the total outputs of Printpack are purchased by the 12 key accounts.

Printpack’s main activity is converting, which is highly focused, as shown in table S4. Printpack has become

involved in packaging design cooperation and, as a result, it has not developed other distinctive capabilities

in the supply network.

37

. Printpack Realities was the outputs from internal reviews on Printpack business including survey on its Associates (labours) which was provided to IB Group to be used for the project. 38

. A manufacture’s choice of lighter raw materials and plant location could have a large impact on total costs.

High

Low

Sk

ill Lev

el

In-bound Production Out-bound Marketing Service

Supplier Packaging Firms F&B ※ Skill Criteria

� High 7

� Middle 4

� Low 1

50 / 235

Table S4 supply chain network,

Source: Printpack Realities (Provided by Printpack in the Seminars) and Interviews

In comparison to its competitors, Printpack has very limited geographical presence in Europe. Furthermore,

Printpack has no capability of selling directly through its distribution centres to those which buy small

quantities of products for their business. This situation is unlikely to facilitate a long-term Business-to-

business relationship.

Various aspects of optimizing the supply chain include liaising with suppliers to eliminate bottlenecks;

implementing Just in Time (JIT) techniques to optimize manufacturing flow; and using location/allocation,

dynamic programming, vehicle routing analysis and, of course, traditional logistics optimization to

maximize the efficiency of the distribution side. However, Printpack’s current supply system is more

traditional, as shown in the table S5.

New Materials?

Supply chain mgt Waste Mgt

Outputs by Printpack

• Printed Films• Laminations • Cold Seal Technology • Barrier Coatings• Twist wrap• Labels

Raw materials

Package design

F & BMarketing

DistributionF & Bmaker

PackageFilling

Packaging facility

Ware-housing

Retail ConsumerPackaging recycling

Waste Collection

Packaging R & D

Manf.

Plant Design

Plant Building

Plant Mgnt.

Distribution

Distributor

CustomerDemandInfo.

Raw Material

* AAR: Activity, Actor and Resource Bond

51 / 235

� Insight from Printpack realities < Quotation >

� Managerial Implication Integration

A possible business direction that Printpack has at this moment - Forward integration - will allow control

over the supply chain, which could consequently improve profitability with an increase in complexity of

business and buyers becoming competitors. Backward integration will allow Printpack to control raw

materials. This comes with the risk that competitors could become customers and be reluctant to do

business.

The costs associated with these strategies are high (acquisition cost and integration cost). Printpack will be

moving away from its core area of competence and may find it difficult to compete with global packaging

manufacturers who have achieved economy of scale.

Traditional “Static” Solution

Supply Chain Variability

Opportunity (risk) Gap

New Generation Reality

Supply Chain

Dynamic Solution gets closer to reality

Opportunity (risk) Gap is reduced

Supply Chain SENSING

Supply Chain SHAPING

Reality Supply Chain is shaped to optimal opportunity

“Theoretical Best”

Opportunity (risk) Gap is reduced

Supply Chain Visibility

Virtual Direct Demand Shaping CSE

Speed Reactivity (Real-Time-Enterprise)

Flexibility Low Cost

Table S5 Master Data Management-Production Information Management (MDM-PIM) by Oracle Collaborative Supply Execution (CSE) by Gartner Business Summit Forum 2008

Current SCM of Printpack

1. Suppliers find it easier to work with smaller converters who use supplier expertise directly and make quick decisions

2. Film manufacturers are approaching retailers with regard to sustainable materials because retailers are driving this market and put pressure on our customers

3. Emerging film manufacturers are increasingly approaching major end-users as a road into the market

4. We do not adequately allocate resources to development and strategic work 5. After significant initial progress, we have reached a static level of waste 6. The € continues to strengthen versus the £ 7. The € continues to weaken versus PLN 8. Good cash management 9. Proactive in identifying innovation

52 / 235

Long-Term Relationship Management

Supply chain management (SCM) is the management of relationships and flows of information between the

string of operations and process that provide value in the form of products and services to the ultimate

consumer.39 As the relationship between actors in a supply chain is the basis on which the exchange of

products, services, information and money is conducted, managing supply chains is about managing

relationships. Partnership between suppliers and customers results in the sharing of skills and resources to

achieve joint benefits. This is seen as a compromise between vertical integration and transactional

relationship.

If markets are under high uncertainty, partnership relationship may lower the risks caused by change of

supplier. Nevertheless, shifts in the competitive environment have forced players in the industry to focus

more on raw material cost reduction in order to survive within one of the toughest industries.

Position of Solution Provider

Printpack, as a pure plastic converter, should build a competitive advantage by providing value added

services in the value supply network. As explained in table S4, Printpack has very limited AAR (Actor,

Activity, Resources) bonding. The focus of Printpack’s value chain has been to manage cost factors since the

cost of raw materials accounts for a very high proportion of the firm’s total expenditure.

Printpack needs to move out of its risk-averse business strategy for its success in the future. It has to

develop distinctive capabilities in providing packaging solutions for new customers, especially small

medium customers with little resource for packaging who have the potential to be key accounts in the

future.40

Change of desirable Customer Relationship Management

39

. N. Slack, S. Chambers, R. Johnston and A. Betts (2006), Operations and Process Management, Prentice Hall, p. 208. 40

. Fields in management such as retail, service design, research, prototyping, integration, launch and revision, CRM, service support, sales and contract management are considered.

Role changing: from Supplier to expertise, advisor, and partner Client development:

Maintain: existing clients Acquire: new potential clients - using new materials, lower costs, etc. Develop: ‘service package’ - Out-packaging boxes, etc. Partnership: strategic relation, provide whole packaging – Advice +Production +Innovation

53 / 235

Management of Supply Chain System

Printpack should focus on a quick shift to the Internet Business including the current Vendor Managed

Inventory (VMI). It is less effective in inducing customers into its management system let alone potential

customers. Nowadays, networking through management system has become a hygiene factor for business.

On-line channel is very efficient in accessing a target market and managing suppliers.41 The lack of physical

limitations of time or place on the web creates a purely global market. Furthermore, the number of

internet users having buying power and being opinion leaders is increasing. For example in the era of Web

2.0, customers can turn into business hosts, opening ‘Open Market Blogs’ in which they can sell anything

they want to.42 The Integrated information system is also very effective in knowledge-based competition,

because it can constantly redesign its system by creating and using knowledge. However, it is not easy to

overcome conflict in the value chain with many cooperative firms.

5.3 Sourcing of raw materials

Industry trend

Prices of raw materials are heavily influenced by the price of oil, and the market size of flexible packaging

has been commensurate with economic growth worldwide. As western countries have stalled in economic

and population growth, focus is on the emerging market, such as Eastern Europe and Asian Countries.

Table S6 shows trade statistics on HS code 392010 which include film, foil, strip of polymers, non-cellulose.

Looking at the table, a clear tendency to import and use low-priced raw materials from emerging countries

can be seen. This trend is reflected in the business for most major flexible packaging firms. Our field

interviews verified the trend.

Table S6 Statistical Trend of Raw Material Exchange

Year World to EU Value(€ ) Inc.Rate (%)

China to UK Value (US $) Inc. Rate (%)

China to Poland Value (US $) Inc. Rate (%)

2001 - - 647,266 44.1 5,141 -90.2

2002 - - 590,645 -8.7 149,601 2,810.0

2003 2,084,340 1,132,332 91.7 95,648 -36.1

2004 2,608,284 25.1 1,030,129 -9.0 36,862 -61.5

2005 3,052,364 17.0 372,423 -63.8 1,055,471 2,763.3

2006 3,415,289 11.9 2,146,580 476.4 984,346 -6.7

2007 *3,171,503 10.1 7,061,593 229.0 1,390,200 41.2

* Compared with export US from China in 2007 worth $45.5M. (Date of data October 2007)

, Source: <China Trade Statistics, Imp/Exp by Commodity, KOTIS(Korea Trade Information Service)

41

. Dell Computer introduced mass customization, accepting a buyer’s order on the Internet. Dell’s success symbolizes the transformation into extremely segmented micro-markets and a new, more dynamic market situation carried forward by IT. 42

. They can easily mobilize materials to produce goods and services and distribute them. As direct cyber-shopping malls between consumers (www.openbay.co.kr and Selling Place) develop, people can be business hosts. Content businesses on the web and auction sites as individual places are good examples.

54 / 235

Although there is a difference in consumption of raw materials by market and segment, recently low-cost

suppliers have expanded their market share. The low cost suppliers offer lower price than high brand firms

and compensate later for their weakness in the market (reference to appendix S26 for PE prices). For the

packaging firms raw materials are of strategic importance in order to make their business successful. We

recommend that Printpack’s current and future supplier strategy also be in line with this trend.

The film markets are also segmented on several levels. For PE film, Toray, DuPont and Mitsubishi are first

rated suppliers. SKC and Kolon are on the second level where quality and price are good but with lower

services and longer leading time. The next level includes Indian and Chinese suppliers. As mentioned by the

Fredonia group, the price of films has increased around 100% if we compare the prices of film from 1993 to

2008 and a further increase is forecast by 2013 as the prices of petroleum is rising daily.

Supplying Situations

Film prices increase with the daily rise in petroleum prices almost daily. The same will happen to resins as

derivatives of petroleum, accounting for about 3.5% of Printpack’s total raw material expenses as shown in

table S7. A gravure cylinder contains roughly 6% and the prices of steel increase every year. Costs related to

logistics accounts for just about 4.5% of total expenses of raw materials, where it will be affected by

petroleum prices. Ink accounts for a high percentage of total raw material expenses, 16%, and the tendency

in price movement is pretty similar to what is happening in the film market.

Table S7 Printpack’s raw material expenses

Product Number of companies Purchases £ Printpack Total Purchases %

Film 10 12,749,801.41 48.85%

Ink 2 4,149,759.50 15.90%

Orig 3 1,446,002.47 5.55%

Contractor 1 1,003,487.46 4.11%

Resin 2 910,220.33 3.49%

Pkg 1 185,028.44 0.71%

C/Seal 1 161,563.91 0.62%

Waste 2 125,615.39 0.48%

Adhesive 1 106,567.55 0.41%

Hygiene 1 86,486.58 0.33%

Ctg 1 74,075.62 0.28%

25 £20,998,608.66 80.73%

Source: Printpack Realities.

Printpack has a high percentage of raw material expenses, around 60% of the end-prices. In the above table

most suppliers are locally located first graded. Printpack has certainly a buying behaviour of a long-term

relationship with a few suppliers. Even film accounts for around 50% of total raw material expenses. In the

55 / 235

case of transaction with Exxon Chemical, about half the amount is customer-requested buying from our

interview. And it has offered storage services using Belgium. This situation means that Printpack has no

choice with regard to raw material suppliers.

For the purchasing decision, quality of raw material seems a most critical factor in Printpack’s business.

Price looks like a second factor in selecting suppliers. Added to that is the need to consider different factors

such as differentiation of input, switching cost of supplier, emergence of new materials, suppliers’

concentration, importance of volume to suppliers, cost relative to total purchase in the industry, and threat

of integration.

Printpack has not followed the industry tendency of buying raw material from low-cost countries. The

countries that showed more capabilities to export into EU are countries such as China, India and Korea.

China is one of the biggest film exporters in the world, but India and Korea are also currently expanding

their capabilities into EU and US. There are companies such as Cosmo, SKC and Kolon that have been

showing good development and business across EU.

With supplier interviews and internal assumptions we can see there are differences in strategic importance.

Table S8 shows conception of how we can differentiate between materials and machinery.

The idea is relative to perspectives. We only focused on a future business orientation. For films, price and

risk of uncertainty are a high consideration. As film is the largest portion of cost and it is of diverse kinds,

Price

Risk of Uncertainty

Transaction Cost

Service/Quality

Film

Ink / Adhesive

Resin

Machinery

Table S8, Strategic importance of material and machinery

Source: Assumption based on Printpack Realities and Interviews

56 / 235

film must be the first priority to analyze. On the other hand machine and ink / adhesive are a more

transactional cost combined. Resin is a common material in both categories.

Insight from Printpack Realities

Managerial Implication

A Sourcing plan is a key part of a company’s supply chain. In order to have a proper sourcing plan there is a

need to start with an outline of demand consisting of information from various sources, such as forecast

demand from customers and product managers. Typically the demand plan will be at a ‘grouped’ level,

perhaps starting at the range or collection level, and gradually being refined down to style and style/colour

level as the company progresses towards finalising production or purchase details. Using supply chain

planning tools a company can perform optimizations of the supply process, and can identify and define a

sourcing plan allowing it to meet its demands in the most profitable way.

Achieving Long-term Economy of Scale

In terms of purchasing contract, economy of scale is a key to suppliers such as large volume, large accounts,

and centralized buying. Logistics costs are high when a small amount is offered several times. However,

logistic costs can be relatively smaller under high volume purchase. At the same time, other services such

as rebate, flexible offer and flexibility in volume can be supplied with a big purchase.

Considering middle and long-term increase of material costs, suppliers’ long-term price policy is also

important. If a supplier has high future capacity with more than one year fixed price costs, the firm will

exercise high power through its supply network and reduce Printpack’s concerns about price fluctuation.

For now the use of a low-cost raw material supplier has not been exploited at all by Printpack although

there are enough low cost suppliers that could fulfill Printpack requirements. Meanwhile, emerging film

manufacturers are increasingly approaching major end users as a road into the market proving to everyone

that they have reached the higher standards that the European Union and some companies are requesting.

Meeting Diverse Expectation from Customers

As film manufacturers are approaching retailers directly, there is a need to reduce log-in between customer

1. Suppliers are highly interested in partnerships, but Printpack is not making effective use of this

2. We do not use low cost raw material suppliers, e.g. Cosmo 3. Volume throughput has improved year on year

57 / 235

and suppliers. One of the reasons for such behaviours is that customers, especially key accounts of

Printpack, are concerned about their product quality. Another reason is that Printpack’s strategic

relationship is not deep enough to run a mutual business. To break the constraints, Printpack should

respond quickly to customers’ needs and satisfy their demands. However, low-priced suppliers such as

Indian and Chinese suppliers cannot guarantee quality, service, and delivery time. For example the

technical uniformity of Corona and Chemical must be guaranteed by suppliers.

The major growing part is shrink slip and PE and OPP (Wrapping) films at a yearly rate of 5-10%.

Biodegradable products are especially growing with an increased demand for them. Despite currently

increasing demand, however, 2 or 3 times higher prices have prevented Printpack from using such products.

Customers’ carbon footprint has shown the same trend.

Lead time is quite important for a few customers, as seen in the case of sales campaigns. It takes 8 weeks

(production 1 month, and transit 1 month) to deliver materials from long-distance places like Asia. There

are also a few firms which cannot meet customer requests on R&D competence and skills. Therefore,

quality and technology must be proved in the market. If a supplier has high capacity for several materials

like thermoflexable film, PVdC coated barrier, Formable film, Twistable film etc. Printpack may enjoy a

developing relationship with the firm.

Developing Strategic Relationship

Printpack has not been allocating enough resources for development of strategic work with potential

customers. Its suppliers have attractive technologies in the pipeline which could provide a competitive

advantage and commence by making use of partnerships. Printpack associates have an Insight into the fact

that film and wets suppliers are extremely interested in partnerships, where Printpack is not making

efficient use of this kind of situation.

More fundamental partnership should come from a trend that is happening worldwide, where mainly film

suppliers find it easier to work with small to medium-size converters who often use a supplier’s expertise

and are able to make a quick decision. This tendency is based on a film manufacturer’s manner of work, as

they are currently approaching retailers with regards to sustainable materials for the reason that retailers

are driving this market and are putting pressure on Printpack’s end customers such as Coca-cola, Frito lay

etc.

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The relationship of the supply chain is like a Pyramid from Raw Material to Converters to Food & Beverage

firms and bottlers. But as explained in the industry trend, large-scaled firms have a direct connection both

vertically and horizontally. However, Printpack is weak in managing multi-relationship with its suppliers and

customers.

Decision Factors in Sourcing Films

Decision Factor Current Situation Level of Constraints Consideration

Product level (Technology)

Customer lock-in and expectation

not much in cutting edge

More than 70% HIGH

the rest is LOW

Innovative and high quality for the current key accounts

Others are less concerned

Economy of Scale

Depends on price quotation HIGH with large

suppliers More than minimum quantity order is

necessary

Lead Time Using VMI purchase expected

with few exceptional case MIDDLE Two types: stable or urgent

B2B Relationship

Long standing with major suppliers

MIDDLE Depends on future business focus

Costs Considered much but getting

important in time HIGH Base for competitiveness

Product Diversity

Many type of films MIDDLE Diverse product offer from one firm is

better

Storage Service Only Exxon Chemical HIGH Possible option: consign service

Table S9, Strategic sourcing plan, Source: Interview with Printpack associates and Printpack realties

Using constraints seen in the table S9 above, we can see strategic ideas for a future sourcing plan. If the

level of constraints is middle or high we should solve related problems. But if it is low, future options can be

chosen by simple decision criteria.

Pros and Cons of Low Cost Suppliers

Table S10, Low cost supplier’s Pros and Cons

Pros Cons

Reduce supplying costs More revenues

Possibility of failure in customer expectation on quality

Develop new up-stream Value Need for new marketing efforts to develop new accounts

More market insights Channel conflicts

Higher negotiating power increases with more distributors

Operational risk including increase in overhead costs


59 / 235

Keeping table S9 and S10 in mind we can suggest to Printpack al policy that should be incremental. It can

source part of its films from middle-cost suppliers with the idea that for the first few years, the UK factory

can be quality-oriented and high-value added, and Poland for normal products focusing on price-

competitiveness.

For soft landing we recommend Printpack could divide its supplier base between spot sellers (order) for

local purchasing and steady sellers for outsourcing using low cost suppliers (reference to appendix S25) The

spot sellers would be more appropriate in urgent purchasing situations whilst those steady sellers would be

more appropriate for long distance suppliers and much lower costs. After testing the soft landing period it

can expand its suppliers to Chinese and Indian products. The storage service offered by Exxon Chemical can

be substituted with the same effectiveness by securing a Consignment Service43 or using local distributors

of middle-priced suppliers.

Relationship development is not a short-term matter as it is strategic business-oriented. Printpack should

test the relationship (quality, service, communication, etc) on a small scale. If it is confident, it can decrease

local dependence and increase cost benefits. Overall, Printpack needs to have middle-range products to

lower its business risks.

Implementation Suggestion

43

. Consignment service is an example, like buying 100 tons films under 3 months usage: in a month 30 ton use and payment, in the second month 40 tons and in the third 30 tons.

3 Months

• Conduct primary research of middle-range suppliers 6 Months

• Evaluate cost-benefit relationship with customers

• Implement incentive-based rebate with new customers and suppliers 12 Months

• Reduce Overall costs

• Track customers’ responses

• Develop new strategy 18-36 Months

• Determine price and sourcing strategy

• Develop new up-stream channels

• Continue to review contracts with existing suppliers

• Penetrate into new segment like dog and cat foods in Germany

• Reconsider management of all supply network

60 / 235

5.4 Technology

In the Knowledge Based Economy,44 a firm can not rely for competitive advantage on product superiority

alone and advanced logistics and global supply systems are not enough to secure unconditional success. A

firm’s competitiveness depends in large part on its ability to generate creativity-added value through

technological innovation.45 Product innovation by breakthrough technology or by innovative substitutes is a

unique option for long-term success in the market. However, to be successful in the management of

technology in the flexible packaging industry, market-driven planning is the key whereby integration

between business strategy and technology strategy may happen easily.

In the case of Printpack, an analysis of technology management was a key to judging its competition

strategy. But it seems that it did not get any systematic attention from technology management.

Technology development has not been considered together with customer intimacy or both have been

treated as separate areas.

Industry trend and Printpack realities The flexible packaging world is evolving towards an ever more sophisticated structure by means of new

technologies and materials, as illustrated in table S13. The market requirements for better products in

terms of processing, built-in properties (stiffness, seal properties, thermal behaviour, softness, etc) and

ergonomic properties have generated means and process developments. According to the latest

technologies, developments are continuing for productivity and line size improvement and also for better

product tailoring and product homogeneity. Film is one of the most innovative products. Depending on the

product to be packaged, polypropylene films are used as is, or they constitute one or several layers in more

complex structures. BOPP, cast and blown films associated with multi-step processes such as metallization,

lamination and extrusion coating provide many opportunities for new ideas and innovations.

44

. Nonaka and H. Takeguchi (1995), The Knowledge Creating Company, Oxford University Press. 45

. 58% of US CEOs responded that Technological Innovation is the most critical concerns. Chris Floyd (1997) Managing Technology for Corporate Success, Gower Publishing Limited, p13.

61 / 235

Printpack’s position in table S13 is located with the two major technologies of Rotogravure and

Flexographic. In table S14 we can see seven capabilities that are required to service flexible packaging

converters and its importance according to our source. Such capabilities are based on the main drivers for

innovation such as new trends in material, demographics etc. As seen in table S14 converters are driven by

technology where they will find room for improvements and innovation, creating opportunities for flexible

packaging at the expense of rigid packaging. This is in conjunction with the customer relationship or service,

allocating these two factors the same importance in the industry.

Table S14, What is required to Service Flexible Packaging Converters?

Source: AT Kearney Analysis (Re-quoted from Innovation Adhesives and Flexible Packaging, CMM International –Chicago 2003, Page 9)

The main objective of the latest technologies is moving forward to reduce volume size of packaging,

sourcing packaging materials that are light weight and more easily recycled. As a matter of fact, companies

Im porta nc e

C a pa bility

M a nu fa cturing E xce llen ce

E -B us ines s C a pab ilit ies

S up ply C h ain M an age m en t

App lica tio n D e velop m en t an d Te chn ical S up po rt

T ech nolo gy Po rtfolio an d P rodu ct R an ge

Bra nd a nd C o m m itm ent to In du stry

M a na gin g C u stom e r R e la tion sh ip / Se rv ic e

51Im porta nc e

C a pa bility

M a nu fa cturing E xce llen ce

E -B us ines s C a pab ilit ies

S up ply C h ain M an age m en t

App lica tio n D e velop m en t an d Te chn ical S up po rt

T ech nolo gy Po rtfolio an d P rodu ct R an ge

Bra nd a nd C o m m itm ent to In du stry

M a na gin g C u stom e r R e la tion sh ip / Se rv ic e

51

Tec

hni

cal M

om

en

tum

Emerging

Declining

Evolving

Mature

Leading Same Following

Relative Competence Position

Rigid PlasticCommodity

AerosolTin plate

BeveragesTin plate

Glass/AluminiumDrinks Plastics

Drinks

Flexible/New MaterialBiomaterial,

Organic Plastic

Cellulous

Rotogravure

Biodegradation of plastics

RFID

Lamination

Flexographic

Nano-Printing

Technology

Modifiedatmospherepackaging

Combined Tech

Oxygen-absorbing packaging

Activepackaging

Printpack

Source: Desk research and Euromonitor 2006

Table S13, Product Trends by Material and Technology

62 / 235

can achieve a lot of environmental benefits through efficiency in packaging design, enhanced productivity,

waste recycling and working with suppliers and customers to reduce waste and increase recycling. The

industry recognizes that flexible packaging commerce will find room for new developments.

These will principally figure around environmental trends and requirements as well as the converters’

demands for seal integrity, down-gauging, efficiency, maximizing output and production speed. In new

technology, plastics have increasingly replaced traditional materials in this sector because of their light

weight and superior functionality.46 New developments in materials include heat resistant and high barrier

plastics which can replace metals and glass in other packaging applications.

Currently, flexible packaging types range from bags and bubble wrap to tubes, stand-up pouches and foam

cushioning materials. Rigid packaging comprises blisters, bottles, cartridges, clam shells, pallets, trays, etc.

Polymers are used in caps and closures, sacks, bags, labels, adhesives, rigid containers, films and other

flexibles. The substitution of other polymers and materials, including paper, will continue because of the

versatility of BOPP. New developments include liquid crystal polymers, which are high temperature

resistant materials with excellent barrier properties: an example is the production of composite cans which

has begun in the UK.

Printpack Technology Initiatives

Feature Benefit

Accessible packaging Packages for an aging population

E-Beam Ply Elimination, Productivity, High Gloss

Nanotechnology Barrier from nano-scale particles

Resealing Mechanisms Improved Package Functionality

Retort Packaging Next Generation, Home Meal Replacement

RFID Package Tracking, Real Time Data

Sealant Technology Wide Operating Window and Peelable Sealants

Sustainable Packaging Renewable materials; Optimized Processes

Value Added pouches High quality graphics for bulk products

Table S15, Feature and benefits for Printpack technology initiatives

Source: Printpack realities

46

. In rigid packaging polyethylene terephthalate (PET) has replaced glass in bottles for carbonated drinks, which has moved this resin from a speciality to a commodity plastic.

63 / 235

Insight from Printpack Realities


The current Printpack capabilities focus on technological efficiency in the operation of flexographic, and

rotogravure printing machines. Investment in new or latest technologies will certainly improve the

capabilities that currently account for the company, and may offer a better service to current and potential

customers, showing initiative to meet new trends and offer the most innovative result in terms of flexible

packaging.

However, in managing technology Printpack first needs to answer the questions showed below:

• How long will Printpack continue with current portfolio and assets?

• Does Printpack have the necessary resources and capabilities to become successful in the new

game?

• How will Printpack continue to be a leading plastic converter?

According to Executive Summary of Printpack 200747 and our interviews the current Printpack situation is to

facilitate the technology management process in mainland Europe in three ways:

1. Leveraging technology innovation using resources in Printpack US,

2. Incremental innovation especially for the increase in operational efficiency in Saffron Walden,

3. Developing new materials which must be compensated and easily managed in current situation. Evolving

technologies such as fiber and foil gradually gaining shares in the market may be recommendable.

Implications for implementation are:

47

. Printpack bought Deacro slitting machines in the last quarter of fiscal year 2006, which is most noticeable investment in technology.

1. We do not adequately allocate resources to development and strategic work 2. There is a lot of technical progress in the machinery market which we are not using 3. Our suppliers have attractive technologies in their pipeline which could provide competitive

advantage to us 4. Machine speeds: steady increase at SW and Bury. Substantial increase in flexo unit 5. Flexo run size has increased following implementation of COPS and combination printing 6. Bury: Long periods of no investment resulting in technology gaps 7. Saffron Walden: No Primary investment

64 / 235

Allocation of budget for technology Service and localization

Printpack EU currently has little dedicated resource for internal R&D.

1. Increase in investment/budgeting for R&D,

2. Hire expertise in new material, especially Aluminum foils, Paper, etc.

3. Intensify existing materials research and lithography research (Customized shaping, Value-added

packaging solution, Recycle value).

4. Recruit experienced people to enhance the expertise knowledge and capability in new material

production and innovation

Portfolio Management in Technology

Printpack should adopt a management strategy according to its competence level and industry

development. For instance, research on RFID technology must be on a long-term technology road map as

its spectrum is broad and difficult to commercialize. On the other hand, technology for Nano-printing for a

few products can be easily acquired.

As stated in table S16, we can see the Concept of R&D portfolio management under business positioning.

Table S16, techniques in acquiring technology in terms of usage area of external technology

Source: Harris, Insinge, Morone and Werle48

Organizational Alliance

From an Insight from Printpack associates, we can see it has no core competences in the other fields except

for a few operational technologies. Accordingly, joint and cooperative systems should be taken as a first

priority. This is because such action is the most efficient way to eliminate the related uncertainty, and to

intensify market-related competitive power.49

48

. Harris, Insinge, Morone and Werle (1999) Technology Analysis and Strategic Management, pp. 17-29, Routledge, part of the Taylor & Francis Group.

49. The real winner in the technology market is standard-setters as in the case of the global standard war between VHS and Beta.

Competence Acquirement Internal R&D

Alliance/Market Observation Risk Sharing with

Partners/ Alliance

Internal R&D/ Risk Sharing

Outsourcing Utilization of External Resources

Cash Cow

(Core Technology)

(Emerging Technology)

(Basic Technology)

(Commodity Technology) Abandon Withdrawal

Sell Out

Internal Competence

Competence Intensifying

Technology Value

Low

High

High

65 / 235

To gain technological insight in mainland Europe, Fraunhofer Research Institute for Process Engineering and

Packaging IVV in Germany may provide several disciplines such as development of new technology, test for

format and safety, raw material consulting and the like at lower costs. Outsourcing some research from

Fraunhofer will allow Printpack to focus on its core competences and managerial insight in the local market.

Strategy Based on Market Constraints

For Printpack to develop an innovative product it should overcome both technological and commercial

hurdles. To succeed in the commercialization of a new technology, market factors and management

structure are key components. 50 Marketing factors in technology development are to understand

customers’ needs, the degree of interest in marketing, production timing, development efficiency and the

leadership of the managerial level on commercialization. Before a new technology or product is developed,

marketing planning should be combined with R&D planning.

5.5 EU legislations

Both operational risk and commercial risks are intrinsic to business. However, macro factors (PESTER) are

becoming critical to the industrial competitive environment. Here we can see macro factors for Printpack’s

future business, which include Corporate Social Responsibility, Green Issues (Carbon Foot Print), and EU

regulation on Plastics (REACH).

We have not made a deep countrywide analysis of Printpack realities, One of the reasons is that EU-wide

regulations will soon replace country-wide ones. Therefore most of our concerns focus on industry trends

and best practice for business and the operation of future Printpack.

CSR (Corporate Social Responsibility)

In many local markets an image of corporate social responsibility can enhance marketing success and

environmental issues are emerging as a critical success factor. Corporate Social Responsibility is a concept

where businesses consider the interests of humanity, taking responsibility for the impact of their activities

on clientele, suppliers, workforce, shareholders, communities and the environment in all aspects of their

operations.

This responsibility is seen to extend beyond the legal obligation to comply with legislation and sees

corporations voluntarily taking further steps to improve the quality of life of employees and their families

50

. Ashish Arora (2001), Markets for Technology, the MIT Press, pp. 1-14.

66 / 235

as well as showing concern for the local communities and societies at large, which is in line with the

European Commission. CSR 51 Companies are advised to integrate social and environmental concerns in

their business management and in their interaction with their stakeholders on a voluntary basis.

In terms of business practices, there is an advanced practice as demonstrated in table S18: The

environmental, social and economic impacts of a company's activities up and down its supply chain, as well

as in its own operations, need consideration, should be compliant. Each phase, as in the Raw material

supplier, Production, Logistics, and Sales has its own management.

Table S18 Corporate social Responsibilities for advanced practices

Source: Analysis from Marks & Spence Homepage and Annual Report 2005 The raw material supplier may have a certain impact in terms of the quality control required by some

European legislation in order to comply with the standards required for the product to be allowed into

most European countries. CSR is always very environment-driven, as every logistic provider needs to have

the latest technologies in order to reduce contamination. In terms of production, companies need to

ensure their employees are not working with harmful materials that can get the company into trouble

when the labour force requires more expensive health insurance.

In terms of Printpack’s sustainable packaging mission, “sustainability involves both process and product.

Process initiatives include use of oxidizers to ensure high air quality standards of plant emissions, waste

reduction programs reducing our landfill disposal, material down-gauging, reducing the amount of post-

consumer disposal, plant energy conservation efforts and others”.

Printpack environmental considerations are always a concern when making new investments: for instance,

considering whether the new Poland plant should be VOC free (Volatile Organic Compounds) and when

51

. 「European Multi-stakeholder Forum on CSR "Final results & recommendation"」, 2004/2006.

Corporate Responsibility for Advanced Practice

Raw Material Supplier

Production Logistics Sales ▪ Quality Control

▪ Product Safety ▪ Labor Right

▪ Quality Control ▪ Environment Protection

▪ Quality Control ▪ Customer Service

67 / 235

replacing motors. Associates are also encouraged and supported in community and charitable events: for

example they entered 3 teams in the Trans Lake Challenge last year to raise thousands of pounds for the

British Heart Foundation.


The EU regulatory commission emphasises:

- CSR covers social and environmental issues, in spite of the English term corporate social responsibility

- CSR is not or should not be separate from business strategy and operations: it is about integrating social

and environmental concerns into business strategy and operations

- CSR is a voluntary concept

- An important aspect of CSR is how enterprises interact with their internal and external stakeholders

(employees, customers, neighbours, non-governmental organisations, public authorities, etc.)

The empathy of CSR for many companies in the EU can be summarized (???) as the voluntary integration of

environmental and social consideration into business operations, and legal requirements and contractual

obligations which is about going beyond these, not replacing or avoiding them.

Carbon Foot Print

It is increasingly important to follow the tendency to reduce our footprint worldwide. Europe is the strictest

continent in terms of legislation to immediately implement the reduction of our carbon footprint,52 but a

carbon footprint is a measure of the impact human activities on the environment in terms of the amount of

greenhouse gases produced, measured in units of carbon dioxide as illustrated in table S19.

A campaign throughout Europe is currently encouraging employees and individuals to switch off lights and

turn off electrical devices when not in use, including factory and plant equipment. The main goal is to

reduce consumption of both energy and water and in so doing helping reduce business the carbon

footprint and save money for the business. The pie chart in table S19 shows the main elements which make

up the total of an average person's carbon footprint:

52

. Carbon Footprint is made up of the sum of two parts, the direct / primary footprint and the indirect / secondary footprint. The primary footprint is a measure of our direct emissions of CO2 from the burning of fossil fuels including domestic energy consumption and transportation (e.g. car and plane). The secondary footprint is a measure of the indirect CO2 emissions from the whole lifecycle of products we use - those associated with their manufacture and eventual breakdown.

68 / 235

Table S19 Breakdown of carbon footprint by person

Source: Carbon Footprint Ltd 2008 all rights reserved

When operating in developing countries such as Poland and / or in situations of weak governance,

Printpack need to take into account the different context and challenges, including poverty, conflicts,

health and environmental issues.

Sustainable Logistics for Carbon Footprint

Nowadays European member states will ensure that their future transport flows increasingly depending on

scarce energy supplies, while at the same time striving to reduce CO2 emissions by 2050 through energy

efficiency, renewable fuels and transport demand control. In order to have sustainable management,

Printpack needs to consider to Reduce, Reuse, Eco-treatment and Recycle.

Transport policy is energy policy. Not only will this approach protect the environment but it will also

improve the use of existing capacity, quality of service, safety and security. The European Council’s

conclusions on a European Energy Strategy for Transport placed great emphasis on new technology and

efficiency gains. So, we propose the below initiatives:

• Green Procurement : preventing harmful materials being supplied, complying with regulations, and

buying eco-friendly materials

• Modal Shift : using trains and shipping, which are low in CO2 emissions.

• Joint Transportation such as using train Containers

• Hub & Spoke: optimal logistics, reduction of lead time

69 / 235

REACH

REACH53 is a new European Community Regulation on chemicals and their safe use. It deals with the

Registration, Evaluation, Authorisation and Restriction of Chemical substances. The new law entered into

force on 1 June 2007. The aim of REACH is to improve the protection of human beings’ health and the

environment through the better and earlier identification of the intrinsic properties of chemical substances.

At the same time, innovative capability and competitiveness of the EU chemicals industry should be

enhanced. The benefits of the REACH system will come gradually, as more and more substances are phased

into REACH. The Directive related to the classification, packaging and labelling of dangerous substances ask

firms to adapt to the draft regulation

Certainly the tendency to adopt those regulations will be in place from April 2008. Printpack accounts for

certain European Accreditations such as:

• ISO 9001:2000 Certified by LRQA

• A.I.B. Hygiene – Superior Rating

• BRC/IOP Technical Standard

• Registered with Sedex Ethical Trading Standard

• Environmental Management System: approved with IPPC

The REACH Regulation may have a huge impact on plastic packaging firms. A plastic converter should

register its products in the EU regulatory regime and provide safety information to the public. Under

current trends, this regulation will give Printpack the responsibility of gathering information on the

properties of their chemical substances, which will allow their safe handling for the employees at the time

of managing such materials.

Scenario Impacts on packaging industry

Running a business entails many kinds of risks: commercial risk, operational risks and management risks,

most of which are intrinsic. Macro factors are more fundamental for the business strategy. The plastic

packaging industry has been affected by a number of regulatory factors. The pro-environmental consumer

attitude built up momentum to bring in legislation to persuade authorities to push through recycling. It will

bring about a harsh situation for the future business of Printpack. However, we feel that as most of the

environmental factors can turn into cost problems in short term, the usage of plastic packaging will be

steady. Three macro scenarios are shown in table S20 in order to understand the “Green issues” in terms of

such regulation:

53

.Council Directive 67/548/EEC2: classification, packaging and labeling of dangerous substances, in order to adapt it to the draft regulation on REACH.

70 / 235

Factor Industry

Scenario I: No Change -Macro Factor

Impact Market Change

Scenario II: Mid level Change


Scenario III : Fundamental Change


Metal Neutral(Short-term) Slow Decrease

Negative Decrease Negative Rapid Decrease

Paper Positive Short Term Increase

Positive Increase Positive Rapid Increase

Plastic Positive Increase Short-term Positive

Positive within now market

Neutral by factors

Neutral by Factors

Table S20, Macro Scenarios from Green Issues

Source: Assumption form desk research

* Scenario II is a low intensity regulation such as 0.5 Euro deposit per Kg

For the present, the changing factors are more favourable to the flexible packaging firms in the packaging

area than other packaging industries such as paper, cans, etc. However, it is expected that Printpack’s cost

competitiveness has been eroded steadily, with an overall increase in demand.54

Business Discussion

Business Performance

Volume Throughput Rate in the Printpack operation has improved year after year as machine speeds have

steadily increased at both Saffron Walden and Bury.55 Between two printing types, there is a greater

increase in demand for Flexographic and combination printing reached a static level of waste leftover.

However, both gross margin and ROCE are trending downwards, although the sales rating for ink jet

promotional activities had a significantly improved gross margin. This tendency has made Printpack

increase the cost for customer credits even thought Printpack claims to have very good cash management.

Efficiency in Technology

In the field of Technology, both Bury and Saffron Walden have been under a long period of no investment

resulting in a tremendous technology gap as the age of their equipment may be limiting their current

business capabilities, although Printpack has still been very proactive in identifying innovation. These

limited capabilities in the current business do not allow Printpack to stretch their product portfolio. As a

matter of fact, Printpack has been called upon to produce automated inter-company data transfers, where

such information systems will reduce the gaps in technology terms.

54

. Critical threats to prospective market position in 5 years. By the degree of impact there may be three levels of scenarios. In scenario II a low intensity regulation such as 1 Euro deposit per bb for can recycle is presumed. 55

. The report from Printpack Realities Team has showed this trend.

71 / 235

Labour Costs

Printpack has the highest pay rates, compared to other PAFA members. It is also very important to consider

that 40% of Printpack associates will reach retirement age within the next 15 years, when the increased of

use of internal resources for design and delivery of training intervention will be needed in order to

successfully replace retired associates. These circumstances can be seen in table S21.

(Unit: thousand Euro, %)

Table S21, Printpack Financial Realities, and Exchange Rate: 1.3 Euro per pound

NET SALES 8,1322.8 100.00

MATERIAL COST 4,5542.9 56.00

TOTAL SALES - MATERIAL COST 3,5779.9 44.00

Direct Labour 1,3968.5 17.18

Indirect Labour 3773.9 4.64

TOTAL LABOUR 1,7742.4 21.82

OPERATING MARGIN 2515.5 3.09

INCOME BEFORE TAXES ADJUSTED 2515.5 3.09

INTEREST CHARGE 55.9 0.07

INCOME BEFORE TAXES + INTEREST CHARGE 2571.4 3.16

Diff :- Overheads , Depreciation etc 1,5466.1 19.02

D.PEAT / EDGAR RICHARDSONS REPORT 428.35 0.53

- CASH IN HAND + LOANS + ST HELENS INVESTMENT + SHAREHOLDERS FUNDS 24,557.43333 30.20

CASH IN HAND -508.1916667 -0.62


Profit Impact by Scenario

Most of all, employing a different manufacturing technique can allow Printpack higher cost effectiveness.

Under current Printpack Realities a short-term change in cost structure of its operation may have low

influence to its business achievement due to an increase in raw material costs as well as a rise in other

costs neutralizing its market share and giving advantage to local converters.56 So for the time being

Printpack continues to suffer in making profits in the market.

However, with its heavy dependence on heavy raw materials, if Printpack implements a better SCM, it will

not only lower costs in production and in/out logistics, but also produce a better customer intimacy,57 given

that the ultimate goal of SCM is to maximize value creation while minimizing costs. Based on our analysis

56

. To curb the diminishing competitive advantage, the existing players should have invested in defining the future of their businesses. Investments in R&D and careful diversification would prove to be a key in such a scenario. 57

. M. Treacy and F. Wiersema (1993) Customer Intimacy and Other Value Disciplines, Harvard Business Review, January-February.

72 / 235

and interview, the cost comparison between the suppliers group is like the situation showed in table S22.

Table S22 Supplier Comparison: PET Thin Film (12 Micron)

Firm Quality

Price (Coronated, Euro per Kg)

EU Capacity (Ton, Total)

Service Brand Value

DuPont (High) 100 100(2.1+/- 10%) 60,000 (77,000) High High

SKC Kolon

96 95

95 (1.9 +/- 10%) 93 (1.8 +/- 10%)

93,000 (113,000) 60,000 (150,000)

Middle Middle

Jindal 90 85 (1.7 +/- 10%) 70,000 Low Low

Chinese Firm 70 - - Not rated Not rated

Source: Supplier’s interviews and Korean packaging association and companies web sites

Labour cost Projection in Poland Factory

As explained above, Printpack UK has suffered the highest labour costs in the plastic packaging industry.

However, if Printpack wants to achieve higher productivity in operation, it should introduce a new payment

strategy. Basically speaking, it seems that the Poland operation will achieve much lower costs for operation

despite a large capital outflow in setting up a new facility, because of favourable Polish economy.

In the future, Printpack can utilize a performance-based payment which may be combined with MBO

(Management of Objective), Incentive Payment, Payment Bands, Salary Peak System 58 , etc. Other

management schemes such as flexible working time system and evaluation of the promotion and skill may

lower its operational costs.

By introducing industry best practices, it is not difficult for Printpack Poland to reduce its labour costs by

10% in its operation. In particular, the Poland factory will be able to achieve a better management in cost

structure with lower rigid costs related to labour such as pension funds, and younger workers compared to

human resources in UK. Considering the industry trend in costs and macro economic factors of UK,

Printpack should increase its operations in Eastern Europe.

Within the breakdown of table S22, we understand that:

1. Products with Chemical Treated is around 10% higher than corrugated

2. Fair Prices as of mid 2007

3. Quality is based on product uniformity and easiness for printing

Printpack realties in the sense of price per unit (table S23) gives an idea about Printpack’s overall costs over

supplying films.

58

. It is a middle way between job security and cost reduction for the older workers.

73 / 235

Table S23 Packaging Film Quote on Printpack Exchange rate: 1.3 Euro/pound

Suppliers Brand Usage Price

Pence Euro

Exson Mobil (OPP)

17MB400 Clear OPP 2.24p/m2 1.31/kg

38LL247 Voided white label

film 3.95p/m2 2.31/kg

36MO747 White coated biscuit

film 8.23p/m2 4.82/kg

Dupont (PET)

Mylar813 Clear PET 3.10p/m2 1.81/kg

Treofan (OPP)

LTD35 Clear label film 4.84p/m2 2.83/kg

WND30 Solid white 4.45p/m2 2.6/kg

Average Price (as of ¼ quarter 2008) £1.92 / kg(45 sq

m/kg = 4.26 p/m2) 2.496 / kg (45 sq m/kg

= 0.05538 Euro/m2)

Source: interview with Printpack Realities

As a result of such a benchmark and as we discussed in a previous chapter, if Printpack comes to utilize a

middle ranged cost supplier, a substantial profit adjustment might occur as we can see in table S24.

Increase in Operational Profits

(Unit: thousand Euro, %)

Table S24 other costs (Distribution, marketing, and in-bound logistics, etc.) are considered fixed.

Cost Factors Original Cost Structure Percent Amount

Changed Cost Structure Percent Amount

Raw Material Costs - film costs - others

56.0 20.4 35.6

45,542.9 16,574.7 28,950.9

53.9 18.4 35.6

43,832.0 14,963.4 28,950.9

Labour Costs 21.8 17,742.4 19.6 15,968.2

*Other Costs 19.1 25,291.4 19.1 25,291.4

Profits 3.1 2,515.5 7.4 6,017.9

Source: Printpack realties and assumptions made

Seen in table S24, the operational profit of Printpack is only 3.1%. If Printpack makes 10% cost reduction of

film and labour (respectively 20% and 21.8 % of total costs) the operational profit will change to 7.4% from

3.1%. Considering the industry feature, the increase in profit is large enough to change its business

structure into a leading one. If cost deduction in in-bound logistics and stock management from the

effectiveness in SCM is to be calculated, the profit level will be much higher. Besides, SCM may create other

additional benefits by increasing customer intimacy.

74 / 235

5.6 Business Discussion

Business Performance

A volume throughput rate in the Printpack operation has improved year after year as machine speeds has a

steady increase at both Saffron Walden and Bury. Between two printing types, more increase in demand is

Flexographic and combination printing reached a static level of waste. However, both gross margin and

ROCE are trending downwards, although the sales rating to ink jet promotional activities significantly

improved gross margin. This tendency is taking Printpack to increase the cost to the company of customer

credits even thought Printpack claims to have a very good cash management.

Efficiency in Technology

In the sense of Technology, both Bury and Saffron Walden have been under a long period of no investment

resulting in a tremendous technology gap as the age of their equipment may be limiting their current

business capabilities, though Printpack still been very proactive in identifying innovation. This limited

capability in the current business does not allow Printpack to stretch their product portfolio. As a matter of

fact Printpack has been called upon to produce automated inter-company data transfers, where such

information systems will reduce the gaps in technology terms.

Labour Costs

Printpack has the highest pay rates, compared to other PAFA members. It has a lot of absenteeism, where

this one is above the budget. As well is very important to consider that 40% of Printpack associates will

reach retirement age within the next 15 years, where the increased of use of internal resources for design

and delivery of training intervention will be needed in order to cover successfully retired associated. These

circumstances can be seen in table S21.

Table S21, Printpack Financial Realities, and Exchange Rate: 1.3 per pound (Unit: thousand Euro, %)

NET SALES 81322.8 100.00

MATERIAL COST 45542.9 56.00

TOTAL SALES - MATERIAL COST 35779.9 44.00

Direct Labour 13968.5 17.18

Indirect Labour 3773.9 4.64

TOTAL LABOUR 17742.4 21.82

OPERATING MARGIN 2515.5 3.09

INCOME BEFORE TAXES ADJUSTED 2515.5 3.09

INTEREST CHARGE 55.9 0.07

INCOME BEFORE TAXES + INTEREST CHARGE 2571.4 3.16

Diff :- Overheads , Depreciation etc 15466.1 19.02

D.PEAT / EDGAR RICHARDSONS REPORT 428.35 0.53

CASH IN HAND + LOANS + ST HELENS INVESTMENT + SHAREHOLDERS FUNDS 24557.4333 30.20

CASH IN HAND -508.1916667 -0.62


75 / 235

Profit Impact by Scenario

Most of all, employing a different manufacturing technique can allow Printpack highest cost effectiveness.

Under current Printpack Realities a short-term change in cost structure of its operation may have low spike

due to increase in raw material costs as well as a rise in other costs neutralizing its market share and giving

advantage for local converters.59 So for the time being Printpack continues to suffer in making profits in the

market.

However, with its heavy dependence on heavy raw materials, if Printpack implements a better SCM, it will

not only lower costs in production and in/out logistics, but also produce a better customer intimacy,60 given

that the ultimate goal of SCM is to maximize value creation while minimizing costs. Based on our analysis

and interview, the cost comparison between suppliers group is like the situation showed in table S22.

Table S22 Supplier Comparison: PET Thin Film (12 Micron)

Firm Quality

Price (Coronated, Euro per Kg)


Service Brand Value

DuPont (High)

100 100(2.1+/- 10%) 60,000 (77,000) High High

SKC Kolon

96 95

95 (1.9 +/- 10%) 93 (1.8 +/- 10%)

93,000 (113,000) 60,000 (150,000)

Middle Middle

Jindal 90 85 (1.7 +/- 10%) 70,000 Low Low

Chinese Firm

70 - - Not rated Not rated

Source: Supplier’s interviews and Korean packaging association and companies web sites

Within the breakdown of table S22, we comprehend that:

4. Products with Chemical Treated is around 10% higher than corogated

5. Fair Prices as in half of 20007

6. Quality is based on product uniformity and easiness for printing

Printpack realties in the sense of price per unit (table S23) gives an idea about Printpack’s overall costs over

supplying films.

59

. To curb the diminishing competitive advantage, the existing players should have invested in defining the future of their businesses. Investments in R&D and careful diversification would prove to be a key in such a scenario. 60

. M. Treacy and F. Wiersema (1993) Customer Intimacy and Other Value Disciplines, Harvard Business Review, January-February.

76 / 235

Table S23 Packaging Film Quote on Printpack Exchange rate: 1.3 Euro/pound

Suppliers Brand Usage Price

Pence (Pound) Euro

Exson Mobil (OPP)

17MB400 Clear OPP 2.24p/m2 1.31/kg

38LL247 Voided white label film 3.95p/m2 2.31/kg

36MO747 White coated biscuit film

8.23p/m2 4.82/kg

Dupont (PET)

Mylar813 Clear PET 3.10p/m2 1.81/kg

Treofan (OPP)

LTD35 Clear label film 4.84p/m2 2.83/kg

WND30 Solid white 4.45p/m2 2.6/kg

Average Price (as of ¼ quarter 2008) £1.92 / kg(45 sq m/kg = 4.26 p/m2)

2.496 / kg (45 sq m/kg = 0.05538 Euro/m2)

Source: interview with Printpack Realities

As a result of such benchmark and as we discussed in previous chapter, if Printpack comes to utilize middle

ranged cost supplier, a substantial profit adjustment might occurs as we can see in table S24.

Increase in Operational Profits

Table S24 other costs (Distribution, marketing, and in-bound logistics, etc.) are considered fixed.

Cost Factors Original Cost Structure Percent Amount

Changed Cost Structure Percent Amount

Raw Material Costs - film costs - others

56.0 20.4 35.6

45,542.9 16574.7 28950.9

53.9 18.4 35.6

43832.0 14963.4 28950.9

Labour Costs 21.8 17742.4 19.6 15968.2

*Other Costs 19.1 25291.4 19.1 25291.4

Profits 3.1 2515.5 7.4 6017.9

Source: Printpack realties and assumptions made

Seen in table S24, the operational profit of Printpack is only 3.1%. If Printpack makes 10% cost reduction of

film and labour (respectively 20% and 21.8 % of total costs) the operational profit will change to 7.4% from

3.1%. Considering the industry feature, the increase in profit is large enough to change its business

structure as leading one. If cost deduction in in-bound logistics and stock management from the

effectiveness in SCM is to be calculated, the profit level will be much higher. Besides, SCM may create other

additional benefits by increasing customer intimacy.

77 / 235

6. Competitive landscape analysis

This section offers an overview of the competitive landscape by analysing the overall situation of

companies in Europe together with the study of successful cases in Poland and Germany. Ultimately, we

aim to offer Printpack insights on a wide variety of business models presented in both markets which can

be seen as a reference point with regard to how Printpack can structure itself in its expansion to mainland

Europe.

6.1. Competitive landscape in Europe

As of 2006, the European market for flexible packaging was estimated to be worth about € 9.29 b61 in sales

value. With a turnover of approximately £ 60 m in 2006 Printpack UK occupies 1% of the European market.

The Western European market currently represents 88.4% with an average projected growth of about 1%

per year over the next ten years. In contrast, the Eastern European market accounts for only 11.6% of the

total European market, but has an astonishing growth potential ranging from 2.8% for the Czech Republic

to 9% for Russia. 62 Figure CE 1 shows the size of the main markets in Europe and their related growth rate.

61

The world, flexible packaging market 2006, PCI report 2006. 62

The world, flexible packaging market 2006, PCI report 2006.

Figure CE 1 : European Competitive Markets

€ 85 m3% € 85 m3%

Total market size

(05)

Market share growth

(05-06)

Total market size

(05)

Market share growth

(05-06)

€ 135m.1% € 135m.1% € 400 M9.6% € 400 M9.6%

€ 130 m5% € 130 m5%

€ 108 m2.8% € 108 m2.8%

€ 64 m8.1% € 64 m8.1%

€ 2,080 m-0.1% € 2,080 m-0.1%

€ 2,870 m.7% € 2,870 m.7%

€ 1,245 m.4% € 1,245 m.4%

€ 160 m2.2% € 160 m2.2%

Total

market size

(05)

Market share growth

(05-06)

Total

market size

(05)

Market share growth

(05-06)

Source: The world, flexible packaging market, 2006, PCI report 2006.

78 / 235

A groundwork analysis was carried out63 on a sample of 72 subsidiaries of packaging competitors across

Europe64. This analysis highlights the position of Printpack’s financial turnover / profit in the European

competitive landscape (see Figure CE 2) . Figure CE 2 demonstrates that the majority of companies of that

sample experienced low profit margin levels, a result also applicable to Printpack.

In a final presentation65, the study of the European competitive landscape, enlarged to a wider sample,

reinforces this scenario (see part 3.3 of this report). Figure CE 3 shows Operating Revenue versus profit

margin for the year 2006. It indicates the high number of subsidiaries with near-zero profitability, a clear

sign of the challenges faced by the packing industry in Europe.

63

Results presented at MBS to both the faculty and Printpack on February 14th

2008. 64

This study was prepared as a main theme for the intermediate report on February 14th

in order to validate the approach to be used in the final report. The first test was carried out with 72 companies obtained from Database AMADEUS based on NACE CODE in Printing and plastic manufacturers across Europe.

65 Complementary results presented at MBS to both the faculty and Printpack on April 7

th 2008.

AMCOR FLEXIBLES TRANSPAC BE

AMCOR FLEXIBLES FRANCE

VAN HESSEN B.V.

ALCAN PACKAGING FLEXIBLE FR

VAASSEN FLEXIBLE PACKAGING

B.V. NL

GOGLIO S.P.A. O INFORMA ESTESA GOGLIO

LUIGI MILANO S.P.A.AMCOR FLEXIBLE

S UK LTD

AUTOBAR GROUP

LTD GB

TSCHEULIN-

ROTHAL GMBH DE

ALUFLEXPACK D.O

.O. HR

BURGERS-FLEXIPRINT B.V. NL

PRINTPAC

K UK

AMCOR FLEXIBLES TRANSPAC BE

AMCOR FLEXIBLES FRANCE

VAN HESSEN B.V.

ALCAN PACKAGING FLEXIBLE FR

VAASSEN FLEXIBLE PACKAGING

B.V. NL

GOGLIO S.P.A. O INFORMA ESTESA GOGLIO

LUIGI MILANO S.P.A.AMCOR FLEXIBLE

S UK LTD

AUTOBAR GROUP

LTD GB

TSCHEULIN-

ROTHAL GMBH DE

ALUFLEXPACK D.O

.O. HR

BURGERS-FLEXIPRINT B.V. NL

PRINTPAC

K UK

Figure CE 2 : European Operating Revenue / Profit

Source: Amadeus Data base and author’s analysis

79 / 235

Another useful aspect to look at is the spread of packaging group subsidiaries across Europe. Figure CE 4

shows a high concentration of subsidiaries in the largest national markets (UK, Germany, France and Italy).

We think that this situation is likely to change as companies seek diversification of plant activities in order

to remain competitive. We also observe in figure CE4 that 3/23 groups (Alcan, Amcor, Huhtamaki, Mondi)

operate in 10 or more national markets.

Now in order to better understand the implications of this study, we are going to evaluate two samples,

specifically in Poland and Germany.

Figure CE 3 : Profit Margin


Figure CE 4 : Geographical Spread


80 / 235

6.2. Competitive landscape in Poland

The scatter plot CP 1 below compares operating revenue and profit margin performances of Polish

packaging subsidiaries. The packaging industry areas are identified according to NACE code66.

Some aluminium production subsidiaries generate exceptional operating revenue. These are the aluminium

subsidiaries of the KETY group. The paper and paper board subsidiary generating exceptional operating

revenue and profit margin for 2006 is the mother company of MONDI packaging. Considering the scope of

Printpack’s flexible packaging activities we focused on identifying competitors’ subsidiaries a generating

profit margin and operating revenue within the flexible plastic packaging industry. We then identified how

those competitors and their subsidiaries performed in the Polish market. We looked at understanding the

product offering, the customer segment served, the technological capabilities, the latest expansion

activities and the geographical reach.

66

NACE Code stands for Nomenclature Generale des Activites Economiques dans I`Union Europeenneis and it is the European Standard code for Industry Classifications. Introduced in 1970 and revised in 1990 and 2002, our current version. Source: Thomson’s Ellis Publications

Scatter Plot CP1

Source: Amadeus data base

81 / 235

• Packaging market size

Datamonitor values the total output of plastic packaging for 2005 as PLN 4.89b. This represents a total

value output of € 1.1 b to €1.6 b (05 exchange rate 1€ = PLN 4.39 07 exchange rate around €1 = PLN 3.5).

The 36 subsidiaries represented in the sample population (see appendix CP5) had a value of € 1.43 b in

turnover for the year 2005.67

• A market dominated by few

The sample consists of 19 branded companies. 10/19 branded companies generate below 2% revenue

sample share (200%). The sample is dominated, by 8 branded companies in revenue terms for year 2005

(Graph CP 2). Two subsidiaries dominate 60% of the sample (in 2005 revenue terms). The Mondi group

dominates 36% of the sample size and the KETY group dominates 24% of the sample size (refer to Appendix

CP 1). Euromonitor68 also indicates that the market is dominated by 10 flexible packaging manufacturers in

Poland. These include the Grupa Kety, Amcor Flexibles Polska Sp zoo, Mondi Bags, Lielec Sp zoo and

Constantia.

• Global, pan-European or local Polish players

Within the sample, 6 of those 8 dominant players are global or pan-European players (Mondi, UPM,

Huhtamaki, Amcor, Constantia and Nordenia). 2 of these 8 dominant players are present in the Polish

market only (Grupa Kety and Ergis). This seems to indicate that the Polish market’s competitive landscape is

dominated by a few large international competitors and two local Polish competitors. The rest of the

67

Packaging Poland, Euromonitor International : Country Market Insight, March 2007 68

Packaging Poland, Euromonitor International Euromonitor International : Country Market Insight, March 2007

Graph CP 2 : Market sample representation Polish Packaging Manufacturers

Source: Amadeus Data Base – Refer to Appendix CP1

23.94%

8.75%

4.67%

11.76%36.06%

3.46%

4.41%

2.47%

2.38% MONDI PACKAGING SP ZOO

GRUPA KETY S.A.

UPM SP. Z O.O.

HUHTAMAKI POLSKA SP. Z O.O.

AMCOR POLSKA SP. Z O.O.

CONSTANTIA SP. Z O.O.

NORDENIA

ERGIS - EUROFILMS S.A.

Others

82 / 235

market, around 11% of our sample is occupied by competitors with less than 1% share. On average, these

groups generated operating revenue in 2005 of € 16m. Those groups generating between 2% and 5%

revenue share an average €46 m in operating revenue in 2005 (see appendix CP1)..

• Insight 1: consolidation of the packaging industry

Poland has seen strong economic growth, particularly since 2004 when Poland signed the final ratification

and integration treaty into the EU. The Polish real GDP has grown at a 6.6% rate in 2006 compared to a

3.9% rate in 2003 69. The country has seen its foreign direct investment inflows triple from 17,847 PLN in

2003 to 43,000 PLN in 200670. Concurrently, the packaging industry has seen intensification in the

incorporation of subsidiaries in the last decade (Table and graph CP3).

As illustrated in table and graph CP 3, out of 36 branded packaging subsidiaries studied (see Appendix CP 4

for sample definition), 1.62 subsidiaries have been incorporated per year between 1992 and 2005

compared to 0.20 subsidiaries incorporated between 1947 and 1992.

We think this is a sign of a more intense level of corporate consolidation from 1992 to 2005. In fact,

“Intensifying competition is increasingly leading to market consolidation and key participants such as

Amcor and Alcan have acquired smaller companies with speciality products that offer good revenue

potential.” 71

In fact, in our population a total of 7 subsidiaries have been incorporated between the year 2001 and 2005.

69

Poland country fact file, Euromonitor International, 2007 70

Poland country fact file, Euromonitor International, 2007 71

Databases selected: ProQuest European Business, Plastics Offer a Wealth of Possibilities to the Food Packaging Market, PR Newswire Europe Including UK Disclose. New York: Feb 20, 2006.

Table and graph CP3

83 / 235

Amongst these are the Alcan, Amcor and Mondi groups. The Mondi group has incorporated 3 subsidiaries

in paper whilst the other groups have incorporated 1 also in paper. Moreover, between 1992 and 2005,

5/23 subsidiaries were plastic packaging incorporated plants whilst 10/23 subsidiaries were incorporated

paper packaging plants.

• Findings

Printpack Europe is currently looking to expand into mainland Europe. Its Poland plant is projected to start

operating mid 2009. In this context, we have identified competitors which not only generate high revenue

in a given year but also generate high growth. This was done with the aim to support the understanding of

the competitive environment which Printpack is looking to penetrate. The profit margin and its growth

were studied as an indicator of the operational performance. The operating revenue and this growth were

studied as an indicator of the revenue generated by competitive groups. These subsidiaries and their

mother groups were identified for the distinguishable competitive characteristics they could represent to

Printpack as it expands into continental Europe and Poland.

• Packaging industry per area expertise

From the identified complete sample, we find that 67% of all subsidiaries (see appendix CP2) cluster in

three packaging industries. Table and graph CP4 focus on these subsidiaries. The scatter plot shows that

subsidiary of the sample cluster in three packaging industry areas: that of metal (> 27XX NACE industry

code72), that of plastic (25XX NACE) and those of related paper and printing industry activities (21XX and

22XX NACE). 9 out of 13 of those companies operate in the plastic-related industries (NACE code 25XX).

Although registered under the plastic industry code, all of them also have printing technological capabilities.

Moreover, from table CP4 we see the operating revenue range in 2006 per packaging industry area. The

average operating revenue across those three packaging industry subsidiaries is €24.7 m for 2006. Those

operating in the plastic-related manufacturing activities averaged operating revenue of €29.4 m in 2006.

Those subsidiaries operating in plastic-related manufacturing also experience the widest range in operating

revenues in 2006. Those operating in the paper-related manufacturing activities averaged the highest

operating revenue of €29.2 m in 06. Amongst these, the only subsidiary in the sample which operates in

metal packaging generated operating revenue of € 19.7 m.

72

NACE Code stands for Nomenclature Generale des Activites Economiques dans I`Union Europeenneis and it is the European Standard code for Industry Classifications. Introduced in 1970 and revised in 1990 and 2002, our current version. Source: Thomson’s Ellis Publications

84 / 235

• Insight 2: hard competition for revenue generation amongst plastic packaging subsidiaries.

The number of subsidiaries registered under the plastic packaging industry NACE code is greater than the

number of subsidiaries registered under the paper industry NACE code (see table CP4). The average profit

margin in 2006 for plastic subsidiaries is 3.51% lower than that of paper packaging subsidiaries at 7.07%.

Both the lower profit margins (see table CP4) of plastic subsidiaries and their higher number suggests that

there may be saturation for improved operating profit margin despite greater revenue generation in plastic

packaging subsidiaries.

• Insight 3: lower revenue generation for subsidiary in flexible packaging printing only

From table CP4 we see that 1 subsidiary is registered in the printing packaging industry only. It is Skanem

Introl SA and generates operating revenues of € 20.6m in 06. This is lower than for subsidiaries operating in

either the plastic or paper packaging industries (see table CP4). The profit margin of Skanem Introl SA, at

6.95% in 06 of the single printing packaging industry players, is ¾ points away from the average 06 profit

margin of subsidiaries registered in the paper packaging industry. In fact, Printpack UK is also registered

under printing packaging manufacturers, where its core capabilities lie. This also suggests that, despite

comparatively strong profit margin generation, the operating revenue prospects for those operating only in

the printing packaging industry may be lower.

NACE number of subsidiaireis

number of branded companies

maximum minimumLight metalpackaging

(2872 NACE) 2 1

€ 19.70 m8.33

Plastic goods (25XX NACE) 12 11

€29.4 m € 84.4 m Huhtamaki (SIEMIANOWICE SLASKIE)

€ 2.4 m NORDENIA POLSK (SWAROZYN)

4.21

Paper packaging

(21XX NACE)

8 3 € 27.8 m € 43.9 mAmcor Rentsch Polska SP. Z O.O.

€ 18.7m Mondi (BRZEZNO)

6.03

Printing packaging

(22XX NACE)

1 1 € 20.6 m 6.95

Average operatingrevenue 06 / NACECODE Range

Skanem Introl S.A. (TARNOWO PODGORNE)

€ 19.70 m Constantia Colorcap SP. Z O.O. (JEJKOWICE)

Source: Amadeus Database

Table CP 4 : Packaging industry per area expertise

Average profit margin 06 (%)

85 / 235

• Revenue generation and profit margin

The scatter plot CP5 shows the subsidiaries’ operating revenue according to profit margin in the year 2006.

Within the 36 subsidiaries, the average operating revenue 06 is € 24.7 m with a 4.8% profit margin 06.

GROUP A

Those subsidiaries in quarter A generate both high revenue and high profit margin for year 2006 (see table

CP 5). These include subsidiaries of 2 groups The Constantia Teich subsidiary in KLESZCZOW with € 25.5 m

operating revenue and 6.15% profit margin, the Mondi subsidiary of MSZCZONO with € 26.2m operating

revenue and 6.9% profit margin.

B A

D C

Scatter plot CP 5:


Mondi

UPM

Grupa Kety - aluminium

AutobarMondi

Amcor - LodzMondi

NordeniaKety

Schur

Lindpack

ConstantiaMondi

Bojanek

Emsur

UPMSkanem

-10.00 -5.00 0.00 5.00 10.00

Profit Margin 06 (th)

0.00

25000.00

50000.00

75000.00

100000.00O

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Mondi

UPM

Grupa Kety - aluminium

AutobarMondi

Amcor - LodzMondi

NordeniaKety

Schur

Lindpack

ConstantiaMondi

Bojanek

Emsur

UPMSkanem

-10.00 -5.00 0.00 5.00 10.00

Profit Margin 06 (th)

0.00

25000.00

50000.00

75000.00

100000.00O

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86 / 235

Table CP6

Location NACE code

Date of inc.

# of employees (06)

Operating Revenue (th EUR 2006)


Op profit margin 06

%

Op profit margin 05

% Products

Technological capabilities

Customer

MONDI MSZCZONO (1/11 subsidiaires in Poland with 8 in paper related and 1 in plastic (Baniocha)

2121 1997 125 26,218 23,065 5.90 10.28Paper corrugated cardboad

? ?

Constantia Teich KLESZCZOW

2522 140 30,179 25,072 7.79 6.15

Labels, laminted lids, laminated foils for packaging, trays and dishes,

Lamination, printing, slitting, metalisation, roto and flexo

Large international food manufactuers in confectionery, dried food such as Unilver (Knorr soup) , Kraft food (Lu) packages (source: web site below), Dairy, Confectionery, Pet Food industry, as well as for international Pharmaceutical companies.

http://www.constantia-tp.com/tp/index.php?page=2&menu=2

Poland Plants

The Constantia Teich KLESZCZOW plant manufactures plastic packaging goods (see table CP7). It serves

large intentional customers and some medium-size players. It serves both food manufacturers and the

pharmaceutical industry. It has a dedicated sales team for each customer sector. It offers a wide product

range which includes aluminium-coated lids, labels, films. Its capabilities are laminating, slitting, printing

and aluminium-coating. The plant also has an R&D centre. The plant belongs to the Constantia group. This

Constantia group has production plants across the globe with a European concentration of 19/22 plants

across 8 EU countries.

Table CP7

Mondi Global paper, plastic

coating for labels

2.5 acquisitions in Europe (Pland and 2 Austria) Acquisition of BRZEZNO in 2000 (paper) and BYSTRZYCA KLODZKA in 2002 (paper) - Modernisation of Swiece plant (corregated board) - Acquisition of AltrapackPoland

Confectinoary, Dried food, cosmetics and

hygene

http://www.mondigroup.com/desktopdefault.aspx/tabid-919/

Constantia (Austria based)

Global

Plastic flexible packaging and

labels, Paper and corrugated board,

Aluminium

2007 - announces possible furhter participation in Danpak flexible Danemark (manufactures flexible packaging products for the dairy, food and pharmaceutical industries)

Constantia Flexibles: Food, Beverages &

LablesPharma / Healthcare

http://www.constantia-packaging.com/english/content_4.asp

Who Geographical reachPackaging Industry

Activities M&A Activity

Customer and/or market segments

The MONDI MSZCZONO subsidiary operates in paper packaging (see table CP7). It is interesting to note that

the Mondi group has plants in both quarters A and B of scatter plot CP5. The Mondi group is the leading

packaging competitor on the Polish market. In our sample it occupies 45.5% of the operating revenue

shares (in 2005, see appendix CP1) and knows how to generate above average revenues, operative revenue

growth and profit margin growth across its subsidiaries. It draws its revenue from paper and plastic

87 / 235

packaging activities, with above average revenue growth and revenue generation for the year 2001-2006

for three of its five paper packaging plants. It has grown to add 2 acquired Polish packaging plants which

also manufacture plastic in the last five years. Both are registered in the paper-packaging industry

(BRZEZNO 2000 and BYSTRZYCA KLODZKA 2002).

• Insight 4: Some large competitors serving international food manufacturers generate high revenues

and high profit margins.

Here we distinguish 2 competitor strategies, generating high revenue and high profit margin. Both groups

are cost-driven and serve large international food manufacturers. Yet, on one hand, the Mondi strategy

focuses to deliver “exceptional value to our customers”73 and it expands through rapid acquisitions. On the

other hand the Constantia group is also focused on innovation and serves an extended customer base,

particularly in the pharmaceutical industry.

GROUP D

Those in quarter D (see scatter plot CP5) generate below average operating revenue and below average

profit margin. The Nordenia Swarozyn plant with € 2.2 m operating revenue is noticeable for generating

the lowest operating revenue and the lowest profit margin (see scatter plot CP5).

The NORDENIA Swarozyn plant, with much specialised manufacturing (see table CP8) produces flexible

plastic bulk containers74 and serves the chemical industry, food industry and pharmaceutical industry. The

Swarozyn plant belongs to the Nordenia group. The group has been acquired in 2006 by Oak tree capital

management. In 2007, along with 14 other European companies the EU condemned the Nordenia group to

a € 39.1 m ban for fixing prices in industrial plastic packaging75 (see table CP9).

Location NACE code

Date of inc.

Number of employees 06



Op profit margin 06

%

Op profit margin 05

% Products


Customer

Nordenia Swarozyn (Poznan)

2522 (2)

1996 200 2,437 2,226 -4.11 0.33

flexible bulk containers for the international and Polish markets

?

Chemical industry, Food industry, Pharmaceutical industry

Table CP8 Poland Plant

73

http://www.mondigroup.com/desktopdefault.aspx/tabid-293 74

http://www.nordenia.com/company,company_id-lang,6-en.html (accessed 010408) 75

Source: 1 November 2007, EUR-Lex (c) European Communities 2007, FACTIVA

88 / 235

Table CP9

Nordenia (German holding group)

Global plastic (flexible packaging,

2006 - New main shareholder of the group : Oak tree Capital Management has purchased a 90% share in flexible packaging and technical film manufacturer Nordenia Group. This will allow the group to expand in these areas. *

chemical industry, food industry and pharmaceutical industry

http://www.nordenia.com/index,lang,en.html *1 April 2006, Nonwovens Industry, ISSN: 0163-4429;

Packaging Industry Activities

M&A ActivityCustomer and/or market segments

Who Geographical

reach

GROUP C

Those subsidiaries in quarter C generate below average operating revenue and higher than average profit

margin (see scatter plot CP5). Amongst those are the Constantia JEJKOWIC plant, the Constantia KLESZCZO

plant, the EMSUR plant in PLOCHOCI with € 25.2 m operating revenue and 4.74% profit margin, the

Nordenia Dopieno plant,and the Skanem plant, with operating revenues of € 17.9 m in 06 and profit margin

of 6.96%.

Skanem group (Sweedish but HQ in Oslo)

Pan European (14 plants)

Product marking and identification -self adhesive labels

Expansion to Thailand 2007 (Skanem Thais up Bangkok factory deal, 30 September 2007, Company Reports, source FACTIVA)

Food, beverage, personal care, homecare, automotive, industrial, pharmaceutical



Who Geographical

reach

Table CP10

Location NACE code

Date of inc.

Number of

employees 06


Operating Revenue(t

h EUR 2005)

Op profit margin 06

%

Op profit margin 05

% Products


Customer

SKANEM INTROL S.A. (TARNOWO PODGORNE)

2222 1982 160 20,670 17,930 9.20 9.49Self adhesive labelling

Rotoflex , Exposure devices, pre-press, Plates preparation , Flat bed dies production,Computer assisted inks preparation

Health & Beauty, Household chemicals, Food, Beverage, Pharmaceuticals

Source: http://www.skanem.com/index.html?infoPage=oppslag.html&id=808&siteID=28&languageCode=EN&scrollMenuID=1000985#products

Poland Plant

This plant is characteristic of those within groups which operate in a marked niche segment with limited

revenue generation but with leadership in innovation, high innovation, new market explorations and higher

profit margins.

89 / 235

The SKANEM Introl SA plant situated in Tarnowo is a printing-only plant76. The TARNOWO plant operates in

the much focused self-adhesive labelling packaging industry (table CP10). It serves a range of customers

(Health & Beauty, Household, chemicals, Food, Beverage, and Pharmaceuticals) with very focused and

innovative technologies (roto and flexo, cold and hot stamping, lamination and printing on the glue side of

the paper materials77). These technologies are supported by the mother group’s activities in machinery

production. In 1999 the company moved into new and modern premises. Since 2005, SKANEM Introl SA is

part of a larger Norwegian group (table CP10). Its activities are focused marking and identification of

products, ranging form labels to marking machines to maintenance services. Reaching a wide range of

global customers, the group operates in a marked niche product offering of the packaging market, and its

manufacturing capabilities extend to machinery. This also allows the group to constantly innovate for its

label market. The machine manufacturing also involves a possible maintenance service agreement with

customers. The group continues to expand across the world and to innovate, both technically and in its

product offering. The group has teamed up with American-based Maratech to promote environmentally-

friendly disposal of waste, particularly the recycling of silicone-coated backing paper in self-adhesive

labels78

GROUP B

Those in quarter B generated higher than average operating revenue but lower than average profit margin

for 2006 (see scatter plot CP5). Mondi plastic packaging plant of BANIOCHA shows above average revenues

for the year 2006 to € 29.6 m and also generate a profit margin growth lower than the industry average

With operating revenues of € 30 m and profit margins of 3.87% in 2006 Autobar is typical of a company

with a diversified range of capabilities and a wide range of markets, and which advertises its solution

provider capabilities.

Autobar (Veriplast)

Europe

Solution provider offering labels, shrikn sleves,

packaging

Recently acquired by Sun Capital Partners on 11/01/07

Multinationals like Nestle and Royal canin, Danone, Unilever, Craft,

Colgate and P&GSource: http://www.veriplast.pl/



Who Geographical

reach

Table CP11

76

http://www.skanem.com 77


Skanem's green scheme is working like a dream, 31 March 2007, Company Reports, source FACVTIVA

90 / 235

Location NACE code

Date of inc.

Number of employees 06



Op profit margin 06

%

Op profit margin 05

% Products


Customer

Autobar SKIERNIEWICE

2,521 1,996 200 32,855 30,122 1.16 3.87

labels, shrikn sleves, packaging

Extrusion (polystyrene sheeting) with focus on recycle products

Multinationals like Nestle and Royal canin, Danone, Unilever, Craft,

Colgate and P&G

Poland Plant

Part of the greater Autobar Packaging group, now VERIPLAST solutions (http://www.veriplast.pl/). The

Autobar Poland plant belongs to the Autobar packaging business unit (table CP11). The Autobar group has

been sold to US-based Sun Capital Partners on 11/01/07 from Charterhouse Capital Partners.79 Whilst the

Autobar Polish plant is located in SKIERNIEWICE, the rest of the group operates across 14 production sites

and 7 sales offices across Europe. The group operates fifteen production plants in 7 European countries80.

11 of its production plants are concentrated in three western European countries and the remaining ones

are in Eastern Europe. The Veriplast website advertises new label innovations, reducing the raw material

use by 30%, thus contributing to reduce CO2 footprint. The group serves principally large European and

multinational customers in the food industry, including dairy products, fresh and frozen food, butter and

margarines, pet food, personal care and hygiene. It advertises that its customer portfolio includes

multinationals like Nestlé and Royal Canin, Danone, Unilever, Craft, Colgate and P&G81. Autobar Flexible

Packaging makes consumer bags, pallet wrap, printed shrink film, food packaging, refuse bags, and

envelopes.82 It is also a vertically integrated player with its own production of PE from recycled films. The

group has recently changed image. The web site advertises the company as a solution provider (Veriplast

Flexible Solutions, Veriplast Recycling Solutions, Veriplast Decorative Solutions, Veriplast Consumer

Packaging Solutions, Veriplast Food Service Solutions). The technologies are diversified across plants and

include extrusion, converting sleeves, laminating, bag forming, flexo printing, labels, laser and PE recycling83.

79

http://www.foodproductiondaily.com/news/ng.asp?id=73272-sun-capital-autobar-plastic (accessed on 010308) 80

http://www.veriplast.pl/ 81

http://www.veriplast.com 82

http://www.foodproductiondaily.com/news/ng.asp?id=73272-sun-capital-autobar-plastic (accessed on 010308) 83

http://www.veriplast.com/fichiers_html_uk/technologies_uk.html (accessed 010308)

91 / 235

• Revenue growth and profit margin growth (see appendix CP 3)

The scatter plot CP6 shows operating revenue growth and profit margin growth. The operating revenue

growth will give an indication of the revenue generation potential. The profit margin growth will give an

indication of the operational robustness and aggressive operational growth of subsidiaries in this analysis of

those subsidiaries.

The average operating revenues generated grew by 70% over the periods 01-03 and 04-06. The average

operating profit margin grew by 70% over the periods 01-03 and 04-06 (see appendix CP 3).

15 out of 31 subsidiaries generate either profit margin or operating revenue growth above average (see

group C and B appendix CP3). 12 out of 31 subsidiaries generate neither operating margin growth nor

operating revenue growth above the average growth (see group D appendix CP3). 5 subsidiaries generate

operating revenue growth above the sample average ((see group B appendix CP3). None generates both

above average profit margin growth and above average operating revenue growth.

Scatter plot CP 6


92 / 235

• Insight 5: Competitors serving large international customers can also generate increased operating

revenues over the years (section B of scatter plot CP6)

Those 4 subsidiaries of the sample are Mondi, Amcor and Skanem and Hutmataki subsidiaries. The Skanem

plant, whilst it operates in paper and plastic with a focused production of adhesive label-printing also

generates revenues from large international food manufacturers. The web site confirms that “The Skanem

group’s focus on sales to large multinational brand name manufacturers delivered results in 2006, with a

marked increase in sales to this category.”84

The Huhtamaki plant in SIEMIANOWICE SLASKIE belongs to a larger global manufacturer of consumer and

specialty packaging serving a range of medium local customers and large international customers85. It

generated € 84.4 m operating revenues in 2006. The chairman of the board addressed the shareholders in

the following way in March 200886:

“Improved profitability is the focus of all our operations, and our previously confirmed financial targets

remain the same, such that the objective for our Earnings before Interest and Taxes (EBIT) margin is 9

percent.”

The Huhtamaki SIEMIANOWICE SLASKIE plant generated current EBIT margin is -0.84%. This confirms that

the profitability objectives of the group as a whole also apply to this plant. With a gearing ratio of 487.7%

for 2006 compared to 135% in 200587, the negative profit margin together with the increase in gearing ratio

in 2006 is probably a sign of high investment in the plant. In fact the datamonitor reports that after

undergoing an extensive restructuring process from 1999 to the fire which hit the plant in 2001,

“In 2004, Huhtamaki Polska increased its production capacity in its paper division by installing

additional machines. In 2005, the company introduced a new decoration technology (heat shrink

sleeves).”88

With such extended capabilities to a wide range of products, it can offer its customers long-term

relationship and generate higher than average revenue growth (see table CP7 and scatter plot CP6 ).

Table CP7 : Major End-Use Markets for Huhtamaki Polska Sp zoo by Pack Type 2005

Pack Type Sector Major End-Use Product Thin wall plastic containers Packaged food Ice cream, spreadable oils and fats, dairy products, ready

meals, baby food Flexible paper, flexible plastic Packaged food Ice cream Aluminium/plastic pouches Non-food Pet food Source: Euromonitor International : Country Market Insight, March 2007, Packaging Poland

84


Euromonitor International : Country Market Insight, March 2007, Packaging Poland 86

HUHTAMÄKI OYJ STOCK EXCHANGE RELEASE 31.3.2008 AT 19.00: Resolutions of Huhtamäki Oyj's Annual General Meeting of Shareholders, 31 March 2008, Hugin Press Release, (c) 2008, source : Factiva 87

Source: Amadeus Data base 88

Euromonitor International : Country Market Insight, March 2007, Packaging Poland

93 / 235

• Insight 6: operating internationally in diversified market segments and with diversified product

offerings may not necessarily be a gage of success (See group D appendix CP3)

From our sample, 13 out of 31 subsidiaries generate neither operating margin growth nor operating

revenue growth above average (See group D appendix CP3). All belong to international (pan-European or

global) packaging groups. Within these 13 subsidiaries, 1 operates in paper only, 6 operate in plastic and/or

paper whilst others operate in diversified packaging industries. 1 out of 7 registered paper subsidiaries

generate low performances (see appendix CP3).

From this, we gather that there is not necessarily any causal relationship between packaging groups which

operate internationally, within many packaging market industry areas, with aggressive acquisition

strategies and reaching to international food manufacturers as a gauge of success for every plant in the

Polish market. This may indicate a comparatively higher number of plastic packaging subsidiaries

generating both low profit and low operating revenue growth.

We also suggest that both these observations may suggest a sign of high competitiveness pressured by

operational difficulties to improve performance (low profit margin growth). We think this may also be a

sign of current close-to-saturation environment for improved profit margin in the plastic packaging industry

(see insight 1). This is confirmed by specialised trade magazine articles like that of European Plastics News

Vol. 34 No. 9 which states that89

“The plastics conversion sector is undergoing consolidation as major suppliers and powerful end

users and brand owners continue to put pressure on margins of plastic converters. Particularly

facing tough pressures are the packaging producers who are highly dependent on materials pricing

and very much exposed to global brand owners. Through consolidation, polymer converters can

survive the difficult market by building their operation scale and focusing on activities that can

provide long term growth.”

Whilst these subsidiaries generated low profit and revenue growth they actually generated strong revenue

above the sample plastic industry average operating revenue of € 29.4 m the year 2006 (see appendix CP2

and CP3 group D), with Constantia Kezcow generating € 30.17 m, Autobar Skierniewe € 30.1 m, Linpac

Brezeg € 20.7m, Nordenia Dopieno € 33 m and Nodenia Swarozyn € 2.43 m and Mondi Swiecie € 33.6m.

We also think that this may be an indication that a certain revenue level of around € 30 m needs to be

generated before above-average profit margin growth is generated.

89

European Plastics News Vol. 34 No. 9, 11 October 2007, European Plastics News 36-37 34, English (c) 2007 Elsevier Engineering Information, Source: Factiva

94 / 235

Nordenia Swarozyn is the subsidiary which generates both lowest operating revenue growth of – 0.01% and

lowest profit margin growth of 0.15% and the lowest operating revenue in 2006 at €2.43m. The Nordenia

group had grown through acquisition In 2006. It was acquired by investment management group Oaktree90.

On November 1 2007, the group was condemned together with 16 European manufacturers by EU for price

cartel fraud on industrial plastic packaging under the Valv Plast Association. The financial sanction amount

to the second highest (out of four) financial sanction91, that is of € 39.1m. This represents 5.42% of these

annual group revenues for year 2006 (€ 720 m92).

• Insight 7 : The business expansion model of dominant competitors suggests the strength obtained from

the synergies of their rapid expansion (group C in scatter plot CP 6).

The Mondi and Alcan (see the example above of Alcan packaging Slotow) are groups which expand by

acquisition and consolidation of technological capabilities. Rapid continuous expansion in continental

Europe by acquisition could benefit the market opportunities in Printpack’s continental European

expansion.

The Alcan group acquired the former Parkside flexible in 2005 (now Alcan Packaging Zlotow). This is a good

example of growth by rapid expansion through acquisition. The Alcan group has not only acquired the

plant but also invested in new technological capabilities. This may have supported, we think, the profit

margin growth. In fact, the subsidiary (Parkside flexible) was formerly registered under the industry code

2222 (printing). After the Alcan acquisition the subsidiary was registered under the industry code 2121

(paper and paperboard). This is a sign of the expansion to reach greater market segments. The Alcan

Packaging Zlotow subsidiary generated lower than industry average operating revenue for the year 2005.

Whilst the average revenue for those paper packaging-related industry subsidiaries (NACE21XX) is € 29.2 m,

the Alcan Packaging Zlotow generated operating revenues of € 11.9 m and sales of € 11.4 m in 2005. Whilst

the profit margin grew negatively during the years 2001-2005, it grew to a higher 8% in 2005 after the plant

was acquired by Alcan. This profit margin of 8% also coincides with the technical capabilities expansion

from printing only to the paper industry. Both the acquisition by the diversified industrial group Alcan and

the expansion of technological capabilities have contributed to the profit margin growth for the Alcan

Packaging Zlotow subsidiary.

90

European Plastics News Vol. 34 No. 9, 11 October 2007, European Plastics News 36-37 34, English (c) 2007 Elsevier Engineering Information, Source: Factiva 91

1 November 2007, EUR-Lex, French, EUR-Lex (c) European Communities 2007, 20051130 Décision de la Commission du 30 novembre 2005, Source : Factiva 92

Amadeus data base

95 / 235

� Insight 8: competitors with a certain level of revenue show robust growth

It is interesting to note that in our sample, out of 13 subsidiaries registered in the plastic packaging industry,

4 generate operating revenue above average and growth above average. In our sample, the average profit

margin growth and the operating margin growth is 70% year on year over the 2001-2006 period (see

appendix CP3). The average operating revenue generated for subsidiaries registered as plastic packaging

manufacturers (and related) is around € 25 m (see appendix CP3). We think this may suggest that a certain

level of operating revenue at a certain level also generates profit margin growth of a certain level. We think

that, in the current context of a raw material price pressurised market, this may suggest that a certain level

of revenue should be generated to gain above-industry average growth.

• Implications for Printpack

Considering that 5/7 international plastic packaging groups observed grew by aggressive expansion,

generating either higher revenue growth or higher profit margin growth (see appendix CP3),

Considering the observed concentration of the packaging revenue share with a majority of groups occupies

less that 3% revenue share and generates on average € 20.5m in year 2005 (see CP1), together with the

intense consolidation activity,

Considering the observed average profit margin in 2006 for plastic subsidiaries at 1.82% lower than that of

paper packaging subsidiaries at 6.03% but generating higher average revenues (see table CP4),

Considering that in our sample 13/36 subsidiaries generate neither operating margin growth nor operating

revenue growth above average (See group D appendix CP3) and 6 operate in plastic and/or in paper whilst

others operate in a combination of other packaging industries,

Considering that the observed 9 / 13 plastic and printing registered subsidiaries generating revenue above

€ 30m also generate above 60% operating revenue growth,

We are aware of Printpack’s expansion into mainland Europe with a plant due to open commercially in

Poland mid 2009. We think that Printpack must be aware of the diverse strategies adopted by its

competitors in the Polish market and the implications in terms of revenue generation and possible

operating margin potential. This a complex environment, dominated by two major players, Alcan and the

Kety group (see appendix CP1). In this environment some competitors serve large food manufacturers with

a more value added and cost driven approach, others focus on a hyper-specialised product offering whilst

96 / 235

the third group offers a range of products with emphasis on bringing one stop shop solutions to customers.

Some, like the Mondi group in Poland, serve large food manufacturers with a cost-driven approach. The

Mondi Solec BANIOCHA plastic packaging plant in Poland generated operating revenues of € 29.6 m in 06

and a negative profit margin of -6.51%. It grew its operating revenues by 37% over the period 2001-2006

and improved its profit margin by 107% over the same period. With an international food manufacturer

customer base, its current technological capabilities and product offering, the Mondi group and its Solec

BANIOCHA plant illustrate the case of a direct competitor to Printpack’s production capacity in Poland. The

Mondi Solec BANIOCHA serves international food manufacturers, with technological capabilities in

lamination, printing and slitting. It produces packaging monofilms and laminates printed in flexo or

rotogravure technology93. The plant has generated slow operating revenue growth and profit margin

improvements over the period of 2001-2006.

Competitors like the UPM group and the Skanem group are niche product manufacturers in the plastic

packaging industry. Both groups have extensive international (UPM) and European (Skanem) reach and

serve large international customers and medium-size local customers. The Skanem Polish plant is in

TARNOWO PODGORNE and the UPM RAFLATAC Polish plant is in Warsaw. Both plants generate slow

operating revenue growth. The UPM RAFLATAC Polish plant grew operating revenue by 41% and the

Skanem plant by 47% over period 2001-2006. Both groups improved profit margin by around 4% over the

same period. Both plants generate revenues of around € 17m for the year 2006 and profit margins of 7%.

Both groups are backward integrated with activities in the paper industry with paper mills and forestry.

Considering the specialised plastic packaging activities in labels both of these plants illustrate examples of

potential competition to Printpack’s Poland plant and plans to expand into Europe.

Others service customers with a complete service offer. They are a one stop shop with extended technical

capabilities, product offering and market integrated solutions offerings. One of those competitors is

Autobar (Veriplast). It is a solution provider in the sense that it can offer a wide range of product solutions

to its customers (see table CP11). Moreover, the Polish plant makes strong operating revenues of € 32 m in

2006 and profit margin of 1.16%. It grew operating revenue by 47% and negatively improved profit margin

by -107% in the period 2001-2006. The plant and the group is an example of a group acquired by an

investment management house with aggressive ambitions across Europe. In this sense, the similar

customer base, technological capabilities and product offering, and particularly the geographical span of

such groups, represent direct aggressive competition for Printpack’s expansion across mainland Europe.

93

http://www.mondigroup.com/desktopdefault.aspx/tabid-919/ (accessed on 04/04/08)

97 / 235

6.3. Competitive landscape in Germany

Despite being one of the largest packaging markets in Europe, the €2,315million German market has

witnessed a low growth rate over the last decade, with 10 companies controlling over 50% of the market94.

The chart below shows the relative position in our sample of the largest companies presented in the

Germany packaging market. The information is available in terms of Operating Revenue in the year 2006.

These companies belong to larger groups with presence in several segments of the market. Alcan for

instance, Nordenia and Huhtamaki are some of the largest European competitors. More details in the

appendix CG2.

Figure C2

11.76%

11.13%

10.12%

7.31%

5.98%

5.18%

4.79%

4.79%

95.50%

ALCAN HOLDINGS GERMANY GMBH

AMCOR FLEXIBLES HELIO FOLIEN GMBH

UPM-KYMMENE SALES GMBH

UPM-KYMMENE PAPIER GMBH & CO. KG

ALCAN SINGEN GMBH

SCHÜTZ MONTLINGEN GMBH & CO. KG

HUHTAMAKI ALF ZWEIGNIEDERLASSUNG D.HUHTAMAKI DEUTSCHLAND GMBH & CO. KGHUHTAMAKI DEUTSCHLAND GMBH & CO. KG

Others

94

PCI Report

98 / 235

Figure C3 shows the information “Year of Incorporation” over the period between 1835 and 2005. This

information reveals the number of subsidiaries acquired (or incorporated) by mother entity groups in a

specific year. This is an important indicator of intensity of business activities.

As we can see from the chart, the number of companies incorporated until the sixties was fairly stable at

around 1 company incorporated each year. This level reached a peak at the beginning of the nineties, with

6 companies from our sample incorporated every year, decreasing again in 1992. It shot up again towards

the end of the decade, but it fell to levels similar to those of the seventies, stabilizing since 2001 in two

companies per year.

Figure C3

One hypothesis that we could raise from the previous chart is that a reduction in the frequency of

companies incorporated each year might suggest a slowdown in the level of investments in the

manufacture of packaging in the German Market. This result is corroborated by our desk research which

shows large companies such as Alcan closing some of its manufacturing concerns in Germany, such as Alcan

Roth and Alcan Muhltal in November 2005 95

• Analysis

From Figure C4 we can see differences in magnitude of Operating Revenue and profit margin according to

the NACE code of each company of the sample. There are companies classified in a wide variety of

95

PCI

99 / 235

activities such as Wholesale of other household goods, management activities of holding companies or

Aluminum manufacturers with operating revenues at around 1½ billion Euros, a range that is not suitable

for analysis, taking into account the scope of our project, which is to search for feasible models for

Printpack in Europe. Therefore, we aim to assess companies whose operating revenues are below 200

million Euros, a more feasible range considering today’s Printpack realities.

Figures C4

8580757065605550454035302520151050-5-10-15-20-25


1,500,000

1,250,000

1,000,000

750,000

500,000

250,000

0

Op

era

tin

g R

eve

nu

e 2

00

6 t

h E

uro

Manufacturer of corrugated paper and paperboard and of containers of paper and paperboard

Manufacturer of plastic plates, sheets, tubes and profiles

Wholesale of other household goods

Manufacturer of pulp

Other business activities

Wholesale of other household goods

Other wholesale

Manufacturer of wood containers

Manufacturer of plastic packing goods

Printing n.e.cManufacturer of plastic packing goods

Management Activities of holding companies

Wholesale of chemical products

2840

Alumnium production

Packaging activities

Alumnium production

Other business activities

100 / 235

• Findings

Our first task was to look at companies’ operating revenue in million Euros in the year 2006 relative to

profit margin for the same period. After cross-matching Operating Revenue and Profit margin for the year

2006 we obtained 24 cases. From Figure C5 we can see four distinct groups.

In the first group, there are companies with Operating Revenue below the average of 87 million Euros and

average profit margins of 6%. In the second group, there are companies with below average Operating

Revenue, but with a superior profit margin, above 6%. In the third group, there are companies with a high

level of Operating Revenue, or levels above 87 million Euros, but with a profit margin below 6%. Finally, in

the fourth group, we have 1 company with an Operating revenue and Profit Margin above average

Figure C5

12.0010.008.006.004.002.000.00-2.00 Profit Margin (%) 2006

175,000

150,000

125,000

100,000

75,000

50,000

25,000

0

VEREINIGTE PAP

SEALED AIR VER

DETTMER VERPAC

SEALED AIR VER


TILLMANN VERPA

MOOSMANN GMBH

GIZEH VERPACKUDY-PACK VERPAC

CPC HAFERKAMP

AVI GESELLSCHA

MONDI PACKAGIN


ALCAN ALUMINIU

WALKI GMBH

UPM RAFLATAC G

UPM - KYMMENE

HAENDLER & NAT

SAFIC - ALCAN

D

A B

C

Operating Revenue 2006

(th Euro)

101 / 235

Group D

Amongst the companies of group D are Mondi, Nordenia and Bemis, all large players. Considering that the

majority of companies are in this quadrant, 17 out of 24 cases or almost ¾ of cases, we could already

indentify how challenging it is for these subsidiaries to attain an above-average profit margin with

operating Revenues below 87 million.

Group C

Nevertheless, only a minority is managing to achieve superior returns with a similar level of operating

revenue: companies such as Sealed Air and Dettmer Verpackungen. The first has a different range of

capabilities relative to Printpack, providing packing systems, machines and related technical assistance, far

beyond Printpack’s core capabilities.

Yet, Sealed Air is an interesting case to evaluate as they compete in several segments where Printpack

competes. As an example, they provide printable shrink for the food segment such as cheese, coextruded

structures for condensed milk and yoghurt base and they offer an extend variety of products for the fresh

ready meal and take-way food, segments that are becoming increasingly relevant according to

professionals interviewed in Germany. However, the fundamental reason that we kept Sealed Air in our

sample is that, from our search of company information96, we identified a wide range of services and

products along with their high profit margins, which led us to hypothesize that their backwards integration

in the value chain, offering a complete packaging solution, might be their guarantee of creating value

added and thus achieving a superior return.

Dettmer Verpackungen Administration

The other company with operating Revenue around 65 million

Euros is Dettmer Verpackungen. They are present in several

food segments such as dairy, poultry and snacks and non-food

segments such as detergent hygiene and industrial films. Their

printing capabilities are also considerable. They offer 9 CNC-controlled printing machines in total with an

annual print of about 400 million running meters of packaging films. According to them97, the fact that they

are capable of producing their own printing plates offers them flexibility and independence. Indeed they

use flexibility as a promotional tool which suggests that the company is driving their Brand positioning on

this attribute in their market place.

96

http://www.cryovac-retailpartners.com/eu/de/index.htm 97

http://www.dettmer-verpackungen.de

102 / 235

We cannot draw a direct causal relationship between their above average profit margins and their

marketing claims for flexibility. However, based on our findings in the field research we could say that this

is certainly a well-positioned strategy as it is one of the recurrent themes we have observed in the field. As

we can see in the words of the professional from the Ferrero company:

““I do not deal directly with suppliers, but what I can say is that they have to be flexible to work together in

new programmes and projects. I have also seen large equipment that can attend to us when we need to

change requirements quite rapidly. For instance, we may come up with a change in the production line for a

specific label for Finland and the supplier has to be able to answer to those requirements on a large scale at

short notice.”

Professional from Trade Department

Ferrero

Frankfurt, March 5th 2008

Group B

Continuing our analysis of Operating Revenue and related profit margin, we have UPM Raflatac with high

levels of Revenue and therefore scale, yet unable to reach above average returns.

As a Finnish forest group, UPM Raflatac has developed expertise in areas such as RFID and labeling. The first,

although promising, is an area still under development and not fully commercially explored, information

obtained in our conversations with Printpack’s managers. Labeling, that is profitable for Printpack, is the

focus of UPM as well. However, the subsidiary has below average profitability. Could this be a sign that the

market on specific technical solutions such as labeling only might be a very narrow perspective in terms of

customer requirements which have to deal with all the other demands for their packaging needs? This is a

subject that requires a more in-depth analysis on the theme. However, as we go to an analysis of the top

right-hand side of chart C1, we can identify a company which is very well positioned in terms of profit in our

sample and offers an extended variety of services and products for very well focused segments.

103 / 235

Wrap-around labels Crate labels Paper labels

Group A

Haendler & Natermann comes in third in our ranking of the highest profit margin, but with higher operating

revenue than others. The company has achieved a 9.33 % profit margin, a high volume for Operating

Revenue at around 137 million Euros.

Haendler & Natermann Plant - MÜNDEN

Haendler & Natermann is part of the Constantia group (More

details in Appendix CG3). As we saw before, we already

identified in our field research across Germany the strong

presence of Constantia amongst potential customers,

particularly because of high levels of conversion rates - which

basically means all customers who acknowledged knowing

the company had a relationship with them.

We aim to investigate now key information such as Plants Location, Technological capabilities and Market

segments.

Haendler & Natermann have a wide range of products in their portfolio. Their plant location has a historical

reason as it has been in MÜNDEN since 1835, a city with a long history of trade, crafts and shipping

industries.

As an example of what they provide in each segment, in terms of Labeling, they produce from paper labels,

plastic wrap-around labels, crate labels to Aluminum bottle-neck amongst others.

104 / 235

Plastic packaging Shrink sleeves Coldform

They have technical capabilities for shrink sleeves and plastic packaging for food and the non-food industry.

They also offer products to dairy and Food segments and the pharmaceutical industry

In terms of technological capabilities, the company offers the following range:

� Cast extrusion (film extrusion)

� Deep drawing

� Die cutting

� Embossing

� Extrusion

� Extrusion coating

� Flexography

� Lacquering

� Laminating

� Metallizing

� Offset printing

� Reel cutters

� Rolling

� Rotogravure printing

� Sleeving

� Thermoforming

� UV-Flexo printing

Their major clients in the Food manufacture business are Arla Foods, Campinas, Carlsberg, Coca Cola,

Danone. Heineken, Kraft, Lindt, Tetrapak and Unilever.

105 / 235

One of the key elements of Haendler & Natermann is that the company has presented a robust financial

performance not only at a specific point in time such as the one we observed for the year 2006; they also

managed to improve their profit margin consistently between period I and II by almost 144 %.

Figures C6

365.00

315.00

265.00

215.00

165.00

115.00

65.0015.00

-35.00

-85.00

-135.00

-185.00

-235.00

-285.00

-335.00

-385.00

Growth Profit Margin (%) 2001:2003 to 2004:2006

44.00

40.00

36.00

32.00

28.00

24.00

20.00

16.00

12.00

8.00

4.00

0.00

-4.00

-8.00

-12.00

-16.00

-20.00

-24.00

-28.00

-32.00

-36.00

-40.00

-44.00

Gro

wth

Op

era

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ev

en

e (

%)

20

01

:200

3 t

o 2

004

:20

06

BEMIS PACKAGIN

BEMIS PACKAGIN

FIELD ROTOPACK

CPC HAFERKAMP

TILLMANN VERPA

CPC HAFERKAMP

SEALED AIR GMB

SCHÜTZ GMBH &

HEYNE & PENKE

SEALED AIR GMB

AMCOR PET PACK

ROTOPACK BÜNDE

WALKI GMBH

GIZEH VERPACKU

AVI GESELLSCHAMONDI PACKAGIN

BISCHOF & KLEI

BISCHOF & KLEI

HAENDLER & NATMONDI PACKAGIN

NORDENIA INTER

NORDENIA INTER

MONDI PACKAGIN

ALCAN INTERNAT

BUNZL VERPACKU

Haendler & Natermann has not sustained their Operating Revenue level, which decreased slightly over the

period. However, the growth rate of its profit margin has increased three times faster than its nearest

competitor in the second period (2004:2006) relative to the first period (2001-2003).

Again, we can not define a straight line between their financial results and a set of specific causes, but,

considering the outstanding financial results, we note that they are a company with a wide product range

along with a clear strategic focus on profitable segments: namely Dairy & Food, Pharmaceutical and labels -

all in all, it seems that the model is working, at least in financial terms.

In addition, this is a model of company that fits with trends I have observed not only in desk research

where I could identify signs that Food and beverage manufacturers are increasingly purchasing more for

their different product lines from one supplier98. I could also identify in the field work similar information,

such as from Ludwig, which has reduced the number of suppliers considerably in the last 10 years.

98

Packaging: An opportunity to cash in By Rebecca Bream, FT.com site Published: Nov 05, 2003

106 / 235

Costs

Another important finding in our analysis is that in terms of Costs of Employees per Operating revenue,

Figure C7, we have three clear levels of companies. The first group, led by Bemis and followed by Alcan,

managed to sustain this figure at around 5 to 8%.

The other level, where Alcan is also presented with some of its subsidiaries, is companies with costs around

10 to 20%.

At a third level, there are Haendler & Natermann and CPC with costs around 25%. These were companies

more historically integrated in the German system as they were primarily family-owned.

Figures C7

35.00

30.00

25.00

20.00

15.00

10.00

5.00

0.00

Co

sts

of

em

plo

yee

s/o

pe

r. r

ev.

(%)

20

06

35.0030.0025.0020.0015.0010.005.000.00

Costs of employees/oper. rev. (%) 2001

GIZEH VERPACKU

WALKI GMBH

MONDI PACKAGIN

ALCAN KAPA GMB

ALCAN ALUMINIU

HAENDLER & NAT

CPC HAFERKAMP

CPC HAFERKAMP

AVI GESELLSCHA

BEMIS PACKAGIN

BEMIS PACKAGIN

ALCAN-ALUMINIUALCAN ALUMINIU

R Sq Linear = 0.91

Bemis, which claims to have an operational management excellence99, indeed appears to manage costs

down as we can confirm by looking at their costs per employees relative to operating revenue, which is the

lowest of the sample. Conversely, Haendler & Natermann managed to increase its profit margin while

keeping a high level of costs per employees per operating revenue.

99

www.bemis.com

107 / 235

Correlation

We also ran a statistical test to verify whether or not there was a correlation in terms of Solvency Ratio,

Data of incorporation, Profit Margin growth and Operating Revenue growth. The objective was to identify

the strength of relationship between these relevant variables.

We can see from Figure C8.a, a positive correlation between profit margin growth and Solvency Ratio

Growth100. Considering that, according to table C8.b, the average profit margin of the companies of the

sample decreased 18% with an increase in solvency ratio of 13%, we deduce that an increase in liabilities

must have followed these results.

All in all, the overall financial deterioration of the companies of the sample together with the lower number

of new incorporated companies introduced yearly defines an overall scenario that is not very attractive for

those companies.

Figure C8.a

Correlations

1 -.146 -.382* .041

.397 .028 .747

95 36 33 65

-.146 1 .669** -.017

.397 .000 .923

36 36 33 34

-.382* .669** 1 .253

.028 .000 .155

33 33 33 33

.041 -.017 .253 1

.747 .923 .155

65 34 33 65

Pearson Correlation

Sig. (2-tailed)

N

Pearson Correlation

Sig. (2-tailed)

N

Pearson Correlation

Sig. (2-tailed)

N

Pearson Correlation

Sig. (2-tailed)

N

Date Date ofIncorporation

Solvency_Growth GrowthSolvency Ratio (%)2001:2003 to 2004:2006

ProfitMarg_Growth Growth Profit Margin (%)2001:2003 to 2004:2006

OpRev_Growth GrowthOperating Revene (%)2001:2003 to 2004:2006

Date Date ofIncorporation

Solvency_Growth Growth

SolvencyRatio (%)

2001:2003 to2004:2006

ProfitMarg_Growth

Growth ProfitMargin (%)

2001:2003 to2004:2006

OpRev_Growth Growth

OperatingRevene (%)

2001:2003 to2004:2006

Correlation is significant at the 0.05 level (2-tailed).*.

Correlation is significant at the 0.01 level (2-tailed).**.

Table C.9.b

Descriptive Statistics - Growth Rates N Range Minimum Maximum Mean

ID 95 Date of Incorporation 95 248 1757 2005 1972Growth Operating Revene (%) 2001:2003 to 2004:2006 65 128% -38% 90% 10%Growth Profit Margin (%) 2001:2003 to 2004:2006 33 476% -332% 144% -18%Growth Current Ratio (%) 2001:2003 to 2004:2006 26 181% -99% 82% 1%Growth Return on Shareholders funds (%) 2001:2003 to 2004:2006 35 848% -530% 318% -18%Growth RCE (%) 2001:2003 to 2004:2006 30 439% -102% 337% 30%Growth Solvency Ratio (%) 2001:2003 to 2004:2006 36 2248% -837% 1411% 13%Growth Costs of Employees/oper.rev.(%) 2001:2003 to 2004:2006 31 68% -16% 52% 5%

The table above describes growth rate in % in Operating Revenue, Profit Margin, Current Ratio, Return on

Shareholder Funds, Return on Capital Employed, Solvency Ratio and Costs of Employees per Operating

100

Solvency Ratio=After Tax Net Profit+ Depreciation / Long term Liabilities + Short Term Liabilities measured between 2001:2003 to 2004:2006

108 / 235

Revenue. Growth was identified calculating the average between years 2001 to 2003 relatively to the

average between years 2004 to 2006.

According to Figure C9, we can see that the most profitable company was the one with the longest date of

incorporation of the sample.

Figure C9

20152005

19951985

19751965

19551945

19351925

19151905

18951885

18751865

18551845

18351825

1815

Date of Incorporation

3.00

2.00

1.00

0.00

-1.00

-2.00

-3.00Gro

wth

Pro

fit

Ma

rgin

(%

) 2

00

1:2

00

3 t

o 2

00

4:2

00

6




Printing n.e.c

Manufacturer of paper and paperboard





Other retail sale in non-specialized stores



Whosale of other household goods


Manufacturer of Plastic ProductsManufacturer of Pulp

2840

109 / 235

• Implications for Printpack

Considering that:

o ¾ of the companies of the sample have an operating revenue and profit margin below average,

with 87 million Euros 6% respectively

o Companies with a profit margin superior to 6% and operating revenues below 87 million Euros are

present in segments non-related to Printpack’s core competencies

o Companies that presented superior levels of revenue with low level of profit margin relative to the

average have relatively a narrower product portfolio

o The company with a high level of profit margin and the highest margin growth acts as a solution

provider to the client in a well integrated package with a clear market focus

o Companies that managed to be profitable in segments with low value added are the ones which

have backwards integration in the value chain

o Ability to structure one’s operational process towards flexibility as a key driver in the market

o Low costs per employees and new assets are not necessarily a guarantee of higher profitability

Although we are aware that Printpack is not aiming to build physical installations in Germany and therefore

the extent to with those insights can be fully applied are limited, particularly in terms of costs and asset

structure, the review of the German Landscape is necessary because the company will compete in a mature

and highly sophisticated market where existing companies are more familiar with their market place and

still struggling to sustain high levels of profit margin.

For that reason, regardless of the final decision about the most suitable strategic model for Printpack, the

company must be aware that in order to compete successfully in the German market Printpack has to

consider the complexity of the environment, with competitors adopting a wide variety of different business

models to sustain their strategic goals.

110 / 235

Notably, two companies that proved able to achieve a superior margin present themselves as solution

providers. In the case of Sealed Air, its offer is rooted in the ability to support a wide range of products with

technical assistance and proprietary technology possible only by backward-integrated companies.

In the second case, H&M from Constantia Group, the solution comes from the ability to offer a wide

product range, an appealing offer for customers looking for more synergies amongst their diversified

business lines, which in turn lead to companies having a relationship with fewer suppliers.

A third option is also noticeable here. The Finnish company UPM is strongly driven by product innovation

throughout its protective labels and RFID. In this case, however, the company appears to be facing one of

the adverse effects of the product leadership strategy: not being able to fully capitalize on its new product

– RFID, which is not totally commercially viable yet - in order to offset the slowdown of its old portfolio

(paper) and the limited scope of its current portfolio (labelling) – In terms of packaging, labelling is only one

of the aspects of manufacturer requirements.

All in all, these business models are a stimulating example to Printpack as to how packaging companies can

shape themselves in a vast number of ways to face the challenges of the German market.

111 / 235

7. Recommendations

After collecting and analyzing key insights gained through interviews of potential customers, analysis of the

competitive landscape and the supply chain we suggest three possible non-exclusive strategic options for

Printpack. These options are based on segments of customer value requirements: Low cost provider in

Poland, service provider for national companies in Germany and Poland and product innovator for

multinational units based in Germany

7.1. Low cost provider in Poland

One of the strategic options we suggest is that Printpack be a “low-cost provider”. We suggest this means

that Printpack could aim to be a converter with one of the lowest prices on the market. It is important to

note that the term low-cost provider does not necessarily mean low-quality provider. From our field

research in Poland, we found that Huhtamaki, Mondi and Amcor are serving quality materials to large

multinational food customers like Nestlé and Unilever at competitive prices.

Key insights from business discussion

1. From the field study in Poland, 7 of the 11 companies interviewed mentioned cost as the key

determinant in selecting packaging suppliers provided an acceptable quality level is met. These 7

companies included 3 of the 4 multinationals companies and 4 national companies.

As a low cost provider with prerequisite quality attained levels, we recommend Printpack should focus on

serving multinational companies. Serving multinational customers would allow Printpack to require fewer

accounts and obtain larger sales volumes, as shown in figure R1.

Figure R1 Market share of multinational and national companies

Source of underlying data: Euromonitor Segment report 2007

Furthermore, through our Poland field research, we have collected information indicating that purchasing

decisions are made at regional level for all multinational companies interviewed (except for Cargill).

Cumulative market share of multinational and national companies

0.00%20.00%40.00%60.00%80.00%

100.00%120.00%

Cho

cola

teco

nfec

tione

ry

Sug

arco

nfec

tione

ry

Gum

conf

ectio

nery

Dog

& c

atfo

od

Drie

dpr

oces

sed

food

Product Segment

Cu

mu

lati

ve M

ark

et

Sh

are

National companies

Multinational companies7 8 3 5

>15 >12 >16 >24

4

>5

112 / 235

Considering this information, we suggest Printpack could leverage on its existing relationships with

multinationals in the UK and the US.

In such a scenario in which Printpack would serve multinational customers in Poland, we estimate the

flexible plastic packaging spend of multinational customers in Poland across selected product segments to

be around 82 Million Euros per annum. Using the performance of Amcor’s and Mondi’s plants in Poland as

a benchmark for Printpack expected market share, we estimate that Printpack could gain sales8.8 million

Euros sales from serving multinationals across confectionery, dried processed foods, and pet foods

segments.

Table R2: Market potential in Poland from multinational customers in selected product segments

Country Rationale Product segment

Customer type

Market size and expected sales101

Poland

To address the problem of limited market knowledge and relationships in the Polish market, Printpack could leverage on its relationship with multinationals in the UK and US

Confectionery, dried processed foods, and pet foods

Multinational customers

Spend on flexible plastic packaging by multinationals across these selected segments is estimated to be 82 Million Euros. Estimated potential sales for Printpack is 8.8 Million Euros

102 (assumed that

market share is 10.8%)

Source: Field research, underlying data from Eurominotor and MBS student team’s analysis

How can Printpack be a low cost provider in Poland ?

There are several ways in which we suggest Printpack could achieve this option, these include:

• Reducing material costs

• Reducing labour costs

• Improving its production efficiency

After a better understanding of some of the challenges for the Printpack UK plant, we understood that raw

material costs account for about 56% of Printpack UK’s overall costs (see table R3). Thus, we recommend

in our analysis that Printpack could benefit reducing its raw material cost. Moreover, low wages in

Poland103 will be an advantage for all converters that have plants in Poland. With regard to improving

operational efficiency, we also suggest that operational equipment efficiency gains could 104 be more easily

101

See appendix R1 for details on the calculations and assumptions for the market size and Printpack’s estimated sales 102

See appendix R2 for the benchmarking calculations in Poland 103

Stanley Sacharow (April 2006) “Global Giant”, www.pffc-online.com, pg 44-50, Frost & Sullivan (December 2005) “Western European Markets for Plastics in Flexible Food Packaging”, www.frost.com, B687-39, Joanne Hunter (September 22 2005) “Flexible pack prices must be increased” Packaging magazine Vol. 8 Issue 17 104

Factors that determine Overall Equipment Effectiveness is equipment failures, setup and adjustments, idling and minor stoppages, reduced speed operation, scrap and rework and startup losses. Two of these factors can be eliminated or minimised by using new machines. (www.oeetoolkit.nl - OEE Toolkit is a registered trademark of Blom Consultancy.)

113 / 235

implemented in the newly starting Poland plant, its machineries and processes to be installed.

Table R3 Increase in Operational Profits

Cost Factors

Original (Source: Printpack) Impact by 10% Reduction of Film Costs

Percent Amount Percent Amount

Raw Material Costs 56.0 45,542.90 48.2 43,868.13

- film costs 20.4 16,574.70 16.4 14,917.23

- others 35.6 28,950.90 31.8 28,950.90

Labour Costs 21.8 17,742.40 19.5 17,742.40

*Other Costs 19.1 25,291.40 27.7 25,291.40

Profits 3.1 2,521.13 4.6 4,195.90

Source : *other costs (Distribution, marketing, and in-bound logistics, etc.) are considered fixed.

Printpack realties and assumptions made

To reduce raw material costs, we suggest Printpack could consider using film manufacturers such as SKC

and Kolon. As shown in table R4 these suppliers have a comparable film quality and a lower price compared

to that of Printpack’s current suppliers, Exxon Mobil and Dupont.

Table R4 Cost comparison among film suppliers

Firm (Level) Quality Price (Coronated, Euro per Kg)


Service Brand Value

DuPont 100 100(2.1+/- 10%) 60,000 (77,000) High High

SKC Kolon

96 95

95 (1.9 +/- 10%) 93 (1.8 +/- 10%)

93,000 (113,000) 60,000 (150,000)

Middle Middle

Jindal 90 85 (1.7 +/- 10%) 70,000 Low Low

Chinese Firms

70 - - Not rated Not rated

Source: Referring to table S22 Supplier Comparison: PET Thin Film (12 Micron)

Supplier’s interviews and Korean packaging association and companies web sites

As shown in table R3 above, by reducing costs of film by 10%, the company’s operational profit could gain

1.5% from 3.1% to 4.6%.

Challenge

In such a scenario, the challenge for Printpack is that multinational food manufacturers are forming strong

relationships with high-priced high-quality film manufacturers in order to enjoy cost benefits105. This makes

it difficult for Printpack to negotiate on price with these film manufacturers or even switch to less

expensive film manufacturers. Furthermore, the strategy of being a low cost supplier seems to be difficult

to sustain in the long term. Particularly given that other flexible packaging converters can easily imitate this

strategy.

105

Discussion with Printpack Reality Team on March 19, 2008 and Kraft including desk research from Euromonitor – World Packaging 2007.

114 / 235

7.1. Service provider for national companies in Germany

As a service provider, we believe that Printpack can differentiate itself more easily from other packaging

converters. The term “service provider” refers to a supplier who focuses on services related to packaging.


1. 3 out of 7 small national customers in Germany stated that services (ability to bring value added

services related to packaging) were the most important criterion for choosing a supplier.

How can Printpack be a service provider?

Printpack could provide technical assistance with material testing, production line management, packaging

graphics design and promotional packaging material concepts.

From the desk research, we found that Autobar (Veriplast), a flexible packaging manufacturer, positions

itself as solution provider106. This company offers services which it advertises as decorative solutions,

recycling solutions, consumer packaging solutions and food packaging solutions. In 2006, Autobar’s

operating revenues were € 30 m and its profit margins 3.87%, in comparison to the Poland industry average

of € 29.4 m per plant (see Poland competitor insights and appendix CP3).

The potential flexible packaging spending of national customers in Germany in selected segments107 is

estimated at 298 Million Euros per year.

Using Field Rotopack and Cellpack Packaging as benchmarks for achievable market share, the estimated

sales volume Printpack could achieve from serving these customers is 2 – 16 Million Euros per year.108

The Challenge

Currently within the industry, some of the value-added services suggested above are already provided free

of charge. In such a scenario, we think that one of the challenges for Printpack would be to develop

superior services within these suggested areas in order to attract a fee. Furthermore, it could take some

time for Printpack to penetrate the relationship the national companies have with their suppliers, as the

insights suggest that national companies in German tend to prefer proximity and close contact with existing

suppliers. The requirement for additional skill developments or investment could also be a challenge for

Printpack.

106

Please refer to the section on Competitor Landscape Poland 107

We refer to confectionery, biscuits, breakfast cereal and pet foods. We did not include potential sales from baked goods as majority of the material used in baked goods is clear plastic film which is out of Printpack’s focus. 108

See appendix R4 for benchmarking calculation in Germany

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7.2. Product innovator for multinational units based in Germany

From discussions with the Printpack leadership team, we suggest that a product innovator is a supplier who

is always at the forefront of developing new products and processes while at the same time maintaining a

high level of quality.


1. Multinational customers like Nestlé and Ferrero in chocolate confectionery in Germany favor

enhancement of product requirements over other product development requirements (especially

for premium products).

2. The field study in Germany showed that Nestlé looks for new material types and technologies to

help differentiate their products on the shelf. As stated by Nestlé in confectionery, “It is a

differentiated factor to have a supplier who has an advanced research centre to collaborate on new

packaging development”.

3. During our supermarket visit in Germany, we observed cheese packaged in thin-wall plastic

containers rather than in the usual flexible plastic packaging. Thin-wall plastic containers offer

better protection to the contents and are more convenient to use. The packaging does not tear and

can easily be resealed, thus guaranteeing freshness of the products.109 Innovations have recently

been made in plastic snap-on style lids that are pressed into the thin-wall plastic container,

ensuring better re-sealability compared with peel-off plastic. We also observed confectionery

products in pouches.

4. In Poland, Meiszko noted that it valued suppliers that are at the forefront of packaging innovation.

According to Euromonitor Chocolate Confectionery 2007, Meiszko’s success in 2007 was attributed

largely to its new product development. Meiszko’s strategy is to be quick at bringing innovation

into the market.

The insights from the field study suggest that multinational companies in Germany are more interested in

suppliers that can innovate product packaging. We estimate the spend on flexible plastic packaging by

multinational customers in Germany in selected product segments110 to be 308 Million Euros per year as

shown in table R5. From our sample in Poland, Mieszko was the only company which confirmed a keen

interest in benefiting from product innovation initiated by its suppliers. .Thus we cannot draw conclusions

based the product innovation value requirement in Poland based Mieszko only.

109

Euromonitor, Food Packaging – Germany, October 2007 110

Refer to pet foods, confectionery, biscuits and breakfast cereal. We did not include potential sales from baked goods as majority of the material used in baked goods is clear plastic film which is out of Printpack’s focus.

116 / 235

Table R5 Estimated spending on flexible plastic packaging in Germany in selected product segments

Germany (2006) Potential packaging

usage (Million Euros)

Spending on flexible plastic packaging (Million Euros)

Multinational National Total

Dog and cat food 198 61 54 119

Chocolate confectionery 558 172 105 307

Sugar confectionery 205 62 55 125

Gum 55 1 0 1

Biscuits 152 0 66 68

Breakfast cereal 61 12 17 31

Total 1,229 308 298 651

Source: MBS student team’s analysis, underlying information from Euromonitor database. See appendix

R3 for details of calculation and assumptions.

How can Printpack be a product innovator?

We suggest that Printpack could consider extending its research capabilities or forming strategic

partnership with research institutes.

Challenge

Even though multinational customers in Germany are attractive in terms of market size, there are risks

associated with being a product innovator. Some of these risks include: uncertainty of investment scope,

new product failure, uncertainty of profitability and limited current resources of R&D for Printpack Europe.

The three options of the above discussion are suggested a possible strategic paths as Printpack expands

into mainland Europe.

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Appendix PSD1 Project scope and deliverable agreement

PROJECT SCOPE AND DELIVERABLES AGREEMENT International Business Project: Collaboration between Printpack and Manchester Business School Review the European Strategy of an international manufacturing company as it expands into mainland Europe. DEFINITION The project is to review the European Strategy of an international manufacturing company as it expands into mainland Europe. PROJECT SCOPE The scope of the project is to identify profitable market segments in Europe.

AIM These recommendations from our research will provide Printpack with insights for its European strategic development. These insights will allow evaluating the market segment potential gains for Printpack identifying: • Potential market share in a given market segment and area • Range of business volume (in sales) • Number of potential accounts required to achieve the expected sales volume • Expected sales volume and profit for a given level of marketing effort and cost structure • The type of technical capabilities and services that are required to remain competitive for a given

market segment and geographical area • Information (for example, identification of customer’s current suppliers, services offered, technical

capabilities) regarding previously identified competitors. METHODOLOGY Four Printpack sub-teams have been set up to gather and analyze information regarding customers, competitors, up-stream value chain and company realities. The MBS students will integrate with the customers, competitors and up-stream value chain sub-teams in supporting each team to assess the areas below and provide some ideas for the future direction of the company in Europe.

Phase 1: Review of European Strategy of Printpack across

Customers, Competitors, Company Realities and Upstream Value Chain in order to identify potential target markets (geographical and market sectors), customers, products and capability requirements

Phase 2: Field Study

Face to face interviews of identified potential costumers in selected mainland European countries and targeted segments.

This document defines the project scope and deliverables of the project entitled “Review the European

Strategy of an international manufacturing company as it expands into mainland Europe”.

Commissioned by Printpack UK to Manchester Business School. This document was signed on March 19

2008 as an agreement between both parties, Printpack and Manchester Business School , of the project

scope and deliverables. Printpack UK is represented by Mr R.Lumley, marketing and product

development director at Printpack, UK. Manchester Business School is represented by Syd Howell (MBS

Faculty) ,Nathan Proudlove (MBS Faculty), and six MBA students, Ekene Ogbechie, Caroline Dillard,

Woosik Jeung, Valdemir Oliveira, Oswaldo Mendoza, Surasak Wattanayakor.

118 / 235

Phase 3: Consolidation and recommendations

Qualitative and quantitative analysis of data collated from primary and secondary research. DELIVERABLES Outputs - Customer landscape Analysis - Insights from potential customer on future requirements, pack formats, unmet needs

- Competitor insights - Competitive landscape analysis - Supplier value area - Technology - CSR policy / actions - Sourcing plan Delivered documents - Written Report (1 paper and soft copy) - Power point presentation (1 paper and soft copy) - List of potential customers and established contact. TIME FRAME This project is carried out between the 24th of January 2008 and the 7th of April 2008. A midterm presentation will be held on the 14th of February 2008. A final presentation will take place on the 7th of April 2008. EXPENSES A budget of GBP£ 15,180 was approved by Printpack to achieve this project.

119 / 235

Appendix MCUST1a 42 product segments screening or top 5 countries in Eastern and Western Europe

Baby food

Bakery products

Bath and shower products

Beer

Bottled water

Canned/preserved food

Carbonates

Cheese

Chilled processed food

Cigarettes

Coffee

Confectionery

Dishwashing products

Dog and cat food

Dried processed food

Drinking milk products

Fabric softeners

Fragrances

Frozen processed food

Fruit/vegetable juice

Hair care

Ice cream

Incontinence products

Kitchen towels

Laundry detergents

Men's grooming products

Nappies/diapers/pants

Paper tableware

Pet care products

Sanitary protection

Sauces, dressings and condiments

Skin care

Snack bars

Spirits

Spreads

Sweet and savoury snacks

Tea

Tissues

Toilet paper

Wine

Wipes

Yoghurt and sour milk drinks

Source: Euromonitor

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Appendix MCUST1b Ranking scores of category size, growth and percentage of flexible packaging

Data point Category size Score

Size 1 0.2 1

Size 2 0.7 1

Size 3 1.2 1

Size 4 1.2 1

Size 5 2.2 1

Size 6 3.3 1

Size 7 3.9 1

Size 8 4.2 1

Size 9 6.2 1

Size 10 6.7 1

Size 11 8.5 1

Size 12 9 1

Size 13 9.1 1

Size 14 9.2 1

Size 15 11.3 1

Size 16 13.8 1

Size 17 16 1

Size 18 16.1 1

Size 19 16.4 1

Size 20 16.8 1

Size 21 20.1 1

Size 22 20.7 1

Size 23 21 1

Size 24 25.6 1

Size 25 32.4 1

Size 26 32.7 1

Size 27 34.9 1

Size 28 36.2 1

Size 29 39.3 1

Size 30 42.8 1

Size 31 47.1 1

Size 32 49.1 1

Size 33 49.7 1

Size 34 50.7 1

Size 35 56.5 1

Size 36 59.1 1

Size 37 68.7 1

Size 38 72.3 1

Size 39 74.5 1

Size 40 77.8 1

Size 41 77.8 1

Size 42 78.3 1

Size 43 78.9 2

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Size 44 79.2 2

Size 45 79.2 2

Size 46 81.4 2

Size 47 81.7 2

Size 48 84.2 2

Size 49 87.5 2

Size 50 90.8 2

Size 51 92.1 2

Size 52 92.8 2

Size 53 95.8 2

Size 54 100.5 2

Size 55 104.7 2

Size 56 105.6 2

Size 57 108.4 2

Size 58 113 2

Size 59 116.4 2

Size 60 116.5 2

Size 61 117.4 2

Size 62 121.2 2

Size 63 122.7 2

Size 64 130.6 2

Size 65 134.6 2

Size 66 139.6 2

Size 67 141.3 2

Size 68 146.9 2

Size 69 150.1 2

Size 70 152.2 2

Size 71 154.1 2

Size 72 155.2 2

Size 73 157.7 2

Size 74 161.4 2

Size 75 163.9 2

Size 76 172.3 2

Size 77 180 2

Size 78 184.4 2

Size 79 186.8 2

Size 80 187.4 2

Size 81 188 2

Size 82 190.1 2

Size 83 207.9 2

Size 84 210.5 2

Size 85 211.4 3

Size 86 212.8 3

Size 87 217.6 3

Size 88 217.8 3

Size 89 218.6 3

Size 90 218.7 3

Size 91 221.4 3

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Size 92 222.4 3

Size 93 226.5 3

Size 94 230.2 3

Size 95 234.6 3

Size 96 235.5 3

Size 97 241.2 3

Size 98 243.4 3

Size 99 244.8 3

Size 100 256.1 3

Size 101 266.1 3

Size 102 268.2 3

Size 103 268.9 3

Size 104 269.7 3

Size 105 271.2 3

Size 106 273.5 3

Size 107 292.8 3

Size 108 296.9 3

Size 109 297.5 3

Size 110 309 3

Size 111 309 3

Size 112 318.5 3

Size 113 319.7 3

Size 114 322.1 3

Size 115 322.2 3

Size 116 333.3 3

Size 117 335.1 3

Size 118 338.2 3

Size 119 338.3 3

Size 120 338.4 3

Size 121 340.8 3

Size 122 342 3

Size 123 345.2 3

Size 124 348 3

Size 125 356.4 3

Size 126 356.8 3

Size 127 359.7 4

Size 128 362.4 4

Size 129 364.7 4

Size 130 369.8 4

Size 131 370.6 4

Size 132 372.4 4

Size 133 378.4 4

Size 134 399 4

Size 135 399.6 4

Size 136 400.1 4

Size 137 400.4 4

Size 138 407.3 4

Size 139 407.7 4

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Size 140 408.1 4

Size 141 414 4

Size 142 423.7 4

Size 143 431.4 4

Size 144 434.1 4

Size 145 457.7 4

Size 146 460.8 4

Size 147 462.5 4

Size 148 478.3 4

Size 149 479.4 4

Size 150 490.3 4

Size 151 497.3 4

Size 152 508.2 4

Size 153 509.7 4

Size 154 517.5 4

Size 155 519.3 4

Size 156 521.6 4

Size 157 523.6 4

Size 158 524.5 4

Size 159 525 4

Size 160 527.3 4

Size 161 540.1 4

Size 162 540.6 4

Size 163 545.9 4

Size 164 550 4

Size 165 568.5 4

Size 166 576 4

Size 167 578.5 4

Size 168 581.6 4

Size 169 582.3 5

Size 170 593.3 5

Size 171 596.7 5

Size 172 599.3 5

Size 173 600.9 5

Size 174 606 5

Size 175 607.1 5

Size 176 620.5 5

Size 177 621.2 5

Size 178 621.6 5

Size 179 627.3 5

Size 180 644.8 5

Size 181 646.6 5

Size 182 649.7 5

Size 183 650.3 5

Size 184 650.4 5

Size 185 659.3 5

Size 186 670.5 5

Size 187 670.5 5

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Size 188 671.9 5

Size 189 673.7 5

Size 190 675.7 5

Size 191 686.8 5

Size 192 688.4 5

Size 193 689.9 5

Size 194 692.4 5

Size 195 703.6 5

Size 196 704.9 5

Size 197 707.3 5

Size 198 717.9 5

Size 199 719.6 5

Size 200 732.2 5

Size 201 737.9 5

Size 202 760.2 5

Size 203 763.1 5

Size 204 770.4 5

Size 205 773.3 5

Size 206 780.2 5

Size 207 787.9 5

Size 208 791.3 5

Size 209 793.7 5

Size 210 800.7 5

Size 211 801.7 6

Size 212 821.7 6

Size 213 830 6

Size 214 847 6

Size 215 849 6

Size 216 855.2 6

Size 217 859.6 6

Size 218 896.8 6

Size 219 907.2 6

Size 220 908.2 6

Size 221 926.4 6

Size 222 927.3 6

Size 223 930.1 6

Size 224 934.6 6

Size 225 940.9 6

Size 226 941.2 6

Size 227 957.7 6

Size 228 959.6 6

Size 229 970.6 6

Size 230 973 6

Size 231 976.3 6

Size 232 985 6

Size 233 989.6 6

Size 234 994.6 6

Size 235 1013.6 6

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Size 236 1021 6

Size 237 1027.2 6

Size 238 1049.6 6

Size 239 1065.9 6

Size 240 1073.7 6

Size 241 1089.3 6

Size 242 1120.6 6

Size 243 1129.9 6

Size 244 1134.5 6

Size 245 1172 6

Size 246 1173.9 6

Size 247 1174.7 6

Size 248 1174.8 6

Size 249 1183.6 6

Size 250 1186 6

Size 251 1196.5 6

Size 252 1202.6 7

Size 253 1227.1 7

Size 254 1235.4 7

Size 255 1293.8 7

Size 256 1297.7 7

Size 257 1302.5 7

Size 258 1306 7

Size 259 1311.4 7

Size 260 1325.6 7

Size 261 1347.3 7

Size 262 1398.7 7

Size 263 1429.6 7

Size 264 1444.5 7

Size 265 1453.7 7

Size 266 1460.5 7

Size 267 1461.6 7

Size 268 1462.5 7

Size 269 1473.2 7

Size 270 1477.9 7

Size 271 1492.1 7

Size 272 1516.2 7

Size 273 1521.8 7

Size 274 1532 7

Size 275 1555.9 7

Size 276 1571.3 7

Size 277 1579 7

Size 278 1605 7

Size 279 1611.3 7

Size 280 1622.4 7

Size 281 1623.3 7

Size 282 1641.5 7

Size 283 1656.8 7

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Size 284 1687.4 7

Size 285 1756.1 7

Size 286 1771.7 7

Size 287 1789.5 7

Size 288 1793.8 7

Size 289 1801.9 7

Size 290 1847.2 7

Size 291 1875.8 7

Size 292 1880.1 7

Size 293 1884.7 7

Size 294 1918.5 8

Size 295 1930.3 8

Size 296 1947 8

Size 297 1947.3 8

Size 298 1950.7 8

Size 299 1992.6 8

Size 300 2029.6 8

Size 301 2041.5 8

Size 302 2056.3 8

Size 303 2059.4 8

Size 304 2062.9 8

Size 305 2088.6 8

Size 306 2133.4 8

Size 307 2155.4 8

Size 308 2174.3 8

Size 309 2224.7 8

Size 310 2240.8 8

Size 311 2241.9 8

Size 312 2245 8

Size 313 2264.4 8

Size 314 2301.9 8

Size 315 2305.5 8

Size 316 2313.3 8

Size 317 2329.4 8

Size 318 2360.7 8

Size 319 2363.9 8

Size 320 2394.2 8

Size 321 2398 8

Size 322 2430 8

Size 323 2430.4 8

Size 324 2491.1 8

Size 325 2491.4 8

Size 326 2492.3 8

Size 327 2533.4 8

Size 328 2553.1 8

Size 329 2553.6 8

Size 330 2611.9 8

Size 331 2665.1 8

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Size 332 2685.7 8

Size 333 2687.1 8

Size 334 2741 8

Size 335 2761.8 8

Size 336 2783 9

Size 337 2798.1 9

Size 338 2814.8 9

Size 339 2889.5 9

Size 340 2891.5 9

Size 341 2905.6 9

Size 342 2918.4 9

Size 343 2958 9

Size 344 2998.5 9

Size 345 3036.4 9

Size 346 3054.5 9

Size 347 3104.4 9

Size 348 3150.2 9

Size 349 3163.6 9

Size 350 3224.3 9

Size 351 3229.5 9

Size 352 3256.5 9

Size 353 3280.6 9

Size 354 3310.2 9

Size 355 3334.8 9

Size 356 3415.8 9

Size 357 3428.6 9

Size 358 3522.4 9

Size 359 3572.6 9

Size 360 3708.8 9

Size 361 3753.6 9

Size 362 3811.6 9

Size 363 4012.9 9

Size 364 4049.4 9

Size 365 4068.6 9

Size 366 4284.9 9

Size 367 4473.7 9

Size 368 4523.1 9

Size 369 4595.6 9

Size 370 4595.9 9

Size 371 4651.6 9

Size 372 4671.5 9

Size 373 4754.8 9

Size 374 4828.9 9

Size 375 5067.2 9

Size 376 5308.6 9

Size 377 5402.5 9

Size 378 5555.2 10

Size 379 5649.2 10

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Size 380 5853.5 10

Size 381 5864.5 10

Size 382 6000.4 10

Size 383 6101.3 10

Size 384 6224.5 10

Size 385 6266.2 10

Size 386 6511.1 10

Size 387 6532.3 10

Size 388 6887 10

Size 389 7115.7 10

Size 390 7474.7 10

Size 391 7598.5 10

Size 392 8078.4 10

Size 393 8128 10

Size 394 8139.6 10

Size 395 8389.5 10

Size 396 8948 10

Size 397 9291.9 10

Size 398 10167.3 10

Size 399 10584.8 10

Size 400 10759 10

Size 401 11474.3 10

Size 402 12207.5 10

Size 403 12397.4 10

Size 404 12900.3 10

Size 405 13970.4 10

Size 406 14435.6 10

Size 407 14751.2 10

Size 408 15518.5 10

Size 409 16490.6 10

Size 410 16681.7 10

Size 411 17048.6 10

Size 412 18027.9 10

Size 413 18562.5 10

Size 414 18851.7 10

Size 415 18893.6 10

Size 416 20543.3 10

Size 417 22037.9 10

Size 418 22156.5 10

Size 419 25640.4 10

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Data point Growth Score

Growth 1 -1.8% 1

Growth 2 -1.1% 1

Growth 3 -1.0% 1

Growth 4 -0.9% 1

Growth 5 -0.9% 1

Growth 6 -0.9% 1

Growth 7 -0.6% 1

Growth 8 -0.5% 1

Growth 9 -0.5% 1

Growth 10 -0.5% 1

Growth 11 -0.4% 1

Growth 12 -0.2% 1

Growth 13 0.1% 1

Growth 14 0.1% 1

Growth 15 0.1% 1

Growth 16 0.1% 1

Growth 17 0.1% 1

Growth 18 0.2% 1

Growth 19 0.2% 1

Growth 20 0.2% 1

Growth 21 0.2% 1

Growth 22 0.3% 1

Growth 23 0.4% 1

Growth 24 0.5% 1

Growth 25 0.6% 1

Growth 26 0.6% 1

Growth 27 0.6% 1

Growth 28 0.6% 1

Growth 29 0.7% 1

Growth 30 0.7% 1

Growth 31 0.7% 1

Growth 32 0.8% 1

Growth 33 0.8% 1

Growth 34 0.8% 1

Growth 35 0.8% 1

Growth 36 0.8% 1

Growth 37 0.9% 1

Growth 38 1.0% 1

Growth 39 1.0% 1

Growth 40 1.0% 1

Growth 41 1.0% 1

Growth 42 1.1% 1

Growth 43 1.1% 2

Growth 44 1.2% 2

Growth 45 1.3% 2

Growth 46 1.4% 2

Growth 47 1.4% 2

Growth 48 1.4% 2

Growth 49 1.4% 2

Growth 50 1.5% 2

Growth 51 1.5% 2

130 / 235

Growth 52 1.6% 2

Growth 53 1.7% 2

Growth 54 1.7% 2

Growth 55 1.7% 2

Growth 56 1.7% 2

Growth 57 1.7% 2

Growth 58 1.8% 2

Growth 59 1.8% 2

Growth 60 1.8% 2

Growth 61 1.8% 2

Growth 62 1.9% 2

Growth 63 1.9% 2

Growth 64 2.0% 2

Growth 65 2.0% 2

Growth 66 2.0% 2

Growth 67 2.0% 2

Growth 68 2.0% 2

Growth 69 2.0% 2

Growth 70 2.0% 2

Growth 71 2.0% 2

Growth 72 2.0% 2

Growth 73 2.1% 2

Growth 74 2.1% 2

Growth 75 2.1% 2

Growth 76 2.1% 2

Growth 77 2.2% 2

Growth 78 2.2% 2

Growth 79 2.2% 2

Growth 80 2.2% 2

Growth 81 2.2% 2

Growth 82 2.2% 2

Growth 83 2.2% 2

Growth 84 2.2% 2

Growth 85 2.2% 3

Growth 86 2.3% 3

Growth 87 2.3% 3

Growth 88 2.3% 3

Growth 89 2.3% 3

Growth 90 2.4% 3

Growth 91 2.4% 3

Growth 92 2.4% 3

Growth 93 2.4% 3

Growth 94 2.4% 3

Growth 95 2.4% 3

Growth 96 2.4% 3

Growth 97 2.5% 3

Growth 98 2.5% 3

Growth 99 2.5% 3

Growth 100 2.5% 3

Growth 101 2.5% 3

Growth 102 2.5% 3

Growth 103 2.6% 3

Growth 104 2.6% 3

131 / 235

Growth 105 2.6% 3

Growth 106 2.7% 3

Growth 107 2.7% 3

Growth 108 2.7% 3

Growth 109 2.7% 3

Growth 110 2.7% 3

Growth 111 2.7% 3

Growth 112 2.7% 3

Growth 113 2.7% 3

Growth 114 2.7% 3

Growth 115 2.8% 3

Growth 116 2.8% 3

Growth 117 2.9% 3

Growth 118 2.9% 3

Growth 119 2.9% 3

Growth 120 2.9% 3

Growth 121 2.9% 3

Growth 122 2.9% 3

Growth 123 3.0% 3

Growth 124 3.0% 3

Growth 125 3.0% 3

Growth 126 3.0% 3

Growth 127 3.0% 4

Growth 128 3.1% 4

Growth 129 3.1% 4

Growth 130 3.1% 4

Growth 131 3.1% 4

Growth 132 3.1% 4

Growth 133 3.1% 4

Growth 134 3.1% 4

Growth 135 3.1% 4

Growth 136 3.1% 4

Growth 137 3.1% 4

Growth 138 3.2% 4

Growth 139 3.2% 4

Growth 140 3.2% 4

Growth 141 3.2% 4

Growth 142 3.2% 4

Growth 143 3.2% 4

Growth 144 3.3% 4

Growth 145 3.3% 4

Growth 146 3.3% 4

Growth 147 3.3% 4

Growth 148 3.3% 4

Growth 149 3.3% 4

Growth 150 3.3% 4

Growth 151 3.5% 4

Growth 152 3.5% 4

Growth 153 3.5% 4

Growth 154 3.5% 4

Growth 155 3.5% 4

Growth 156 3.6% 4

Growth 157 3.6% 4

132 / 235

Growth 158 3.6% 4

Growth 159 3.6% 4

Growth 160 3.6% 4

Growth 161 3.6% 4

Growth 162 3.7% 4

Growth 163 3.7% 4

Growth 164 3.7% 4

Growth 165 3.7% 4

Growth 166 3.8% 4

Growth 167 3.8% 4

Growth 168 3.8% 4

Growth 169 3.9% 5

Growth 170 3.9% 5

Growth 171 4.0% 5

Growth 172 4.0% 5

Growth 173 4.0% 5

Growth 174 4.0% 5

Growth 175 4.1% 5

Growth 176 4.1% 5

Growth 177 4.1% 5

Growth 178 4.1% 5

Growth 179 4.2% 5

Growth 180 4.2% 5

Growth 181 4.3% 5

Growth 182 4.3% 5

Growth 183 4.4% 5

Growth 184 4.4% 5

Growth 185 4.4% 5

Growth 186 4.4% 5

Growth 187 4.5% 5

Growth 188 4.5% 5

Growth 189 4.6% 5

Growth 190 4.6% 5

Growth 191 4.6% 5

Growth 192 4.7% 5

Growth 193 4.7% 5

Growth 194 4.7% 5

Growth 195 4.7% 5

Growth 196 4.8% 5

Growth 197 4.8% 5

Growth 198 4.9% 5

Growth 199 4.9% 5

Growth 200 4.9% 5

Growth 201 4.9% 5

Growth 202 5.0% 5

Growth 203 5.0% 5

Growth 204 5.0% 5

Growth 205 5.1% 5

Growth 206 5.2% 5

Growth 207 5.2% 5

Growth 208 5.2% 5

Growth 209 5.3% 5

Growth 210 5.3% 5

133 / 235

Growth 211 5.4% 6

Growth 212 5.4% 6

Growth 213 5.4% 6

Growth 214 5.4% 6

Growth 215 5.4% 6

Growth 216 5.5% 6

Growth 217 5.5% 6

Growth 218 5.5% 6

Growth 219 5.5% 6

Growth 220 5.5% 6

Growth 221 5.5% 6

Growth 222 5.6% 6

Growth 223 5.6% 6

Growth 224 5.6% 6

Growth 225 5.6% 6

Growth 226 5.6% 6

Growth 227 5.6% 6

Growth 228 5.7% 6

Growth 229 5.7% 6

Growth 230 5.7% 6

Growth 231 5.7% 6

Growth 232 5.7% 6

Growth 233 5.8% 6

Growth 234 5.8% 6

Growth 235 5.8% 6

Growth 236 5.9% 6

Growth 237 5.9% 6

Growth 238 6.0% 6

Growth 239 6.1% 6

Growth 240 6.1% 6

Growth 241 6.1% 6

Growth 242 6.2% 6

Growth 243 6.2% 6

Growth 244 6.3% 6

Growth 245 6.3% 6

Growth 246 6.3% 6

Growth 247 6.3% 6

Growth 248 6.4% 6

Growth 249 6.4% 6

Growth 250 6.4% 6

Growth 251 6.5% 6

Growth 252 6.5% 7

Growth 253 6.6% 7

Growth 254 6.7% 7

Growth 255 6.7% 7

Growth 256 6.7% 7

Growth 257 6.8% 7

Growth 258 6.8% 7

Growth 259 6.8% 7

Growth 260 6.8% 7

Growth 261 6.9% 7

Growth 262 6.9% 7

Growth 263 7.1% 7

134 / 235

Growth 264 7.1% 7

Growth 265 7.1% 7

Growth 266 7.1% 7

Growth 267 7.3% 7

Growth 268 7.3% 7

Growth 269 7.3% 7

Growth 270 7.4% 7

Growth 271 7.4% 7

Growth 272 7.4% 7

Growth 273 7.5% 7

Growth 274 7.6% 7

Growth 275 7.6% 7

Growth 276 7.7% 7

Growth 277 7.7% 7

Growth 278 7.7% 7

Growth 279 7.8% 7

Growth 280 7.8% 7

Growth 281 8.0% 7

Growth 282 8.0% 7

Growth 283 8.0% 7

Growth 284 8.0% 7

Growth 285 8.1% 7

Growth 286 8.1% 7

Growth 287 8.2% 7

Growth 288 8.2% 7

Growth 289 8.3% 7

Growth 290 8.4% 7

Growth 291 8.5% 7

Growth 292 8.5% 7

Growth 293 8.5% 7

Growth 294 8.7% 8

Growth 295 9.0% 8

Growth 296 9.0% 8

Growth 297 9.1% 8

Growth 298 9.2% 8

Growth 299 9.2% 8

Growth 300 9.3% 8

Growth 301 9.4% 8

Growth 302 9.5% 8

Growth 303 9.5% 8

Growth 304 9.6% 8

Growth 305 9.9% 8

Growth 306 10.0% 8

Growth 307 10.2% 8

Growth 308 10.5% 8

Growth 309 10.6% 8

Growth 310 10.7% 8

Growth 311 10.8% 8

Growth 312 10.9% 8

Growth 313 10.9% 8

Growth 314 10.9% 8

Growth 315 11.0% 8

Growth 316 11.1% 8

135 / 235

Growth 317 11.4% 8

Growth 318 11.4% 8

Growth 319 11.5% 8

Growth 320 11.6% 8

Growth 321 11.6% 8

Growth 322 11.8% 8

Growth 323 11.8% 8

Growth 324 11.8% 8

Growth 325 11.9% 8

Growth 326 11.9% 8

Growth 327 12.0% 8

Growth 328 12.0% 8

Growth 329 12.1% 8

Growth 330 12.2% 8

Growth 331 12.4% 8

Growth 332 12.4% 8

Growth 333 12.6% 8

Growth 334 12.6% 8

Growth 335 12.7% 8

Growth 336 13.2% 9

Growth 337 13.4% 9

Growth 338 13.6% 9

Growth 339 13.6% 9

Growth 340 13.7% 9

Growth 341 13.8% 9

Growth 342 13.9% 9

Growth 343 14.0% 9

Growth 344 14.0% 9

Growth 345 14.1% 9

Growth 346 14.2% 9

Growth 347 14.2% 9

Growth 348 14.3% 9

Growth 349 14.3% 9

Growth 350 14.5% 9

Growth 351 14.7% 9

Growth 352 14.7% 9

Growth 353 14.8% 9

Growth 354 14.8% 9

Growth 355 14.9% 9

Growth 356 15.0% 9

Growth 357 15.0% 9

Growth 358 15.0% 9

Growth 359 15.1% 9

Growth 360 15.4% 9

Growth 361 15.5% 9

Growth 362 15.5% 9

Growth 363 15.5% 9

Growth 364 15.8% 9

Growth 365 16.1% 9

Growth 366 16.3% 9

Growth 367 16.4% 9

Growth 368 16.5% 9

Growth 369 16.6% 9

136 / 235

Growth 370 16.6% 9

Growth 371 16.7% 9

Growth 372 16.8% 9

Growth 373 16.8% 9

Growth 374 16.9% 9

Growth 375 17.0% 9

Growth 376 17.0% 9

Growth 377 17.2% 9

Growth 378 17.4% 10

Growth 379 17.5% 10

Growth 380 17.7% 10

Growth 381 17.8% 10

Growth 382 18.1% 10

Growth 383 18.5% 10

Growth 384 18.6% 10

Growth 385 18.7% 10

Growth 386 18.7% 10

Growth 387 18.8% 10

Growth 388 18.8% 10

Growth 389 19.1% 10

Growth 390 19.4% 10

Growth 391 19.5% 10

Growth 392 19.5% 10

Growth 393 19.8% 10

Growth 394 19.8% 10

Growth 395 20.0% 10

Growth 396 20.2% 10

Growth 397 20.5% 10

Growth 398 20.6% 10

Growth 399 20.7% 10

Growth 400 20.7% 10

Growth 401 20.7% 10

Growth 402 21.0% 10

Growth 403 21.0% 10

Growth 404 21.6% 10

Growth 405 22.2% 10

Growth 406 22.6% 10

Growth 407 23.1% 10

Growth 408 23.3% 10

Growth 409 23.8% 10

Growth 410 24.2% 10

Growth 411 24.6% 10

Growth 412 24.8% 10

Growth 413 25.0% 10

Growth 414 25.3% 10

Growth 415 27.2% 10

Growth 416 28.1% 10

Growth 417 30.1% 10

Growth 418 30.5% 10

Growth 419 33.2% 10

137 / 235

Data point % of flexible packaging

Score

% of flexible packaging 1 0.03% 0.00


















































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145 / 235

Appendix MCUST1c Total weighted score by countries Western Europe

Italy Spain France Germany UK

Product segmentsTotal

weighted score

Total weighted

score

Total weighted

score

Total weighted

score

Total weighted

scoreTotal scoreConfectionery 7.7 7.2 7.6 7.1 7.9 37.5Ice cream 8.2 7.0 6.5 7.1 7.3 36.2Sweet and savoury snacks 5.7 7.3 6.2 7.8 8.3 35.3Cheese 7.6 6.9 6.2 6.5 7.2 34.3Bakery products 7.4 7.1 5.7 6.8 6.8 33.7Toilet paper 6.4 5.8 6.2 6.2 6.8 31.3Nappies/diapers/pants 6.1 6.0 6.2 6.3 6.4 30.9Incontinence products 6.1 6.0 6.7 5.8 6.3 30.8Dog and cat food 6.1 5.4 6.2 6.0 6.8 30.5Chilled processed food 7.0 5.9 6.0 5.7 5.1 29.7Wipes 5.4 6.4 5.3 6.0 6.4 29.4Kitchen towels 6.0 5.8 5.5 5.5 6.6 29.2Snack bars 6.7 6.7 4.5 3.7 6.7 28.3Sanitary protection 5.5 5.3 5.3 5.6 6.1 27.7Dried processed food 5.6 5.0 5.0 6.3 5.6 27.5Frozen processed food 6.0 4.9 4.8 6.5 5.2 27.4Pet care products 5.3 4.9 5.4 5.1 5.9 26.5Tissues 5.6 4.8 5.1 5.1 5.1 25.7Skin care 4.3 4.4 5.1 4.6 5.1 23.5Sauces, dressings and condiments 4.3 3.7 4.2 5.8 4.9 22.9Paper tableware 4.8 4.0 4.7 4.2 5.0 22.6Bottled water 4.2 5.0 3.8 5.1 4.5 22.5Cigarettes 5.2 4.2 4.2 4.4 4.2 22.0Beer 4.4 4.0 4.0 4.3 4.8 21.5Carbonates 3.9 4.1 3.7 5.1 4.4 21.1Yoghurt and sour milk drinks 4.4 4.1 3.7 4.7 3.9 20.8Bath and shower products 4.0 4.6 4.0 4.0 4.0 20.6Wine 3.8 3.5 3.8 3.8 4.8 19.6Dishwashing products 3.7 4.4 4.0 3.7 3.7 19.4Fruit/vegetable juice 3.3 3.3 3.5 4.4 4.6 19.2Coffee 3.6 2.9 4.2 4.6 3.4 18.6Canned/preserved food 3.3 4.7 3.5 3.7 3.4 18.6Drinking milk products 3.7 3.8 3.5 3.7 3.8 18.4Laundry detergents 3.6 3.4 3.6 3.6 4.0 18.1Spirits 3.2 3.0 3.9 3.4 4.3 17.8Hair care 3.7 3.9 3.3 3.5 3.5 17.8Baby food 3.9 3.8 3.7 3.4 2.9 17.7Fragrances 3.7 2.9 3.5 3.8 3.9 17.7Men's grooming products 2.8 3.5 2.8 3.1 3.9 16.0Spreads 2.8 2.9 3.2 3.0 2.3 14.1Tea 1.8 2.7 2.2 2.6 3.2 12.6Fabric softeners 2.0 2.0 1.5 2.0 2.6 10.1Average score 4.8 4.7 4.6 4.8 5.0 23.9

146 / 235

Eastern Europe Czech Poland Russia Ukraine Turkey

Product segmentsTotal

weighted score

Total weighted

score

Total weighted

score

Total weighted

score

Total weighted

scoreTotal scoreConfectionery 7.1 8.2 9.2 8.8 9.2 42.5Sweet and savoury snacks 7.7 7.6 9.4 8.9 8.2 41.8Bakery products 8.0 7.8 8.2 7.9 9.3 41.1Nappies/diapers/pants 7.5 6.9 8.9 8.1 7.9 39.3Toilet paper 7.9 7.3 8.1 7.7 7.7 38.7Chilled processed food 7.0 5.0 9.4 9.3 7.7 38.3Kitchen towels 7.3 7.5 7.7 7.9 7.3 37.7Tissues 7.5 7.3 7.7 7.9 7.1 37.5Sanitary protection 7.0 6.6 8.6 7.8 7.4 37.4Dried processed food 6.8 7.7 8.0 8.0 6.9 37.4Wipes 7.2 7.2 7.6 7.6 7.4 37.0Ice cream 5.3 6.1 8.4 8.5 7.7 36.1Incontinence products 7.2 6.6 7.4 7.4 6.6 35.2Snack bars 6.4 8.2 8.1 7.1 5.2 35.0Cheese 6.3 5.5 8.0 7.9 5.7 33.4Frozen processed food 6.3 5.3 6.9 8.0 5.2 31.7Paper tableware 6.1 5.5 6.3 6.7 6.1 30.7Dog and cat food 5.8 5.8 7.0 6.0 5.6 30.2Sauces, dressings and condiments 3.6 4.4 5.6 8.0 3.7 25.3Pet care products 4.6 4.4 5.0 5.2 4.4 23.6Drinking milk products 1.4 3.2 6.8 7.1 3.3 21.8Cigarettes 3.6 4.2 4.6 4.4 4.2 21.0Bath and shower products 3.5 3.7 4.9 4.9 3.9 20.9Baby food 3.2 3.7 4.0 4.4 5.1 20.4Dishwashing products 3.6 3.6 4.4 4.2 4.0 19.8Bottled water 2.4 3.4 4.2 3.2 3.6 16.8Carbonates 2.0 3.0 4.0 3.4 3.6 16.0Coffee 2.4 3.0 4.0 3.4 3.0 15.8Beer 2.5 2.7 3.9 3.7 2.9 15.7Yoghurt and sour milk drinks 2.0 2.4 3.6 4.0 2.7 14.8Skin care 2.3 2.7 3.7 3.3 2.3 14.3Tea 1.8 2.2 3.8 2.8 2.8 13.5Laundry detergents 2.0 1.6 3.8 3.2 2.8 13.4Spirits 2.0 2.2 3.2 3.6 2.2 13.4Fruit/vegetable juice 1.7 2.5 3.7 3.0 2.4 13.3Fragrances 1.9 2.5 3.9 2.9 2.1 13.3Hair care 2.1 2.1 3.5 2.9 2.5 13.1Wine 2.0 1.8 3.8 3.2 2.0 13.0Canned/preserved food 1.8 1.8 3.8 3.0 1.8 12.3Men's grooming products 1.7 1.9 3.5 2.7 2.3 12.1Spreads 1.7 1.9 2.9 1.9 2.7 11.0Fabric softeners 1.7 2.1 2.3 2.5 1.9 10.5Average score 4.3 4.5 5.8 5.5 4.8 24.9

147 / 235

Appendix MCUST2 Fit with Printpack’s capability

Dog and cat food High

Sweet and savoury snacks High

Bakery products High

Dried processed food High

Wipes High

Snack bars High

Confectionery High

Frozen processed food High

Ice cream Medium-high

Cheese Medium-high

Paper tableware Medium-high

Chilled processed food Medium

Nappies/diapers/pants Low-medium

Toilet paper Low-medium

Kitchen towels Low-medium

Tissues Low-medium

Sanitary protection Low-medium

Incontinence products Low-medium

Source: Discussion with Printpack

148 / 235

Appendix MCUST3 Further screening on the 11 product segments in Western and Eastern Europe

Results from Western Europe

Product segments Printpack

prediction MBS prediction

Dog and cat food High Low-medium

Wipes High Low-medium

Confectionery High Medium-high

Sweet and savoury snacks High Medium-high

Bakery products High Medium-high

Ice cream Medium-high Medium

Cheese Medium-high Medium

Chilled processed food Medium Medium-high

Toilet paper Low-medium High

Nappies/diapers/pants Low-medium Low-medium

Incontinence products Low-medium Low-medium

Source: Euromonitor, author’s analysis and discussion with Printpack

Results from Eastern Europe

Product segments Printpack

prediction MBS prediction

Dog and cat food High High

Sweet and savoury snacks High Medium-high

Bakery products High Medium-high

Dried processed food High Medium-high

Wipes High Medium-high

Snack bars High Medium

Confectionery High Low-medium

Frozen processed food High Low

Ice cream Medium-high Medium-high

Cheese Medium-high Medium-high

Paper tableware Medium-high Low

Chilled processed food Medium Low

Nappies/diapers/pants Low-medium Medium-high

Toilet paper Low-medium Low

Kitchen towels Low-medium Low-medium

Tissues Low-medium Low

Sanitary protection Low-medium Medium-high

Incontinence products Low-medium Medium-high

Source: Euromonitor, author’s analysis and discussion with Printpack

149 / 235

Appendix MCUST4 Market share of companies that operate within the three selected product segments in Poland and Germany Source of information is Euromonitor database

Confectionery (Poland)

1 Wrigley Poland Sp zoo 13.7% 2 Cadbury Wedel Sp zoo 13.3% 3 Kraft Foods Polska Sp zoo 10.1% 4 Master Foods Polska sp zoo 8.5% 5 Nestlé Polska SA 8.2% 6 Ferrero Polska sp zoo 5.1% 7 Jutrzenka SA 4.8% 8 Wawel SA 3.5% 9 Storck Polska Sp zoo 3.3%

10 Perfetti Van Melle Polska Sp zoo 3.2%

11 FPC Kaliszanka Sp zoo 3.1%

12 ZPC Mieszko SA 2.6% 13 Terravita Sp zoo 1.8% 14 Solidarnosc Sp zoo 1.2% 15 Haribo Sp zoo 0.8% 16 Warner-Lambert Poland Sp zoo 0.8% 17 Lindt & Sprüngli (Poland) Sp zoo 0.8% 18 PPHU Milano Sp zoo 0.6% 19 Fazer Polska Sp zoo 0.5% 20 ZPC Skawa SA 0.4% 21 PPHU Astra Sp zoo 0.3% 22 Ludwig Czekolada Sp zoo 0.3% 23 PPHU Omega 0.3%

24 Argo Sp zoo 0.2%

25 LU Polska Sp zoo 0.2%

26 Ricola AG 0.2% 27 ZPC Vobro 0.2% 28 Inda Polska Sp zoo 0.1% 29 Agros Optima SA 0.1% 30 Joyco España SA 0.1% 31 PWC Odra SA 0.1% 32 Kent Gida Maddeleri Sanayii ve Ticaret AS 0.0%

150 / 235

Dried processed foods (Poland)

1 Unilever Polska SA 20.85

2 Nestlé Polska SA 10.57

3 Lubella SA 9.4

4 Malma SA 4.34

5 Dr Oetker Sp zoo 4.15

6 Tan-Viet Polska Sp zoo 4.11

7 Wytwornia Makaronu GOLIARD Sp zoo 2.94

8 Hfp SA 2.73

9 Rieber Foods Polska SA 2.67

10 Gellwe Sp zoo 2.56

11 Kim Lan Foods Co Ltd 1.6

12 Sawex Sp zoo 1.4

13 Czanieckie Makarony Sp zoo 1.28

14 Ajinomoto Poland Sp zoo 1.28

15 Index Food Distribution Sp zoo 1.19

16 PPH Kupiec 1.17

17 PPH Sulma sp z oo 0.77

18 Cenos Sp zoo 0.71

19 Master Foods Polska sp zoo 0.51

20 Wasa Sp zoo 0.36

21 North Coast Sp zoo 0.35

22 Amati ProFood Sp zoo 0.3

23 Rol Ryz Sp zoo 0.27

24 Eska Sp zoo 0.14

25 Delecta SA 0.1

26 Hanpol Spj 0.04

151 / 235

Dog and Cat food (Poland)

1 Master Foods Polska sp zoo 57

2 Nestlé Polska SA 16.7

3 Pupil Sp zoo 2.3

4 Cargill Inc 2

5 Royal Canin SA 1.4

6 Euro-Zoo Sp zoo 1.2

7 Firma Stopa 1.2

8 Pabemia Sp zoo 0.4

9 Sokolowskie Zaklady Miesne SA 0.4

10 BL de Haan Dierenvoeding BV 0.4

11 Affinity Petcare SA 0.3

12 Bosch Tiernahrung GmbH & Co 0.3

13 Bega-Dogland 0.2

14 Monge & C Srl 0.2

15 Provimi Petfood PL Sp zoo 0.2

Confectionery (Germany)

1 Ferrero OH GmbH 15.14%

2 Storck KG, August 11.04%

3 Masterfoods GmbH 7.95%

4 Kraft Foods Deutschland GmbH & Co 7.90%

5 Wrigley GmbH 5.28%

6 Ritter GmbH & Co KG, Alfred 5.03%

7 Haribo GmbH & Co KG 4.98%

8 Chocoladefabriken Lindt & Sprüngli GmbH 4.89%

9 Nestlé Chocoladen GmbH 4.14%

10 Stollwerck AG 2.57%

11 Katjes Fassin GmbH & Co KG 1.98%

12 Ludwig Schokolade GmbH & Co KG 1.90%

13 Aldi Einkauf GmbH & Co oHG 1.74%

14 Vivil A Müller GmbH & Co KG 1.36%

15 Procter & Gamble GmbH 0.90%

16 Impuls-Vermarktung GmbH & Co KG (part of Zerthus group) 0.86%

17 Ricola AG 0.73%

18 Perfetti Van Melle GmbH 0.71%

19 Mederer Süsswarenvertriebs GmbH 0.59%

20 CFP Brands Süßwarenhandels GmbH & Co KG 0.41%

21 Dr Soldan GmbH 0.39%

22 Hitschler International GmbH 0.32%

23 Zertus GmbH 0.24%

24 Ragolds Süsswaren GmbH & Co 0.15%

25 Siemens & Co 0.13%

26 Villosa Vertriebsgesellschaft mbH 0.09%

27 Frigeo Belte GmbH & Co 0.09%

28 Feodora Chocolate GmbH & Co 0.09%

29 Ragolds Sweet Sales GmbH 0.07%

30 SmithKline Beecham GmbH & Co KG 0.05%

31 GlaxoSmithKline GmbH & Co KG 0.05%

32 Wohlgemuth Süsswaren GmbH 0.03%

152 / 235

Bakery (Germany)

1 Kamps AG 7.49%

2 Griesson de Beukelaer GmbH & Co KG 5.03%

3 Bahlsen GmbH & Co KG 3.37%

4 Harry-Brot GmbH 2.88%

5 Kellogg (Deutschland) GmbH 2.10%

6 Müller Brot GmbH & Co KG 1.71%

7 Cereal Partners Deutschland GmbH & Co oHG 1.04%

8 Kuchenmeister GmbH 1.00%

9 Dr August Oetker Nahrungsmittel KG 0.82%

10 Brandt Zwieback-Schokoladen GmbH & Co KG 0.79%

11 Peter Kölln KGaA 0.75%

12 Lorenz Bahlsen Snack-World GmbH & Co KG Germany 0.73%

13 Barilla Wasa Deutschland GmbH 0.62%

14 Tekrum-Werk Theodor Krumm GmbH & Co KG 0.48%

15 Aachener Printen & Schokoladenfabrik Henry Lambertz GmbH & Co KG 0.29%

16 Stollwerck AG 0.28%

17 Hig Hagemann GmbH & Co KG 0.28%

18 Laurens Spethmann Holding AG & Co 0.23%

19 Coppenrath Feingebäck GmbH 0.21%

20 Schneekoppe GmbH & Co KG 0.20%

21 Manner & Comp AG, Josef 0.20%

22 Dietrich Borggreve KG Zwieback & Keksfabrik GmbH 0.18%

23 Conrad Schulte GmbH & Co KG Feingebäck 0.16%

24 Hans Freitag GmbH & Co KG 0.14%

25 Danesita Ungarn GmbH 0.13%

26 H&J Brüggen KG 0.12%

27 Burger Knäcke GmbH 0.10%


29 Grabower Süsswaren GmbH 0.07%

30 Weetabix GmbH 0.04%

31 Gutena Nahrungsmittel GmbH 0.02%

32 Seitenbacher GmbH 0.02%

33 Hipp GmbH & Co Vertrieb KG 0.01%

Dog and cat food (Germany)


2 Nestlé Purina Petcare Deutschland GmbH 11.17%

3 H Von Gimborn GmbH 2.70%

4 Vitakraft-Werke Wührmann & Sohn 1.79%

5 Affinity Petcare Deutschland GmbH 1.74%

6 Hill's Pet Nutrition GmbH 1.30%

7 Iams Pet Food GmbH & Co KG 0.84%

153 / 235

Appendix CUST1

Definition of categories

Confectionary Cadbury's, Nestle, Mieszko,Ludwig,Terravita

Dog & Cat Food Cargill, Promivi

Dried Processed Food Unilever, Nestle, Delecta, HFP

Definition of market share

<5% Delecta 0.1,Promivi - 0.5, Ludwig - 0.5, Cargill - 0.9, Mieszko - 1.3, Hfp - 2.73, Terravita - 2.86

5 - 20% Nestle, Cadbury's

>20% Unilever

Confectionery Dog & Cat Food Dried Processed Food

Value disciplineCost except for Mieszko that prefers quality to cost

Cost

For the big players like Unilver and Nestle - cost, for the small players like HFP and Delecta - quality

Decision making pointMultinationals- regional+ local,

National companies-localLocal

Varies; Regional - Unilever, Regional + Local - Nestle &

Delecta, Local - Hfp

Current level of Suppliers

performance

good-satisfactory for all companies though Ludwig expressed concerned about cost

good-satisfactory for all companies

good-satisfactory for all companies though Delecta expressed concerned about flexibility

Mode of purchasing transactionPhone & Email except Nestle that

will start to use VMI this yearPhone & Email Phone & Email

Growth areas or major trendsGrowth in jellies & chewies, chocolate pralines & wafers

Emergence of small pouches Growth in convenient food

Competitors- based the

interviewees response to the

questions "which supplier have

you heard of", "which supplier

do you have relationships

with?"

Ergis,Kappa, Mondi,Strenzo,Constantia,Kety, Amcor,Alcan, Huhtamaki,

?Huhtamaki/Amcor/Constantia Alcan /Kety / Mondi

Relationship with current

suppliers

length of relationship, an average of 3 years. Renegotiation, ave. of once a year except for Nestle every 3months and Cadbury's every 2 year

?

length of relationship, an average of 3 years. Renegotiation, ave. of once a year except for Nestle -every 3 months and Hfa -whenever there is a significant increase in order quantity or a change in packaging design

Source of information on

packaging developments

Supplier's update, trade shows/fairs, internet searches



Categories

154 / 235

< 5 % 5-20% > 20%

Value discipline

Varies between cost and quality.Delecta, Hfp and Mieszko consider quality as the major determinant

cost cost

Decision making point Local Local + Regional Regional


performance

good levels of performance though Delecta hinted concerns about flexibility, likewise Ludwig hinted concerns about price

good level of performance, though Nestle did not explicitly state it

good level of performance

Mode of purchasing transaction Email, Phone,FaxEmail, Phone,Fax, VMI(Nestle only)

Email, Phone,Fax

Growth areas or major trends Varies Varies Varies






with?"

Ergis,Kappa, Mondi,Strenzo,Constantia,Kety, Fiomo,Alcan, Huhtamaki,

Amcor, Constantia,Kety, Alcan, Huhtamaki,

Constantia, Alcan, Huhtamaki,


suppliers

Length of relationship minimum 3 years, frequency of re-negotiation once a year, structure of buyer-seller relationship, usually 3 supplier but Ludwig has 1 main supplier 5 trusted suppliers

Length of relationship usually 3 years, frequency of re-negotiation for Nestle every 3 months and for Cadbury's verey 2 years

?


packaging developmentsInternet, Supplier's update,trade-shows

Internet, Supplier's update,trade-shows ?

Marketshare

Local Multinational

Value discipline

Varies between cost and quality.Delecta, Hfp and Mieszko consider quality as the major determinant

cost

Decision making point Local Varies- local, local+regional,regional


performance

good levels of performance though Delecta hinted concerns about flexibility, likewise Ludwig hinted concerns about price

good level of performance, though Nestle did not explicitly state it

Mode of purchasing transaction Email, Phone,Fax Email, Phone,Fax, (Nestle only)

Growth areas or major trends Varies Varies






with?"

Ergis,Kappa, Mondi,Strenzo,Constantia,Kety, Fiomo,Alcan, Huhtamaki,

Amcor, Constantia,Kety, Alcan, Huhtamaki,


suppliers

Length of relationship minimum 3 years, frequency of re-negotiation once a year, structure of buyer-seller relationship, usually 3 supplier but Ludwig has 1 main supplier 5 trusted suppliers

Length of relationship usually 3 years, frequency of re-negotiation for Nestle every 3 months and for Cadbury's verey 2 years, Cargill every year, Unilever no information


packaging developments Internet, Supplier's update,trade-shows

Not information, the only information is for Cadbury's

Type of Company

155 / 235

Appendix CP1 Market share by revenue 2005 The sample of 23 companies and 36 subsidiaries amount to a total operating

revenue for 2005 of € 1.4 b. With 23 branded companies, the market is captured through 36 subsidiaries.

Company name

Operating Revenue - Turnover th EUR 2005

Cumulated Operating Revenue - Turnover th EUR 2005

cumulative % operating Revenue - Turnover th EUR 2005

% Operating Revenue - Turnover th EUR 2005 / Total

MONDI PACKAGING SP ZOO 515,654 515,654 36.06% 36.06%

GRUPA KETY S.A. 342,346 858,000 60.00% 23.94%

UPM SP. Z O.O. 125,128 983,128 68.75% 8.75%

HUHTAMAKI POLSKA SP. Z O.O. 66,767 1,049,895 73.42% 4.67%

AMCOR POLSKA SP. Z O.O. 63,132 1,113,027 77.83% 4.41%

CONSTANTIA SP. Z O.O. 49,422 1,162,448 81.29% 3.46%

NORDENIA 35,328 1,197,776 83.76% 2.47%

ERGIS - EUROFILMS S.A. 34,044 1,231,821 86.14% 2.38%

AUTOBAR PACKAGING POLAND SP. Z O.O. 30,122 1,261,942 88.24% 2.11%

EMSUR POLSKA SP. Z O.O. 27,622 1,289,564 90.18% 1.93%

SEALED AIR POLSKA SP. Z O.O. 24,515 1,314,079 91.89% 1.71%LINPAC PLASTICS POLSKA SP. Z O.O. 20,773 1,334,852 93.34% 1.45%

SKANEM INTROL S.A. 17,930 1,352,782 94.60% 1.25%

SCHOELLER ARCA SYSTEMS SP. Z O.O. 14,983 1,367,765 95.64% 1.05%

BOJANEK S.J. FPH 13,296 1,381,061 96.57% 0.93%

SIMOLDES PLASTICOS POLSKA SP. Z O.O. 12,760 1,393,821 97.47% 0.89%

SCHUR FLEXIBLE POLAND SP. Z O.O. 12,688 1,406,508 98.35% 0.89%

ALCAN PACKAGING ZLOTOW SP. Z O.O. 11,942 1,418,451 99.19% 0.84%

FOLPLAST S.J. 11,599 1,430,050 100.00% 0.81%

Grand Total 1,430,050 2,860,099 100.00%

(blank) 198,229

0% - 2% market share 16,8112% - 3% market share 33,1650% - 3% market share 20,5852% - 5% market share 46,469> 5% market share

SAMPLE MARKET SHARE 2005


Source: Data from Amadeus and author analysis

Average Operating Revenue / Sample market share segment (in operating revenue th EUR 2005)

Euro % Euro %

Millions Share Millions Share

1 Alcan 1500 16% 1 Mondi 515,654 36.06%2 Amcor 1280 14% 2 Grupa Kety S.A. 342,346 23.94%3 Constantia 570 6% 3 Upm Kymmene SP. Z O.O. 125,128 8.75%4 Sealed Air Cryovac 410 4% 4 Hutamaki Polska SP. Z O.O. 66,767 4.67%5 Clondalkin 350 4% 5 Amcor 63,132 4.41%6 Wipak 270 3% 6 Constantia 49,422 3.46%7 Huhtamaki 265 3% 7 Nordenia 35,328 2.47%8 United Flexibles 265 3% 8 Ergis - Eurofils S.A. 34,044 2.38%9 Bemis 250 3%

10 Mondi 250 3%Others (Inc Imports) 3880 41% Others (Inc Imports) 198,229 14%

Total 9290 100% Total 1,430,050 100%

Polish Flexible Packaging sample revenue distributionEuropean Converted Flexible Packaging Sales 2005

Source: Amadeus data base Source: Euromonitor

156 / 235

Appendix CP2 Packaging industry sample per area expertise

9 subsidiaries operate in very different industries (see scatter plot A). One of these shows exceptional

operating revenues in 2006. It is the Kety group with its metal operations (see scatter plot A).

The table below identifies from scatter plot B those subsidiaries registered as manufacturing in the plastic

related packaging industries (25XX NACE). It identifies those subsidiaries which generate higher that

average 2006 operating revenue (>operating revenue of €29.4 m in 06) and show a higher than average

profit margin growth (=70% ) in the period 01-06 (refer to appendix CP3) as follows :

Industry area

06 05 06 05

2112 1 Manufacture of paper and paperboard - 19,994 8.81 13.70

2121 6 Manufacture of corrugated paper and paperboard and of containers of paper and paperboard

29,265 23,365 5.34 7.45

21XX 7 All 21XX 29,265 21,679 7.07 10.58

2222 1 Printing n.e.c. 20,670 17,930 6.95 7.05

2512 1 Retreading and rebuilding of rubber tyres - - - -2.23

2521 2 Manufacture of plas tic plates , sheets , tubes and profiles

32,855 32,083 9.20 6.68

2522 8 Manufacture of plastic packing goods 30,320 26,764 - 1.68

2524 2 Manufacture of other plastic products 25,195 27,622 -2.08 1.40

25XX 13 All 25XX 29,457 28,823 3.56 1.88

2710 1 Manufacture of bas ic iron and s teel and of ferro-alloys (ECSC)20)

- - - -4.61

2742 1 Aluminium production 294,794 195,445 5.90 10.28

2872 2 Manufacture of light metal packaging 19,703 19,243 8.33 10.072875 1 Manufacture of other fabricated m etal products n.e.c. - 13,296 - 6.76

27XX 5 All 27XX and 28XX 157,248 75,995 7.11 5.62

2951 1 Manufacture of m achinery for m etallurgy 3,396 3,044 - -

2XXX 26 Manufacturing 59,160 36,107 6.17 6.28

3430 1 Manufacture of parts and accessories for motor vehicles and their engines

- 12,760 3.46 4.00

5188 1 W holesale of agricultural machinery and accessories and implements, including tractors

- 45,145 - -

5190 4 Other wholesale 33,275 42,604 - 11.55

7020 1 Letting of own property 5,693 6,395 - -TOTAL 33 40,318 32,199 5.74 5.77

NACE Rev.1.1 primary code

Operating revenue th €

Profit margin %

Source : am adeus datab ase

Frequency

0.00 100000.00 200000.00 300000.00

OpRev06

2000.00

3000.00

4000.00

5000.00

6000.00

7000.00

NA

CE

��

�

��

�

�

��

�

��

� �

�

�

��

�

�

��

�

�

��

EFEKT - property letting

EFEKT - property letting

UPM - paperUPM - paper

Linpac - plastic

KETY - aluminium

KETY - aluminium KETY - aluminium

Mondi - plastic

Scatter plot A

0.00 25000.00 50000.00 75000.00 100000.00

OpRev06

2000.00

2250.00

2500.00

2750.00

3000.00

NA

CE

��

�

�

�

�

�

�

��

� ��

�

�

�

Light m etal

MetallurgyLight m etal

Other plas tic goods X 4

Paper board

Plas tic plates , tubes, profils

Printitng

Includes Constantia and Kety

Includes Constantia, Mondi, Nordenia, Huhtamaki, Schur, EMsur, Autobar.

Includes Mondi and Skanem

Scatter plot B

157 / 235

The table below shows those subsidiaries of scatter plot B which are registered in paper related only

industries (21XX NACE). Those which display higher than average revenue growth (>operating revenue of

€23.9 m in 06) and show a higher than average revenue growth (that is which have generated higher than

average 60% operating revenue growth) are the following:

The table below shows those subsidiaries of scatter plot B which are registered in metal related only

industries (> 27XX NACE). Only one subsidiary is recorded to manufacture metal packaging. All other

subsidiaries which are in the metal manufacturing also have activities related to packaging in plastic and/ or

paper (see table industry are >27XX metal).

Companies / Subsidiary name NACE Code City

Operating Revenue /

Turnover th EUR 2006

Op Rev Av Grow th 01

to 06

Employees 2005

> € 29.2 m and growth >70%MONDI PACKAGING SZCZECIN S.A. 2121 KLINISKA WIELKIE 26,183 60% 230

> € 29.2 m AMCOR RENTSCH POLSKA SP. Z O.O. 2121 LODZ 43,959 - 230

Industry area 21XX paper

Source : Amadeus data base

Companies / Subsidiary name NACE Code

City

Operating Revenue /


Op Rev Av Grow th 01

to 06

Employees 2005

> € 29.4 m and growth >70%CONSTANTIA TEICH POLAND SP. Z O.O. 2522 KLESZCZOW 30,179 1.62 154

ERGIS - EUROFILMS S.A. 2521 WARSZAWA 34,044 0.86 80

> € 29.4 m AUTOBAR PACKAGING POLAND SP. Z O.O. 2521 SKIERNIEWICE 30,122 0.69 190

CONSTANTIA TEICH POLAND SP. Z O.O. 2522 KLESZCZOW 30,179 0.37 154

EMSUR POLSKA SP. Z O.O. 2524 PLOCHOCIN 27,622 0.15 60

HUHTAMAKI POLSKA SP. Z O.O. 2522 SIEMIANOWICE SLASKIE 66,767 - 550

MONDI PACKAGING SOLEC SP. Z O.O. 2522 BANIOCHA 27,374 0.32 100

NORDENIA POLSKA POZNAN SP. Z O.O. 2522 DOPIEWO 33,102 0.60 164

Industry area 25XX plastic

Com panies / Subs idiary nam e NACE Code City Operating Revenue /


Op Rev Av Growth 01

to 06

Em ployees 2005

> € 19.7 m

GRUPA KETY S.A. 2742 KETY 294794 0.30 1300

CONSTANTIA COLORCAP SP. Z O.O. 2872 JEJKOWICE 19703 0.47 200

< € 19.7 m ZAM KETY SP. Z O.O. ZAKLADY URZADZEN PRZEMYSLOWYCH

2951 KETY 3396 0.03- 170

Indus try area > 27XX m etal

Source : Am adeus data bas e

158 / 235

Appendix CP3

NACE INDUSTRY CODE

Number of

subsidiaireis / NACE code

Op. Revenue growth 01-06

Op. Profit margin growth 01-06 Name of companies City

SCATTER PLOT 1

7415 1 2.71 0.86 holding CELSA POLSKA H OSTROWIE2524 1 8.35 0.49 other plastic productsSCHOELLER ARCA BYTOM 2121 1 5.21 -0.52 paper, board, containersMONDI PACKAGIN SWIECIE 2121 1 5.21 -0.52 paper, board, containersMONDI PACKAGIN SWIECIE

SCATTER PLOT 2

GROUP B < 0.7 > 0.72112 1 -0.02 0.51 MONDI PACKAGIN SWIECIE 2121 1 0.66 1.48 MONDI PACKAGIN MSZCZONO2522 3 0.32 1.57 SCHUR FLEXIBLE BOGUCIN

0.60 1.21 CONSTANTIA TEI KLESZCZO0.60 1.21 CONSTANTIA TEI KLESZCZO

2742 1 0.44 1.29 GRUPA KETY S.A KETY 5188 1 0.33 0.8 AGRO - EFEKT S PERZOW 5190 0.27 1.42 UPM KYMMENE SP WARSZAWA7020 1 0.17 3.87 EFEKT S.A. KOR KRAKOW

Grand Total 8

GROUP C > 0.7 <0.72121 2 1.87 0.04 MONDI PACKAGIN BRZEZNO

1.19 -2.28 AMCOR FLEXIBLE LODZ 2522 1 1.62 -0.84 HUHTAMAKI POLS SIEMIANO2222 2 0.86 -3.5 SKANEM INTROL TARNOWO

0.01 0.47 SKANEM INTROL S.A. TARNOWO PODGORNE

Grand Total 5

GROUP D <0.7 <0.72112 1 -0.24 -0.02 MONDI PACKAGIN SWIECIE 2512 1 0.15 0.55 LINPAC PLASTIC BRZEG DO2521 1 0.23 0.47 AUTOBAR PACKAG SKIERNIE2522 3 0.13 0.69 NORDENIA POLSK DOPIEWO

-0.01 0.15 NORDENIA POLSK SWAROZYN0.33 0.60 CONSTANTIA TEI KLESZCZO

2524 1 0.57 0.69 EMSUR POLSKA S PLOCHOCI2742 1 0.32 0.30 GRUPA KETY S.A KETY 2872 1 0.01 0.47 CONSTANTIA COL JEJKOWIC2875 1 0.03 0.41 BOJANEK S.J. F CZESTOCH2951 1 -0.15 -0.03 ZAM KETY SP. Z KETY 5190 3 0.32 0.21 SEALED AIR POL OZAROW M

0.08 0.50 UPM RAFLATAC S WARSZAWA0.1 0.34 LINPAC PLASTIC WLADYSLA

7020 -0.10 -0.24 EFEKT S.A. KOR KRAKOW Grand Total 14

Dynamic growth (Operating revenue growth 01-06 / Profit margin growth 01-06)

SCATTER PLOT 1 SCATTER PLOT 2

B

C

159 / 235

Appendix CP4 This appendix describes the complete sample studied to analyse and evaluate the Polish market from

secondary data.

After having identified those international dominant players on the market from Data monitor and our

work with Printpack,

After having identified those industry areas by NACE code related to packaging,

The sample was put together using the Amadeus data base to reflect the Polish flexible packaging market.

The sample size was benchmarked against the Datamonitor total Polish flexible packaging market value.

Datamonitor values the total output of plastic packaging for 2005 to PLN 4.89b. This represents a total

value output of € 1.1 b to €1.6 b (05 exchange rate 1€ = PLN 4.39 07 exchange rate around €1 = PLN 3.5 ).

The 36 branded flexible packaging converters subsidiaries represent € 1.43 b in turnover for the year 2005.

(See table which follow Appendix CP5 1/2 2/2 ). Moreover, the 36 subsidiaries include the dominant market

competitors. Those dominant players of the sample correlate with those mentioned by the Datamonitor.

160 / 235

INDEXCompany

name

NACE Rev.1.1,

primary codeCity

Date of incorporat

ion

Employees 2006

Employees 2001

Operating Revenue /


Operating Revenue / Turnover th EUR 2005


Profit margin (%) 2006



Op Rev Av Growth 01 to

06

Profit Growth 01 to

06

1 MONDI PACKAGING

2112 SWIECIE 1967 970 1375 384298 335962 497376 22.57 12.95 10.27 0.02- 0.51 2 MONDI

PACKAGING 2112 BYSTRZYCA

KLODZKA2000 150 19994 18654 -2.23 2.72 0.08 1.01-

3 ALCAN PACKAGING

2121 ZLOTOW 2005 11942 -4.61 #DIV/0! #DIV/0!4 AMCOR

RENTSCH 2121 LODZ 1993 400 270 43959 38614 52764 16.86 5.41 -6.71 0.09- 12.34-

5 AMCOR FLEXIBLES

2121 LODZ 2002 150 27510 24518 -0.04 2.47 1.19 2.28-

6 MONDI PACKAGING

2121 SWIECIE 2000 220 33604 40680 6.57 5.53 0.05- 5.21 7 MONDI

PACKAGING 2121 KLINISKA

W IELKIE1995 238 29858 26183 -0.42 -4.12 #DIV/0! #DIV/0!

8 MONDI PACKAGING

2121 MSZCZONOW

1997 125 90 26218 23065 12644 5.90 10.28 4.65 0.66 1.48 9 MONDI

PACKAGING 2121 BRZEZNO 2002 130 18779 15867 -9.04 -7.23 1.87 0.04

10 MONDI PACKAGING

2121 SWIECIE 2000 220 33604 40680 6.57 5.53 0.05- 5.21

11 PARKSIDE FLEXIBLES

2222 ZLOTOW 1947 #DIV/0! #DIV/0!12 SKANEM

INTROL S.A.2222 TARNOWO

PODGORNE1982 160 180 20670 17930 9140 9.20 9.49 -4.57 0.86 3.50-

13 LINPAC PLASTICS

2512 BRZEG DOLNY

1996 85 0.55 4.11- 14 AUTOBAR

PACKAGING 2521 SKIERNIEWI

CE1995 200 154 32855 30122 26567 1.16 3.87 -17.55 0.47 1.22-

15 CONSTANTIA TEICH

2522 KLESZCZOW 1987 140 96 25526 30179 15515 7.79 6.15 0.97 0.60 1.21

16 HUHTAMAKI POLSKA SP.

2522 SIEMIANOWICE SLASKIE

1994 670 115 84445 66767 18363 -3.96 -0.50 -5.81 1.62 0.84- 17 MONDI

PACKAGING 2522 BANIOCHA 1994 100 100 29606 27374 20727 -6.51 -1.56 0.49 0.37 1.07-

18 NORDENIA POLSKA

2522 SWAROZYN 1996 200 202 2437 2226 -4.11 0.33 0.15 1.29-

19 SCHUR FLEXIBLE

2522 BOGUCIN 1996 100 100 14378 12688 9426 7.83 -0.46 -5.37 0.32 1.57 20 NORDENIA

POLSKA 2522 DOPIEWO 155 33102 16707 3.87 -17.64 0.69 1.33-


APPENDIX CP 5 1/2 POLAND SAMPLE OF PACKAGING SUBSIDIAIRIES

161 / 235

INDEXCompany

name

NACE Rev.1.1,

primary codeCity

Date of incorporat

ion

Employees 2006

Employees 2001

Operating Revenue /







Op Rev Av Growth 01 to

06

Profit Growth 01 to

06

21 FOLPLAST S.J.

2522 KOSCIAN 1990 55 11599 14.19 #DIV/0! #DIV/0!

22 SCHOELLER ARCA

2524 BYTOM 71 14983 16621 3.41 7.23 0.27 8.35 23 EMSUR

POLSKA SP. 2524 PLOCHOCIN 1998 60 30 25195 27622 12786 4.74 6.27 8.86 0.69 0.42-

24 CELSA HUTA

2710 OSTROWIEC SWIETOKRZ

2000 #DIV/0! #DIV/0!25 GRUPA

KETY S.A.2742 KETY 1953 1300 294794 195445 170233 8.81 13.70 7.87 0.30 0.34

26 GRUPA KETY S.A.

2742 KETY 1953 1300 880 201855 143857 118318 9.70 13.10 3.24 0.44 1.29

27 CONSTANTIA

2872 JEJKOWICE 1994 200 200 19703 19243 13794 6.95 7.05 8.56 0.47 0.06- 28 BOJANEK

S.J. FPH2875 CZESTOCHO

W A1992 95 13296 24.67 0.41 0.04-

29 ZAM KETY SP. Z O.O.

2951 KETY 170 220 3396 3044 3944 4.14 2.55 -15.38 0.03- 1.30- 30 SIMOLDES

PLASTICOS 3430 JELCZ -

LASKOW ICE2003 12760 -7.48 #DIV/0! #DIV/0!

31 AGRO - EFEKT SP.

5188 PERZOW 58 45145 38623 0.99 1.49 0.33 0.80

32 SEALED AIR POLSKA SP.

5190 OZAROW MAZOWIECK

1992 40 24515 21389 6.76 11.45 0.21 0.21- 33 LINPAC

PLASTICS 5190 W LADYSLA

W OW1994 30 24 24181 20773 17511 3.46 4.00 8.82 0.34 0.36-

34 UPM KYMMENE

5190 W ARSZAWA 1996 20 17 56842 107505 57691 2.80 1.40 0.58 0.27 1.42

35 UPM RAFLATAC

5190 W ARSZAWA 1995 25 18803 17623 4.28 0.52 0.50 0.24- 36 CELSA 7415 OSTROWIEC 2003 7.75 2.71


APPENDIX CP 5 2/2 POLAND SAMPLE OF PACKAGING SUBSIDIAIRIES

162 / 235

Appendix CG1

NACE NACE CODE

14 14.9 14.9 14.9

12 12.8 12.8 27.7

11 11.7 11.7 39.4

7 7.4 7.4 46.8

6 6.4 6.4 53.2

6 6.4 6.4 59.6

6 6.4 6.4 66.0

5 5.3 5.3 71.3

4 4.3 4.3 75.5

4 4.3 4.3 79.8

3 3.2 3.2 83.0

3 3.2 3.2 86.2

2 2.1 2.1 88.3

2 2.1 2.1 90.4

1 1.1 1.1 91.5

1 1.1 1.1 92.6

1 1.1 1.1 93.6

1 1.1 1.1 94.7

1 1.1 1.1 95.7

1 1.1 1.1 96.8

1 1.1 1.1 97.9

1 1.1 1.1 98.9

1 1.1 1.1 100.0

94100.0 100.0

2522 Manufacturer of plastic packing goods

2121 Manufacturer of corrugated paper and paperboard and of containers of paper and paperboard

2521 Manufacturer of Plastic Plates, sheets, tubes and profiles

5147 Whosale of other household goods

2222 Printing n.e.c

2524 Manufacturer of other plastic products

7415 Management Activities of holding companies

2125 Manufacturer of other articles of paper and paperboard n.e.c

2112 Manufacturer of paper and paperboard

2872 Manufacturer of light metal packaging

5187 Whosale of other machinery for use in industry, trade and navigatioin

7482 Packaging activities

2520 Manufacturer of Plastic Products

2742 Alumnium production

2111 Manufacturer of Pulp

2123 Manufacturer of Paper Stationery

2416 Manufacturer of Plastic in Primary forms

2513 Manufacturer of other rubber products

2523 Manufacturer of builders'ware of plastic

5112 Agents involved in the ale of fuels, fuels, metals and industrial chemicals

5155 Whosale of chemical products

5190 Other whosale

5212 Other retail sale in non-specialized stores

Total

ValidFrequencyPercentValid Percent

CumulativePercent

163 / 235

Appendix CG2

Company name


Cumulated Operating Revenue - Turnover th EUR 2005

% cumulated Operating Revenue - Turnover th EUR 2005

% Operating Revenue - Turnover th EUR 2005 / Total

ALCAN HOLDINGS GERMANY GMBH 1,350,873.00 1,350,873 11.76% 11.76%AMCOR FLEXIBLES HELIO FOLIEN GMBH 1,278,475.00 2,629,348 22.90% 11.13%UPM-KYMMENE SALES GMBH 1,161,724.00 1,161,724 10.12% 10.12%UPM-KYMMENE PAPIER GMBH & CO. KG 839,536.00 4,630,608 40.32% 7.31%ALCAN SINGEN GMBH 687,318.00 687,318 5.98% 5.98%SCHÜTZ MONTLINGEN GMBH & CO. KG 595,000.00 5,912,926 51.49% 5.18%HUHTAMAKI ALF ZWEIGNIEDERLASSUNG D. HUHTAMAKI DEUTSCHLAND GMBH & CO. KG

550,000.00 550,000 4.79% 4.79%

HUHTAMAKI DEUTSCHLAND GMBH & CO. KG 550,000.00 7,012,926 61.07% 4.79%KLÖCKNER PENTAPLAST GMBH & CO. KG 516,421.00 516,421 4.50% 4.50%NORDENIA INTERNATIONAL AG 482,372.00 8,011,719 69.76% 4.20%BISCHOF & KLEIN GMBH & CO. KG 472,519.00 472,519 4.11% 4.11%BISCHOF & KLEIN GMBH & CO. KG 472,519.00 8,956,757 77.99% 4.11%NORDENIA DEUTSCHLAND GRONAU GMBH 461,971.81 461,972 4.02% 4.02%BISCHOF + KLEIN GMBH & CO. KG 355,000.00 9,773,729 85.11% 3.09%ALCAN PACKAGING SINGEN GMBH 346,646.00 346,646 3.02% 3.02%CROWN VERPACKUNGEN DEUTSCHLAND GMBH 319,381.54 10,439,756 90.91% 2.78%SÜDPACK VERPACKUNGEN GMBH + CO. 200,000.00 200,000 1.74% 1.74%SÜDPACK VERPACKUNGEN GMBH + CO. 200,000.00 10,839,756 94.39% 1.74%TIEFDRUCK SCHWANN-BAGEL GMBH & CO. KG 190,000.00 190,000 1.65% 1.65%WIPAK WALSRODE GMBH & CO. KG 155,000.00 11,184,756 97.39% 1.35%WIPAK WALSRODE GMBH & CO. KG 155,000.00 155,000 1.35% 1.35%SEALED AIR GMBH 144,455.00 11,484,211 100.00% 1.26%UPM RAFLATAC GMBH 141,033.00 141,033 1.23% 1.23%

Others

MARKET SHARE 2005


Source: Data from Amadeus

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Appendix CG3

Hann. Münden - Three River City

At the point where the rivers Werra and Fulda join to form the river Weser, beautifully situated among hills and forests lies Hann. Münden. Over 700 half-timbered buildings dating back six centuries, fortified towers and remains of the old City Wall bear witness of the pride and wealth of the town's former citizens - a framework city of European rank. Alexander von Humboldt, the well-known poet, is said to have called Hann. Münden "one of the seven most beautifully situated towns in the world". Hann. Münden has a long and interesting history based on trade, crafts and shipping industries.

Source: Niedersachsen

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Appendix S25 Low Cost providers

Film Provider/ Country Converter Customer

Cosmo/ India Positive Packaging Napier Brown ITC Frito Lay , Bayer Nestle, Unilever Group Britannia (Danone), Novartis L'Oreal ,Cadbury, Pepsi Westside Distillers Cheminova Perfetti Tesco, Colgate Palmolive Pfizer, Syngenta Dow Agro-Sciences PZ Cussons Rallis Eveready Kari- Out - USA Procter & Gamble Fritolay Heinz Promasidor / FPI Imko - The Nut Company Britannia Industries (Danone Group)

SKC/ Korea Rohm and Haas Company/Anhui Tongfeng Electronics Co., Ltd.

biodegradable, Kodak films

Polinas / Turkey Lawson Mardon Packaging/ part of Alcan

PepsiCo, Caribbean, Storck, Nescaffe etc

Jindal/India

Rexor

Tata tea, coca cola, Palmolive, Rexona, Nescaffe, Lays, maggy, tear tape

TI / Middle east Middle East Arabian Packaging Flexible Division

Tongfeng Electronics Company/ China

Rohm and Haas Company

Biodegradable films

Kolon/ Korea Japan Petrochims GlaxoSmithKline

Flex Industries/ India

Godrej, Heinz, Henkel, ITC Nestle, Pepsi, Perfetti, Smithkline-Beecham, Tata Chemicals, Tata Tea and Unilever, Cadbury, palmolive, Britannia and more

Poliplex / India and Turkey

The criteria preferred to select a low cost provider is to have sufficient capabilities to have presence in the EU

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Appendix S26 Projection on PE prices (Unit: cent/pound)

Product 1993 1998 2003 2008 2013

Plastic Film Average Cost 0.46 0.52 0.57 0.64 0.71

Polypropylene Film 0.29 0.33 0.46 0.52 0.58

LLDPE Extrusion Liner 0.33 0.38 0.56 0.64 0.72

LDPE High Clarity Film 0.39 0.46 0.58 0.65 0.72

HMW-HDPE Film 0.35 0.43 0.59 0.67 0.75

LDPE Fractional Melt Film 0.38 0.46 0.64 0.72 0.8

EVA Extrussion Film 0.4 0.47 0.65 0.74 0.83

Source: The Freedonia Group

World Market demand for Polyester Film 1.Quantity Trend Unit : Thousand MT

Application 2007 2008

Quantity Ratio Quantity Ratio

Packaging 125 44% 136 47%

Magnetic Tape 2 1% 2 1%

Photographic 38 13% 35 12%

Other Industrial 57 20% 60 21%

Hot Stamping Foils 18 6% 18 6%

Reprographic 15 5% 12 4%

Electrical/Electronic 27 10% 28 10%

Total 282 100% 291 100%

2.From 2007 to 2008 Unit : Thousand MT

2007 2008

Thick 105 103

Thin 175 186

Magnetic 2 2

Total 282 291

European Market demand for Polyester Film

1.Quantity Trend Unit : Thousand MT Application 2005 2010 Quantity Ratio Quantity Ratio Packaging 864 48% 1,421 58% Magnetic Tape 108 6% 25 1% Photographic 126 7% 74 3% Other Industrial 414 23% 564 23% Hot Stamping Foils 72 4% 98 4% Reprographic 90 5% 98 4% Electrical/Electronic 126 7% 172 7% Total 1,800 100% 2,450 100% 2.From 2007 to 2008 Unit : Thousand MT

2007 2008 Thick 522 534 Thin 1,510 1,629

Magnetic 62 52 Total 2,094 2,215

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Appendix S27 Radar Map This radar map is to show the possible competitive environment in the containers sphere. Those nearest

the centre are the most competitive in the biggest markets steadily moving out to the edge with smaller

markets and of less significance to the packaging industry as a whole.

Plastic Types

Packaging Alternatives

Suppliers

Alternatives To Plastics

Manufacture

Rigi

Tin

Pap

Glass

Aeroso

Materials Suppliers Fibre Foil

Draught Beer

Fresh Food

Bars

RestaurantHotels

Fast Food Outlets

Ceramics

Wood

Convenience Store

Bakery

Flexible

Drugs

Coating and Seal

Distributors

Sales Representative

Packet

Bottles

Vending machine

Lamination High St/ Supermarkets

Retailers

Importer

Electronics

Al

Mixed

Pots

Jugs Food

Buckets

Pump Spray

Envelopes

Barrels

Al Foil

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Appendix S28 Printpack current suppliers Supplier Name SIC Code Purchases £ % of Total

MOBI01 EXXON CHEMICAL FILMS EUROPE FILMS £7,179,656.09 27.50%

BCLS TREOFAN UK LTD FILMS £4,008,740.18 15.36%

BIMO BIMO ITALIA S.p.a. FILMS £395,707.91 1.52%

RADF RADICI FILM FILMS £312,635.43 1.20%

RHON TORAY EUROPE LTD FILMS £218,640.58 0.84%

ADVF BPI FILMS FILMS £170,581.96 0.65%

DUPO04 DUPONT TEIJIN FILMS FILMS £94,927.68 0.36%

BCLC INNOVIA FILMS LTD FILMS £87,487.11 0.34%

HIFI HIFI INDUSTRIAL FILMS LTD FILMS £60,068.60 0.23%

NEHE ALCAN PACKAGING KREUZLINGEN FILMS £221,355.87 0.85%

SUNC SUN CHEMICAL INKS (UK) LTD INKS £3,458,702.21 13.25%

CHEM UNIVAR SOLVENTS INKS £691,057.29 2.65%

MORT ROHM AND HAAS INKS £11,063.03 0.04%

KEATBF KEATING GROUP GRAVURE CYL LTD ORIG £1,085,585.58 4.16%

WINN SCHAWK UK LTD ORIG £281,341.27 1.08%

DECO DECORFLAIR LIMITED ORIG £79,075.62 0.31%

INTR01 BIBBY DISTRIBUTION LTD CONTR £1,073,487.46 4.11%

INNO INEOS EUROPE LTD RESIN £726,277.42 2.78%

AMPA AMPACET UK RESIN £183,942.91 0.71%

BILL CORENSO (UK) LIMITED PKG £185,028.44 0.71%

SWAL SWALE COATINGS & INKS LTD C/SEAL £161,563.91 0.62%

SOSA SOLVENTS WITH SAFETY LTD WASTE £96,604.42 0.37%

ISMW I.S.M. WASTE DISPOSALS WASTE £29,010.97 0.11%

HENK01 HENKEL LOCTITE ADHESIVES LTD ADH £106,567.55 0.41%

ADCL ADVANCE CLEANERS LTD HYG £86,486.58 0.33%

LATE FORMULATED POLYMER PRODUCTS CTG £74,075.62 0.28%

£21,079,671.69 80.77%

Source: Printpack Realities

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Appendix S29 Printpack Europe Ltd (UK) Financial Data YTD Jul-06 to Jun-07

405284257 Total Sales m2

62556 NET SALES

35033 MATERIAL COST

27523 TOTAL SALES - MATERIAL COST

10,745 Direct Labour

2,903 Indirect Labour

0 Excess Pension Payments Adjustment

13,648 TOTAL LABOUR

1,935 OPERATING MARGIN

0 Excess Pension Payments Adjustment

1,935 INCOME BEFORE TAXES ADJUSTED

43 INTEREST CHARGE

1,978 INCOME BEFORE TAXES + INTEREST CHARGE

11,897 Diff :- Overheads , Depreciation etc

330 D.PEAT / EDGAR RICHARDSONS REPORT

18,890 - CASH IN HAND + LOANS + ST HELENS INVESTMENT + SHAREHOLDERS FUNDS

-391 CASH IN HAND

0 LOANS

0

18,499 Share Capital & Reserves exclude FRS 17

5,209 RAW MATERIAL + FGDS & WIP + TRADE DEBTORS - TRADE CREDITORS - INTEREST ACCRUAL

8 INTEREST ACCRUAL

12,886 TRADE CREDITORS + Short Term Loan (Feb 02 on) -Exclude FRS 17

12,095 TRADE DEBTORS

680 RAW MATERIAL STOCK

5,329 FGDS & WIP STOCK

4,515 Export Sales - Europe - Ken Bot

292 Export Sales - Rest Of World - Ken Bot

484 CAPEX - Production - Toms monthly capex Paragon lever arch file or Capex 1999-00.xls under accounts

0 CAPEX - Environmental - Toms monthly capex Paragon lever arch file (asset title sometimes "Enviro")

53 Sales weeks per month

Source: Printpack Realities

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Appendix 2 Questionnaire

Scheduling the Face to face interview Contact made by phone

Good Morning / Afternoon. I am from Manchester Business School and I am conducting a survey on the packaging industry. In order to do that I appreciate if you could provide 30 minutes of your time for a face to face interview to be scheduled between ___ and ____ of March. Your opinion is valuable to our research. The information will be analysed anonymously without reference to individual responses in accordance to ESOMAR and MBS Code of Ethic for Market Research.

Instructions for Face to Face: Good Morning / Afternoon. I am from Manchester Business School and I am conducting a survey on the packing industry. I will like to thank you for your availability and inform that this interview should not take more than 30 minutes. As mentioned in our earlier correspondence your opinion is valuable to our research. The information will be analysed anonymously without reference to individual responses in accordance to ESOMAR and MBS Code of Ethic for Market Research.

___________________________________________________________________________________ Filter – It is only necessary for contacts made by phone. In the case of face-to-face, this role should already being confirmed. 1. Are you the person responsible for the Packaging purchase decision?

( ) Yes (111) ( ) No, could you inform who is the person responsible for this role? (Apply the instruction below)

Instructions: Ask for the person responsible for the purchase decision, write the name, department and contact number of this person. If the decision is made by more than one person, make sure you write the relevant names mentioned: Name Department Telephone for

contact

(112) (113) (114) (115) (116) (117)

(118) (119) (120)

The following is a questionnaire carried out in Poland and Germany with potential Printpack customers.

This questionnaire was previously studied and agreed upon between the Printpack. team and the IB

group 01 team. . In appendix to this document the ethic code for carrying out interviews : ICC/ESOMAR

Code of Marketing and Social Research Practice.

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Understanding the client business

2. Could you tell me what is your vision for your market place in the next 3 to 5 years?

_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ (121)(122)(123) (124)(125)(126) (127)(128)(129) (130)(131)(132)

3. Where do you see the most growth coming from? And which brands of yours do you see the most

growth coming from? _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ (133)(134)(135) (136)(137)(138) (139)(140)(141) (142)(143)(144)

Be aware that this is a sensitive question and the client might not feel comfortable to discuss it. 4. Could you tell me about the level of competition in your market? Who do you perceive to be your three

main competitors? How are you offsetting competition in your market place? _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ (145)(146)(147) (148)(149)(150) (151)(152)(153) (154)(155)(156)

Explore which players and segments are likely to lead the process 5. In what segments are you likely to see market consolidation in your market in the future? How this

consolidation would looks like? _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ (157)(158)(159) (160)(161)(162) (163)(164)(165) (166)(167)(168)

6. What are the major regulatory changes that are occurring in the packaging industry in your country?

_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ (169)(170)(171) (172)(173)(174) (175)(176)(177) (178)(179)(180)

7. In what way would you like to see consumers engage/interact with the packaging of your products?

_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ (181)(182)(183) (184)(185)(186) (187)(188)(189) (190)(191)(192)

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If the client mentions recycling issues in the answer to one of the questions above, then ask the question below; otherwise go to the next question. 8. As we know recycling packaging materials costs considerably higher than conventional materials. In your

opinion who should take the initiative to lead the process and how additional costs of recycling packaging material should be allocated along the value chain? _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ (193)(194)(195) (196)(197)(198) (199)(200)(201) (202)(203)(204)

9. Are you considering replacing your current packaging format for any reason? Ex: Moving from carton to

Flexible packaging? _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ (205)(206)(207) (208)(209)(210) (211)(212)(213) (214)(215)(216)

Here, you introduce a new theme. We want you to explore the type of print process the client uses. In the space “Other type of print process” you can think of offset litho for instance. In the question about ranking of preference, use the scale: 1: The most preferred 2: Indifferent 3: Least preferred 10. What type of print process

do you use? Gravure ( ) (217) Flexographic ( ) (218) Other, _____ ( ) (219)

11. Which one do you prefer? Gravure ( ) (220) Flexographic ( ) (221) Other, _____ ( )(222)

12. Rank the order of preference? Gravure ( ) (223) Flexographic ( ) (224) Other, _____ ( )

13. What is the reason for your preference and in what circumstances would you consider changing your

print process?

_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ (225)(226)(227) (228)(229)(230) (231)(232)(233) (234)(235)(236)

Now, you introduce a new theme. It is about Location of the plant. Make sure you know where they are. You might focus on the most recent plants. 14. What was the decision behind the location of your recent plants?

_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

(237)(238)(239) (240)(241)(242) (243)(244)(245) (246)(247)(248)

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Understanding the competitive landscape for Printpack

Number each brand accordingly. E.g.: The client says Alcan in first place; put the number 1 in the Alcan space (1). If the client has not mentioned one of these, prompt it, but inform indicating on the questionnaire that you used a prompt with the letter (P): Regarding Flexible packaging suppliers, please could you answer the following questions?

15.

Com

pan

ies

you

have

hea

rd o

f?

16.

Wh

ich

do y

ou

have

rel

atio

nsh

ip

with

?

17.

Wh

ich

wo

uld

you

co

nsid

er f

or fu

ture

re

latio

nsh

ip?

18.

Wh

ich

you

wou

ld

no

t co

nsid

er fo

r fu

ture

par

tner

ship

?

Alcan (249) (250) (251) (252) Amcor (253) (254) (255) (256) Bemis (257) (258) (259) (260) Clondalkin Group

(261)

(262) (263) (264)

Constantia (265) (266) (267) (268) Huhtamaki (269) (270) (271) (272) Kety (273) (274) (275) (276) Mondi Packaging

(277)

(278) (279) (280)

Nordenia (281) (282) (283) (284) Printpack (285) (286) (287) (288) United Flexibles

(289)

(290) (291) (292)

Wipak (293) (294) (295) (296) Other: _______

(297) (298)

(299) (300)

None (301) (302) (303) (304)

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If the client mentions more than 1 brand make sure your notes are taken accordingly: Could you explain the reasons for? 19. Considering future partnership with

Company ______: (305) Reasons: _____________________________ _____________________________ (306)(307)(308) (309)(310)(311) Company ______: (312) Reasons: _____________________________ _____________________________ (313)(314)(315) (316)(317)(318)

20. Not considering future partnership with

Company ______: (319) Reasons: _____________________________ _____________________________ (320)(321)(322) (323)(324)(325) Company ______: (326) Reasons: _____________________________ _____________________________ (327)(328)(329) (330)(331)(332)

Understanding the decision making process, importance of attributes and current vs. expected performance

Mention that from now on, you would like to talk about their current suppliers. Again, if more than one supplier, take notes accordingly, 21. Could you tell how long your relationship has being going with your current supplier? And how frequently

do you renegotiate the contract?

_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

(333)(334)(335) (336)(337)(338) (339)(340)(341)

The question below will drive our understanding of key success factors in the industry. Therefore we need to measure current levels of performance and expected ones, if this is the case.. Explore the question carefully: 22. What are the most important factors in your choice for your current supplier (s) of flexible packaging?

_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ (342)(343)(344) (345)(346)(347) (348)(349)(350)

Explore performance according to the criteria informed in the question before. Example: If the client mentions

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Lead Time, explore what is the current performance. And then explore what would be significantly better to consider a change? Explore it as much as you can and in details: 23. What levels do you have now?

_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ (351)(352)(353) (354)(355)(356) (357)(358)(359)

24. How much better would_________ have to be to consider a change in supplier?

_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ (360)(361)(362) (363)(364)(365) (366)(367)(368)

In the next question explore ideas such as how close departments from both companies (clients and suppliers) work together in projects. 25. What type of relationship do you have with your current supplier?

_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ (369)(370)(371) (372)(373)(374) (375)(376)(377)

26. In choosing a supplier for flexible packaging, could you outline what a typical project team would be?

What are the steps your company consider, departments involved and at which levels are the decision taken. _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ (378)(379)(380) (381)(382)(383) (384)(385)(386)

27. How do you go to market to purchase your flexible packaging requirements?

_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ (387)(388)(389) (390)(391)(392) (393)(394)(395)

IN the question below, explore the ranking of importance using scale. The objective here is to evaluate which of the three strategic dimensions being considered by Printpack does this client prefer. Prompt him with the Table “Importance of attributes” attached in the appendix. 28. In a scale 1 to 3 with 1 being the most important and 3 the least important, how would you rank the

following factors when choosing a supplier?

Low Cost ( ) (396) Superior Service ( ) (397) Product Innovation ( ) (398)

Explore here if the client would be willing to accept lower levels of performance in order to get a supplier close to its plant location. We want to know how location of the plant affects his preferences or interfere in his criteria

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29. Would the plant location interfere in your ranking of criteria? Why? _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ (399)(400)(401) (402)(403)(404) (405)(406)(407)

30. Could you tell me how do you manage your order system?

Electronically ( ) (408) Manually ( ) (409) VMI ( ) (410)

Understanding business volume

31. What is the percentage of your products is in flexible packaging?

( ) (411) 32. What type of flexible packaging materials do you tend to use for your products?

( ) Monowebs without coatings (412) ( ) Monowebs with coatings (413) ( ) Duplex Laminations (2 webs) (414) ( ) Multi-layer laminations (3 webs) (415)

Take notes about any additional comment the client offers

33. Additional information about material:

_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ (416)(417)(418) (419)(420)(421) (422)(423)(424)

Here is a good reference to start your conversation about consumption. Try to explore consumption broken down by (1) segments (2) Product lines (3) Material (4) Volume (5) and frequency. Focus on the products they buy the most. 34. What is your current consumption?

_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ (425)(426)(427) (428)(429)(430) (431)(432)(433) (434)(435)(436)

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35. How do you keep informed on packaging developments?

Trade Magazines ( ) (437) Internet Searches ( ) (438) Attend Trade shows ( ) (439) Others, _________ ( ) (440)

Inform here which on do the client use: Trade Magazines: __________( ) (441) Internet Searches: __________( ) (442) Attend Trade shows: __________ ( ) (443) Others, : __________( ) (444)

Demographics

If the purchase is for more than one plant, check for how many

36. Finally, how many employees does this plant have? ( ) Less than 100 employees (445) ( ) Between 100 and 500 employees (446) ( ) Between 500 and 1000 employees (447) ( ) More than 1000 employees (448)

37. Additional pre-codification from list ( ) ID (449) ( ) Product Type (450) ( ) Sector (451) ( ) Other:________________ (452)

Thank you very much for your time!

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Appendix: ICC/ESOMAR Code of Marketing and Social Research Practice The MRS Code of Conduct is based upon the principles of the ICC/ESOMAR Code whilst taking account of UK legislation and practice. The ICC/ESOMAR Code is included for reference only. All disciplinary and compliance enforcement will be in relation to the MRS Code of Conduct. A. General 1. Marketing research must always be carried out objectively and in accordance with established scientific principles. 2. Marketing research must always conform to the national and international legislation which applies in those countries involved in a given research project. B. The Rights of Respondents 3. Respondents' cooperation in a marketing research project is entirely voluntary at all stages. They must not be misled when being asked for their cooperation. 4. Respondents' anonymity must be strictly preserved. If the Respondent on request from the Researcher has given permission for data to be passed on in a form which allows that Respondent to be personally identified: (a) the Respondent must first have been told to whom the information would be supplied and the purposes for which it will be used, and also (b) the Researcher must ensure that the information will not be used for any non-research purpose and that the recipient of the information has agreed to conform to the requirements of this Code. 5. The Researcher must take all reasonable precautions to ensure that Respondents are in no way directly harmed or adversely affected as a result of their participation in a marketing research project. 6. The Researcher must take special care when interviewing children and young people. The informed consent of the parent or responsible adult must first be obtained for interviews with children. 7. Respondents must be told (normally at the beginning of the interview) if observation techniques or recording equipment are being used, except where these are used in a public place. If a Respondent so wishes, the record or relevant section of it must be destroyed or deleted. Respondents' anonymity must not be infringed by the use of such methods. 8. Respondents must be enabled to check without difficulty the identity and bona fides of the Researcher. C. The Professional Responsibilities of Researchers 9. Researchers must not, whether knowingly or negligently, act in any way which could bring discredit on the marketing research profession or lead to a loss of public confidence in it. 10. Researchers must not make false claims about their skills and experience or about those of their organisation. 11. Researchers must not unjustifiably criticise or disparage other Researchers. 12. Researchers must always strive to design research which is cost-efficient and of adequate quality, and

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then to carry this out to the specifications agreed with the Client. 13. Researchers must ensure the security of all research records in their possession. 14. Researchers must not knowingly allow the dissemination of conclusions from a marketing research project which are not adequately supported by the data. They must always be prepared to make available the technical information necessary to assess the validity of any published findings. 15. When acting in their capacity as Researchers the latter must not undertake any non-research activities, for example database marketing involving data about individuals which will be used for direct marketing and promotional activities. Any such non-research activities must always, in the way they are organised and carried out, be clearly differentiated from marketing research activities. D. The Mutual Rights and Responsibilities of Researchers and Clients 16. These rights and responsibilities will normally be governed by a written Contract between the Researcher and the Client. The parties may amend the provisions of Rules 19-23 below if they have agreed to this in writing beforehand; but the other requirements of this Code may not be altered in this way. Marketing research must also always be conducted according to the principles of fair competition, as generally understood and accepted. 17. The Researcher must inform the Client if the work to be carried out for that Client is to be combined or syndicated in the same project with work for other Clients but must not disclose the identity of such Clients. 18. The Researcher must inform the Client as soon as possible in advance when any part of the work for that Client is to be subcontracted outside the Researcher's own organisation (including the use of any outside consultants). On request the Client must be told the identity of any such subcontractor. 19. The Client does not have the right, without prior agreement between the parties involved, to exclusive use of the Researcher's services or those of his organisation, whether in whole or in part. In carrying out work for different Clients, however, the Researcher must endeavour to avoid possible clashes of interest between the services provided to those Clients. 20. The following Records remain the property of the Client and must not be disclosed by the Researcher to any third party without the Client's permission: (a) Marketing research briefs, specifications and other information provided by the Client. (b) The research data and findings from a marketing research project (except in the case of syndicated or multi-client projects or services where the same data are available to more than one Client). The Client has however no right to know the names or addresses of Respondents unless the latter's explicit permission for this has first been obtained by the Researcher (this particular requirement cannot be altered under Rule 16). 21. Unless it is specifically agreed to the contrary, the following Records remain the property of the Researcher: (a) Marketing research proposals and cost quotations (unless these have been paid for by the Client). They must not be disclosed by the Client to any third party, other than to a consultant working for the Client on that project (with the exception of any consultant working also for a competitor of the Researcher). In particular, they must not be used by the Client to influence research proposals or cost quotations from other Researchers. (b) The contents of a report in the case of syndicated and/or multi-client projects or services where the

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same data are available to more than one Client and where it is clearly understood that the resulting reports are available for general purchase or subscription. The Client may not disclose the findings of such research to any third party (other than to his own consultants and advisors for use in connection with his business) without the permission of the Researcher. (c) All other research Records prepared by the Researcher (with the exception in the case of non-syndicated projects of the report to the Client, and also the research design and questionnaire where the costs of developing these are covered by the charges paid by the Client). 22. The Researcher must conform to currently agreed professional practice relating to the keeping of such Records for an appropriate period of time after the end of the project. On request the Researcher must supply the Client with duplicate copies of such Records provided that such duplicates do not breach anonymity and confidentiality requirements (Rule 4); that the request is made within the agreed time limit for keeping the Records; and that the Client pays the reasonable costs of providing the duplicates. 23. The Researcher must not disclose the identity of the Client (provided there is no legal obligation to do so), or any confidential information about the latter's business, to any third party without the Client's permission. 24. The Researcher must on request allow the Client to arrange for checks on the quality of fieldwork and data preparation provided that the Client pays any additional costs involved in this. Any such checks must conform to the requirements of Rule 4. 25. The Researcher must provide the Client with all appropriate technical details of any research project carried out for that Client. 26. When reporting on the results of a marketing research project the Researcher must make a clear distinction between the findings as such, the Researcher's interpretation of these and any recommendations based on them. 27. Where any of the findings of a research project are published by the Client the latter has a responsibility to ensure that these are not misleading. The Researcher must be consulted and agree in advance the form and content of publication, and must take action to correct any misleading statements about the research and its findings. 28. Researchers must not allow their names to be used in connection with any research project as an assurance that the latter has been carried out in conformity with this Code unless they are confident that the project has in all respects met the Code's requirements.

29. Researchers must ensure that Clients are aware of the existence of this Code and of the need to comply with its requirements

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1. Questions to the Industry Association Summary of information to collate during these interviews -Their views of the industry trends -Critical success factors in the country -Regulations related to the industry -Insights about flexible packaging in the selected categories Details of questions to ask during these interviews

Their views of the industry trends 1. What are the general trends you see in the packaging industry? 2. How do you see the flexible packaging or packaging converting suppliers evolving in the next 2-3 years? Critical success factors in the country 3. What are critical factors required foreign packaging converters to successfully operate in your country? 4. In what situations does the government intervene in the business operations of packaging converters?

Regulations related to the industry 5. What are major regulatory changes that are occurring in the packaging industry in your country? 6. What are environmental (green) policies currently enforced in your country? 7. What do you foresee the impact of the REACH regulation to be in the next 1-3 years?

Insights about flexible packaging in the selected categories 8. What are the advantages/ disadvantages of using flexible packaging in category A, B, C? 9. Who influences the trend of flexible packaging usage in your country e.g. supermarket, consumers or food manufactures? How?

As a complement to the interviews with customers, the IB group 01 team also interviewed industry

associations. The following are questions which were asked to industry associations in Germany.

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2. Questions to Suppliers Summary of information to collate during these interviews -View on trends in the flexible packaging industry -Capability of suppliers -Purchasing policy -Contacts with potential customers (Printpack’s competitors) -Coverage of their network Details of questions to ask during these interviews View on trends in the flexible packaging industry 1. What general trends do you see happening in the packaging industry in particular with flexible packaging? 2. How do you see the flexible packaging industry evolving in the next 2-3 years? Capability of suppliers 3. What type of products and technology are you currently selling to your customers (i.e. printing /flexible packaging converters)? 4. Can you please tell more about the technology you are looking to invest in the future? How are you aligning your future investments in technology to meet the customers’ requirement? 5. How much can you produce per month for required materials X (mention the materials)? Purchasing policy 6. Do you have a minimum order quantity? How much? 7. Can you share with us how you set your prices to potential customers? Who are the key contact persons in your company? Contacts with potential customers (Printpack’s competitors) 8. What type of customers do you usually deal with? Small, middle, large or others please specify by units or

sales value

9. How would you define the relationship with your customer? Arms length, Collaborative, Tight knit, Others specify Coverage of their network 10. What is the coverage of your network (franchises)? Major Locations 11. What is the average time taken to service your customers? Do you have any other services that are unique to your company? 12. What will make you interested in dealing with an international packaging converters / printing label companies? 13. Would you want to be contacted by Printpack?

The following are questions which were asked to suppliers

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3. Questions to the Research Institute Summary of information to collate during these interviews -Introduction of the institute in the packaging value chain -Their views of the industry trends -Critical success factors in the country -Regulations related to the industry -Insights about flexible packaging in the selected categories -Contacts with potential customers (Printpack’s competitors) -Coverage of their network Details of questions to ask during these interviews Their views of the industry trends 1. What are the general trends you see in the packaging industry? 2. How do you see the flexible packaging or packaging converting suppliers evolving in the next 2-3 years? Critical success factors in the country 3. What are critical factors required foreign packaging converters to successfully operate in your country? 4. In what situations does the government intervene in the business operations of packaging converters?

Regulations related to the industry 5. What are major regulatory changes that are occurring in the packaging industry in your country? 6. What are environmental (green) policies currently enforced in your country? 7. What do you foresee the impact of the REACH regulation to be in the next 1-3 years?

Insights about flexible packaging in the selected categories 8. What are the advantages/ disadvantages of using flexible packaging? 9. Who influences the trend of flexible packaging usage in your country e.g. supermarket, consumers or food manufactures? How? 10. Can you please tell more about the technology or materials you are looking to invest in the future? How are you aligning your future research? Contacts with potential customers (Printpack’s competitors) 11. What type of clients do you usually deal with? Small, middle, large or others please specify by units or

sales value

12. How would you define the relationship with your clients? Arms length, Collaborative, Tight knit, Others specify Coverage of their network 13. What is the coverage of your network (franchises)? Major Locations 14. What is the average time taken to service your customers? Do you have any other services that are unique to your company?

The following are questions which were asked to research institutes.

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Questions to the Printpack Realities team A. INFORMATION REQUIRED TO CALCULATE POTENTIAL SALES, INVESTMENTS AND PROFIT IN POLAND AND GERMANY -Based on company X’s product lines, estimate the percentage of flexible plastic and stand-up pouches usage? -Estimate percentages spend on flexible packaging to total sales value?

Examples

Print out product range and table of key players by categories

- What is the current cost structure across the value chain for Printpack in the UK - What is the projected cost structure of serving customers in Poland and Germany from the plant in Poland

B. INFORMATION FOR GAP ANALYSIS

- Price differential that determines the choice of one flexible packaging converter over another What factors determine the price of flexible packaging to your customers What is the usual price difference between Printpack and its competitors, and the industry average - On-time delivery What level of on-time delivery do you achieve annual? Are these delivery always in full quantity? Which customers do you tend not to achieve on-time delivery? Why? - Required lead time

What are the required lead-times for National and Multi-national companies per category? - Level of defective returns for

What is the level of defective returns for each customer and for each product type? What corrective measures do you have in place to reduce these defective returns?

- Use of Vendor Management system

Do you currently use the vendor management system, how much investment did need? Which customers are connected your VMI? Was the implementation of this system customer-led or Printpack-led?

- Low cost materials, labour, distribution

What has been the cost of your raw materials, labour and distribution over the last five years? What are your projected costs for the next five years?

- Efficient processes What type of processes do you have in place to support lean and efficiency manufacturing? How is the effectiveness of these processes monitored, controlled and developed?

The following are questions for interview to the Printpack reality team.

Chocolate confectionary

% of spending on flexible packaging (including stand-up pouches) to total sales value

PlayersRetail value

share 2005 Stand-up pouches Flexible plastic Others TotalFerrero OH GmbH 21.52 100%Masterfoods GmbH 11.67 100%Kraft Foods Deutschland GmbH & Co 11.6 100%Storck KG, August 8.62 100%Ritter GmbH & Co KG, Alfred 7.39 100%

Chocoladefabriken Lindt & Sprüngli GmbH 7.18 100%Nestlé Chocoladen GmbH 6.08 100%Stollwerck AG 3.77 100%Aldi Einkauf GmbH & Co oHG 2.55 100%Ludwig Schokolade GmbH & Co KG 2.5 100%Feodora Chocolate GmbH & Co 0.13 100%

% of packaging usage (in value portion)

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- New machines

How old are your machines, do you have new ones? How often do you change your machines? How is the production output these new machines in comparison to that of the old machines?

- High productivity (revenue/number of employees)

How is your productivity level compared to your corporate target and compared to the industry average - High Quality Printing Technology

What type of new printing technology do you have? What is the level of printing quality in comparison to that of the old machines?

- High-tech printing machinery

What types of machines do you have in place that can give you superior printing design? - High quality flexible packaging materials

What attributes/technical specification do you use to define the quality of the flexible packaging materials? - High-quality suppliers

What volume of your raw materials comes from high-quality suppliers? How do you ensure the consistent of quality from these suppliers?

- Enhanced product requirement

What are your recent product innovations? Are they unique to the market? At what rate to you bring out new product innovation? Are your innovations company-led or customer-led?

- R&D

What type of R&D do you have in place? What level of investment do you put into R&D?

- Proximity to supplier

How close are you to your customers? - Level of flexibility

What measures do you have in place to respond to the urgent needs of customers? - Back-up service

What back of services do you have in place? - Joint projects/collaboration

How often do you collaborate with your customers on joint projects? Who gets involved from Printpack and from the company? What are they outcomes of such collaboration?

- Frequency of visits/service

How often do you visit you customers? What is the level of your sales force? How do you update your customers on your packaging development?

- Payment conditions – long term

What are you payment conditions? What is the maximum length of credit you give your customers?

- High-switching cost

Are there any measures in place that creates a high switching cost for your customers?

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Appendix 3 Interview Minutes Interview Output with Suppliers in Germany

Company SKC Europe GmbH Kolon Industries, Inc. Frankfurt Office

Saehan Industries GmbH

LG Chem Europe (Resin)

Toray (Saehan) Gmbh

Market Trend

Buyer market, minimal growing depending economic growth, more enquiry for hi-tech products

Continuous increasing reflected in production trend

No more plastic packaging, value added such as electronic goods

(Major segment is different)

High quality and new materials

Technology and Products

Most kinds of PET materials (attached brochure)

PET film, nylon film, metalized PET

Diverse PET film for E. goods such solar window film, blistering package, magnetic, etc

High value added

High tech including metalizing, bio-degradable, thermo film etc and low cost products by Saehan factories

Capacity Tons

150,000- 113,000- - Small (Resin) but large in Korea

100,000-

Business Location

Global Pan EU Germany Pan EU, but German is major

Global

Minimum Order

Container base but consider economy of scale

Container base, 20-40 tons

Container base, special case 3 tons

Container base, 14-17 tons

Container base and special condition

Major Customer

Most major flexible packaging firms including Alcan, Amcor, etc. (not factory base)

Large firms by direct contact, and small firms by distributors

LG Philips (Poland LCD), Kurz, Kermpel, Metal Vuoto, 3 UK distributors

Major constructor, and end users (many different segments)

Diverse

B2B focus Pyramid type of relationship

Strategic collaboration

Small segment Coordination (B2C: niche by quality and tech barriers)

Business support

Marketing Strategy

Relationship oriented with high R&D ability

Low price but middle quality

Niche market Very aggressive with variety & volume

Consolidated (High / middle tech )

Special Offer

Consignment service and sweet wrapping PET

Better price offer than others

Flexible volume - Negotiable

Delivery 8 weeks 8 weeks 6-7 weeks 6-8 weeks (4 transaction)

4 weeks using local storage

Contract Anytime deal and flexibility in volume

Depends on the condition

Yearly, bi-yearly Depends on distributor and end user, and negotiation

by-Yearly

Forecast High competition, favourable for customer, OPP films for poor countries

Over supplying, some chance for lower prices

With EURO strength UV Cut, deco and etc are increasingly promising

Higher competition with more than 100 firms

Higher competition but segmented by major suppliers

Market Suggestion for Printpack

Middle ranged price with almost same quality and diversity

No trust for Indian and Chinese products

High competition in packaging, so better to diversify

Tech-price-service in order (tech certification) German are Conservative

Sustainable development necessary in the future

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Interview Output with Fraunhofer Research Institute

� Market Trend - safety is a must and then functions considered with prices, ex) PVC never used by the

regulatory regime and market, cellulous is re-adopted as it is safe in spite of its low functions

- so many test request form all over the world it reflects the trend of new materials - end customer are Sensitive to safety, and conservative - High relationship with packaging firms and material producers, - Cross section test in supply network is general � Regulation � -German regulations have two important sources: 1. EU Directive and 2. BgVV which is a

similar institute to FDA in the US. � -it affects unit price, function. If no safety, absolutely impossible with low price and good

function - ex) bottle subsidy refund system: 25 cents for a bottle, about 70 euros for a car battery, pmt

for plastic ---- environmental costs for firms - generally speaking, more packing more costs - CO2 allocation system, recycling system � Technology - Biodegradable: mixing bio polymer, but problems are � . Preventing gas and vapour, transparency, etc. � . Technical and physical limitation without synthetic materials � . Developing new technology for anti bacteria, preventing power etc. � Physical protection, multi layer lamination, vacuum packing --- no germs, long conservation

periods, � -ex) no more PVDC, Dioxin, now EVOH � Role of Fraunhofer - using home page, research suggestions, development of new technology, test for format

and safety, raw material consulting, but no biz consulting - Access to the institute: using home page contact persons in charge, calling is the best

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14 INTERVIEW SCRIPTS, GERMANY 14 in depth semi structured interviews have been carried out in Germany in food producer companies. These companies produce food in 3 market categories, that of bakery, pet food, confectionery. In order to respect the wish of the interviewees not to remain anonymous, we do not reveal the names of the interviewees not the name of the companies.

Type of company NationalSize of company Small

Category BakerySubcategory Biscuit

1 Yes2 N.A.

3She has seen growth in Germany for all products, but says growth is rather small and limited. Most growth of the products will be generated from exporting to other countries.

4 No information given // Advised to speak with sales department5 No information given // Advised to speak with sales department

6

She does not see any major changes from the regulatory side for the near future. However, she makes clear that there are many strict regulations in the packaging industry and that her company follows all these regulations. Regulatory changes in the past have driven up prices by a considerable amount.

7 No information given // Advised to speak with sales department

8

"Nobody along the value is willing to take the initiative, but it should be the packaging industry’s responsibility to make recycled material cheaper and economically affordable. In terms of additional costs, I believe that nobody is willing to take them up. They should be shared out equally between all participants of the value chain. Especially for smaller companies like ours, it is almost impossible to pass on these extra costs that occur."

9 The company has been with flexible packaging for some time and are not considering a move.13 N.A.14 N.A.19 N.A.

19 - b N.A.20 N.A.

20 - b N.A.

21

There is no clear guideline on how the company sets up contracts and it differs with every product. For their stanard products they have long-term contracts that contain specific quantities to be supplied, but leave space for fluctuations. These contracts are reviewed on a yearly basis// However, they also set up contracts for special products, that might only be produced for a short time period. These contracts are time limited to a few months and are mostly not variable.

22

The first factor is the material’s compatibility with the machines that are being used, as not all materials are suitable for their type of machines. The second factor is the quality of the packaging. She specifically names water and air resistance of the packaging as the main criteria. But she is not able to give specific figures. Also she says that the selection of a supplier depends on the product and the time it will be stored. She says that they had to move away from Mondi and search for other suppliers due to too high pricing. She was not able to give us information about the prices they are paying compared to the standard market price.

23 N.A.

24

They just changed their supplier due to cost pressure. They have to evaluate the new supplier, but they will only consider a change if the new supplier’s quality is significantly better at the same price level. They also changed the printing company to a foreign country and they are currently experiencing some minor problems with the new supplier, as the desirable quality has not been met.

25 N.A.

26

"It involves primarily the Purchasing/Acquisition department, which works together with the technical department. The technical department has to check if the materials are compatible with the machines. The next step is the quality control. Samples of the materials are given to quality controls which have a set of test to be performed on the new packaging. In the final step, the sales department assesses the packaging in how well it is marketable and suitable for the customers."

27 N.A.29 N.A.

33100% flexible packaging, however they have some products which consist of other packaging, however the main packaging with these products is still flexible.

34 1,100 tons for Monowebs with coatings and 1,200 tons for Duplex lamination (2 webs)35 N.A.

INTERVIEW 1, Germany

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Category ConfectionerySubcategory Chocolate/Sugar confectionery

1 Yes

2

"Considering the saturated chocolate bars segment, the aggressive discount from private labels and the highest concentration of the market in a few companies, we can say that we won't expect more consumers on the future. For this reason growth will come from expansion to other segments and geographic areas."

3

"As an example of how we are looking for new geographic regions and alternative segments to classical consumer of chocolate you can see he product "Fritt" which is specially designed for young consumers to whom we offer joys that call their attention. Our new products will increasingly offer light chocolate, less sugar and a mix of ingredients."

4

The client did not say clearly about competition; nevertheless he invariably used examples of packaging from Masterfood and mentioned about a supplier of Ferrero during the interview. He also did not revealed a clear strategy about how to offset competition, but it is noticeable their focus on cost reduction mainly.

5"This is true, there is an danger in the moment of middle range companies get together in order to search for synergies and scale."

6

"We are already familiar with intense legislation in Germany such as Declaration Duty that rules packaging sector, International Food Stanard 5 and prove certificate all mandatory. Legislation in packaging is not new in Germany."

7

"Consumers look for simplicity. They do not want complicate packages. They also value packaging that are environmentally friendly. We believe that the presentation of the product is very important and packaging plays the biggest role."

8 "Recyclable packaging is important. I see the price going to be paid by the end user."

9 No planning for any change revealed

13"99% of my printing is on Gravure. It offers a better quality and it does not bring problems when you have to make small modifications in the lay out."

14

"Plant Location can in some cases represent 25% to 30% of the costs. And we use to have too many suppliers. I reduced to 5 from 500, mainly because cost structure are changing. Out of this 5, just one is in Germany, the others are in Italy, Slovenia and Turkey. Plants can be located far as long as our supplier can deliver in 48 hours. 36 hours is ideal. I have 60 to 70 lorries each day delivering products from different suppliers in this plant."

19 "As a Purchase Manager I do not have any strong feelings in favour or against suppliers."

19 - b "My role is to consider all options available."

20 "I have made business with Alcan and Alcoa in the past, but they are too big for me."20 - b N.A.

21 N.A.

22"We are looking for competitive price. So low cost comes in first place. Then it comes superior service. Product innovation in third place. Plant location does not interfere in this criteria."

23 N.A.24 3 to 5% cost reduction

25Not specifically attached with suppliers. They are keen on testing new alternatives, but in general the current relationship is good

26

"When is about new products, the process starts with the packaging department. Then my approach is to make a test with the product. If the quality is ok and commercially interesting, then the next step is to given them a commercial contract informing time for delivery, tolerance. When the supplier agrees we start with small orders first."

27 "I am usually contacted by suppliers."29 "No. If the supplier manage to deliver in the time agreed, it should not be a problem."33 N.A.34 N.A.35 N.A.


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Category ConfectionerySubcategory Chocolate/Sugar confectionery

1 no2 Beyond his knowledge area3 Beyond his knowledge area4 Beyond his knowledge area5 Beyond his knowledge area6 Beyond his knowledge area7 Beyond his knowledge area8 Beyond his knowledge area

9They intend to move away from carton and synthetics to flexible packaging. They gradually plan to have their most of their products using flexible packaging.

13 N.A.14 N.A.19 N.A.

19 - b N.A.20 N.A.

20 - b N.A.21 He has been in the company for over 10 years, and since then they have been with the same supplier.22 A good price, flexibility and proximity to the plants23 N.A.24 N.A.25 N.A.

26

1. They receive a specific composition for the product by the marketing department, which contains a minimum date of expiry. 2. In the packaging department they then pick a certain material suitable for these product specifications. 3. They test for the ability to keep the flavour over the expiry date and for the ability to allow for a good printing process. However most importantly they test for the sealing of the packages. 4. In coordination with marketing department they then make the final decision regarding the packaging of a product.

27 N.A.29 N.A.33 N.A.34 N.A.35 N.A.


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Type of company NationalSize of company Large

Category BakerySubcategory Breakfast cereal

1 Yes2 He can’t say where the market is going, as the company is too big, and has too many subsidiary companies3 He says that the company has sold many brands, and therefore does not know about the growth of single 4 The Group is too diversified in their subsidiary companies. Each company has different competitors.5 N.A.

6

In Germany there is a law that every time they make use of packaging they have to pay a fee to the Deutsche Pfandsysteme GmbH (DPG) for recycling these materials. This means that they have to try to limit their use of flexible packaging as this is more expensive than using carton for instance. Therefore carton has a high priority due to cost issues.

7 He can't answer the question8 N.A.

9

At the moment they are using about 30 different packaging formats. These formats are aimed at obtaining the highest machine/production efficiency. This means that they are not able to change the packaging material/format without undergoing major changes in production processes. He think that the trend of packaging in Breakfast cereal is moving to plastic despite higher cost of material comparing to that of paper because the production efficiency is higher e.g. less waste/damage and faster speed.

13Gravure with high volume and flexo with low volume (they use offset printing for carton and mainly use flexo for printing tags)

14

They have production plants everywhere across Europe. The plant where he works at is the place where the company was founded (in Bielefeld). They produce the same products everywhere in Europe, so they can produce everywhere. They have plants in Poland, due to tax reasons and also regulatory reasons. Their products are mostly not dependent on the wages; therefore it does not make a difference where they produce.

19 N.A.19 - b N.A.

20 N.A.20 - b N.A.

21

Usually they have contracts between 1 and 3 years. Depending on the product, they usually prefer 3 year contracts. In the contracts they usually set out the amounts of raw materials used, depending on the products. 1 year contracts are not too common any more. They constantly discuss prices with their suppliers, but generally contracts are 3 years long.

22

Most importantly the main reason is proximity to the plant. Second, the ability to supply multiple plants. They also want to see internationality in their suppliers, meaning the ability to supply plants outside their country. He also said that price and quality have a high priority.

23

Regarding key factors in choosing suppliers, he said that he prefers suppliers to deliver the products within 12 weeks for lamination and 5-6 weeks for plastic. Second factor – ability to supply multiple plants. Currently the company has 5 plants in Germany and they prefer to have a single supplier to deliver to many plants rather than have multiple suppliers to supply within nearby areas. Regarding frequency of visits to suppliers: His subordinates who work in quality department normally visit suppliers about 2 times per month. For him (senior position), frequency of visits is about 1-2 times per year.

24 N.A.25 N.A.

26

They always have a project team consisting of: purchasing, product development and packaging technician. The product developer tests if the packaging affects the product. He tests if the packaging interferes with the quality of the product. The packaging technician tests if the supplier has the technical requirements and also if the materials used are compatible with the machines that are present in the plant. He also comes up with the exact specifications needed for the product. Purchasing then makes the contracts and sets out the prices and volumes. He has the final decision after being informed by the project team.

27They approach the market by advertising. In their advertisements they set out the specifications volumes, print process and quality needed for a specific product. They then demand cost estimates.

29 N.A.

33

With regards to packaging, he believes that there is a trend towards refined packaging (high quality) with at least 10 colours. He thinks that gravure printing will lose popularity, as the cost of this procedure is too high. Other printing procedures are catching up on the quality and will overtake gravure printing.

34 N.A.

35

He uses below important websites for the packaging material industry: http://www.euwid-papier.de/ http://www.verpackungsrundschau.de/ http://www.neue-verpackung.de/ http://www.risiinfo.com/ In addition to that he receives an internal newsletter through the company's technical department.


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Type of company MultinationalSize of company Large

Category BakerySubcategory Baked goods

1 Yes2 N.A.3 He sees the most growth coming from topped and filled products.4 N.A.5 N.A.6 N.A.7 N.A.8 N.A.

9

He says that is almost not up to them which packaging format they are using. They are working together with big retailers that determine the packaging format. He says that the packaging format is also determined by the price of the product. A cheap product also requires smaller packaging. There are price barriers to the packaging.

13

When the volume is very low, they tend to use 10-color flexo printing. When printing the standard products with high volumes they use gravure printing 9. "I would never consider changing, because gravure printing is far better when dealing with high volumes. When using flexo with high volumes, you would have to change the “sheets” too often, and this does not work out on the cost side."

14He says that the location of the plant was chosen by his customers. He wants to be close to the customers and that the location is determined by the logistics of the whole process.

19They would not consider any of these for future partnerships. Alcan, Amcor, Mondi, Nordenia, Printpack, United Flexibles, Wipak

19 - bHe says that all of the above companies in question number 19 are too expensive for what they offer. He would never have a partnership with any of these.

20 Mondi and Amcor20 - b He says that Mondi and Amcor are not capable of fixing prices with their suppliers for raw material.

21

He says that they have contracts which contain the volumes and the basic circumstances, such as price and quality. They meet one every year to negotiate the contracts and renew them. When asked about the trend he says that the industry would like to have shorter contracts, and it has been like this for a long time. This is because they want to be on the safe side, as raw material prices are fluctuating. However he thinks that they could have contracts with their suppliers about fixed prices, it is just a matter of will.He says that their current supplier is able to deliver very high quality at a significantly lower price. They have had their supplier for 6 years and it has not changed ever since.

22 N.A.

23

He says something about IFS (International Food Standard Regulation) and BRC (British Retail Consortium). The lead time has to be less than 7 days and sometimes even shorter. He says that it depends on the order and if the supplier has to make orders themselves.

24He says that a higher price has to be justified with better quality. He says that they check if the price and quality is on a world market level.

25 N.A.

26

They do have a project team. First of all they have to decide which kind of film they want to use. They then talk with the suppliers about the requirements for the plastic. The technical and product development department then simulate processes to see how the packaging behaves during the production process. They then decide which points have to be changed or adjusted until the final packaging is agreed. He is the person who has the final decision on new packaging.

27 N.A.29 N.A.33 N.A.34 N.A.

35

To stay informed, he uses trade magazines, but he can’t remember their names. He also uses the internet. Most importantly however, he is often being approached by his supplier about new developments. He is constantly being updated through his suppliers.


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1 Yes2 N.A.3 He sees the most growth coming from topped and filled products.4 N.A.5 N.A.6 N.A.7 N.A.8 N.A.

9

He says that is almost not up to them which packaging format they are using. They are working together with big retailers that determine the packaging format. He says that the packaging format is also determined by the price of the product. A cheap product also requires smaller packaging. There are price barriers to the packaging.

13

When the volume is very low, they tend to use 10-color flexo printing. When printing the standard products with high volumes they use gravure printing 9. "I would never consider changing, because gravure printing is far better when dealing with high volumes. When using flexo with high volumes, you would have to change the “sheets” too often, and this does not work out on the cost side."

14He says that the location of the plant was chosen by his customers. He wants to be close to the customers and that the location is determined by the logistics of the whole process.

19They would not consider any of these for future partnerships. Alcan, Amcor, Mondi, Nordenia, Printpack, United Flexibles, Wipak

19 - bHe says that all of the above companies in question number 19 are too expensive for what they offer. He would never have a partnership with any of these.

20 Mondi and Amcor20 - b He says that Mondi and Amcor are not capable of fixing prices with their suppliers for raw material.

21

He says that they have contracts which contain the volumes and the basic circumstances, such as price and quality. They meet one every year to negotiate the contracts and renew them. When asked about the trend he says that the industry would like to have shorter contracts, and it has been like this for a long time. This is because they want to be on the safe side, as raw material prices are fluctuating. However he thinks that they could have contracts with their suppliers about fixed prices, it is just a matter of will.He says that their current supplier is able to deliver very high quality at a significantly lower price. They have had their supplier for 6 years and it has not changed ever since.

22 N.A.

23

He says something about IFS (International Food Standard Regulation) and BRC (British Retail Consortium). The lead time has to be less than 7 days and sometimes even shorter. He says that it depends on the order and if the supplier has to make orders themselves.

24He says that a higher price has to be justified with better quality. He says that they check if the price and quality is on a world market level.

25 N.A.

26

They do have a project team. First of all they have to decide which kind of film they want to use. They then talk with the suppliers about the requirements for the plastic. The technical and product development department then simulate processes to see how the packaging behaves during the production process. They then decide which points have to be changed or adjusted until the final packaging is agreed. He is the person who has the final decision on new packaging.

27 N.A.29 N.A.33 N.A.34 N.A.

35

To stay informed, he uses trade magazines, but he can’t remember their names. He also uses the internet. Most importantly however, he is often being approached by his supplier about new developments. He is constantly being updated through his suppliers.


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1 Yes2 N.A.3 N.A.4 N.A.5 N.A.

6

There are certain regulations, which determine some aspects of the packaging. They are forced to do degradation tests, which ensure that no smells and flavors from the packaging affect the content of the packaging. But other than that he sees no regulatory changes happening in the near future.

7 N.A.

8He says that recycled materials are more expensive and it is up to the producer to use these materials. He does not know what the ecological footprint is.

9 N.A.

13

He says that the preference changes with the materials used. When using laminations, he uses gravure and flexo.When using carton they use offset and flexo. This is because the printing quality is determined by the customer.

14 N.A.19 N.A.

19 - bHe would consider future partnerships with the companies, because they have had partnerships in the past and there haven't had any problems.

20 N.A.20 - b N.A.

21

He says that the company handles contracts differently. Usually they have 2.5 year contracts when using some crinkled cardboard. When using carton and flexible packaging they do not necessarily have contract, just agreements. However these agreements are never last longer than 1 year. When asked about the trends, he says that he does not see any trends. In their contracts they set out termination clauses that allow each party to retreat from the contract if prices change dramatically. Last year they noticed that it has become very hard to fix prices, as raw material prices were jumping up and down.

22The most important factor is flexibility, lead time and finally the price. However quality is the basic requirement.

23

It entirely depends on the different product groups they need packaging for. When ordering crinkled cardboard they need the materials within 3 days. When ordering laminations, they need at least 4 weeks as they have to align their machines. With labels, he sometimes requires them to be delivered within 1 day. But for some materials they need 8-10 weeks.

24

He would not change the supplier, even if the quality is better. He says that if there is no need for better quality, then he would not consider a higher priced supplier. However if the better quality has a positive effect on their products, then he would be ready to pay a higher price. The lead time however, would not play a role in deciding a new supplier.

25 N.A.

26

Purchasing, product development and the technical department are involved. The materials depend on the date of expiries of the products. The product development sets out specifications such as water resistance and if any gases need to be added to the content. Upon these specifications they then decide within the team which materials would be most appropriate. The Purchasing department then picks the best supplier for this specific material.

27 N.A.29 N.A.33 N.A.34 N.A.

35

He keeps informed about the packaging industry through trade magazines, internet searches and also trade shows. They attend the Ditapacks (?) and Fachpacks (?) Packmittel Messe (?) tradeshow to look out for new developments. He also gets constant updates by his suppliers about any new developments.


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Category BakerySubcategory Baked goods (to retailers)

1 Yes2 N.A.

3He hasn't seen any threat from breakfast cereal. The growth of his products (private brand to retailers) is still increasing. He has seen growth from functional foods e.g. bakery + vitamins.

4 N.A.5 N.A.6 N.A.7 N.A.8 N.A.9 Retailers dictate what kind of packaging they should produce.13 N.A.14 N.A.19 N.A.

19 - b N.A.20 N.A.

20 - b N.A.

21 The contract is determined by volume basis not period with retailers.

22 Quality, price and proximity

23

In terms of quality, he mentioned about BRC (British Retail Consortium) and IOP (Institute of Packaging) standard. In terms of delivery if he orders in the morning today, he expects delivery for tomorrow. If he orders today afternoon, he expects delivery the day after tomorrow.

24 N.A.25 N.A.26 N.A.27 N.A.29 N.A.33 N.A.34 N.A.35 N.A.


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Type of company Pan-europeanSize of company Large


1 Yes2 N.A.3 She said that the company has plan to move forwards to premium product line in 2010 as current market is 4 N.A.5 N.A.6 N.A.7 N.A.8 N.A.

9Depends on the purpose of packaging i.e. the company uses carton or paper for biscuits in order to protect the products from not being broken.

13 No plan to change from Gravure14 N.A.19 N.A.

19 - b N.A.20 N.A.

20 - b N.A.

21

"Previously, the company has 3 years period for the contract and in 2006 the company just changed to 1 year review due to the cost pressure. However I personally perfer to have 3 years contract as the switching cost e.g. time to review new suppliers or cost of cylinder change is high."

22 N.A.23 N.A.

24

She said that when it comes to new suppliers, the company has fixed cost to consider e.g. cylinder cost. They need to change 5-6 cylinders so the price of new suppliers should be at least 5% lower comparing to current level.

25 N.A.

26

Firstly, she is approached by suppliers and consider the price level. If the price is ok, she will look at material certificate e.g. foil doesn't have impact on taste and test safety. Then she will order samples of product for sample test and larger volume for re- test.

27 N.A.29 N.A.33 N.A.34 N.A.35 N.A.


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Category Pet foodSubcategory Dog and cat foods

1 Yes2 N.A.3 N.A.4 N.A.5 N.A.6 N.A.7 N.A.8 N.A.

9Flexible packaging especially in Pouches is increasing and the company has plan to change from card boxes into flexible due to superior design and printing quality.

13"Gravure process is superior in terms of quality comparing to flexographic and the company needs more volume to compensate for the fixed cost. The company uses flexo in case of less amount of printing."

14 N.A.19 N.A.

19 - b N.A.20 N.A.

20 - b N.A.

21 "There are 3-4 suppliers with relationship around 7-8 years"

22Cost is always the point. Printing quality comes next e.g. with colour system 50 colours. Then, printing ability and services. He prefers suppliers to locate near the plant in order of convenience to check quality of printing.

23 Lead time for delivery is around 8-12 weeks

24 N.A.25 N.A.26 N.A.27 N.A.29 N.A.33 N.A.34 N.A.

35 Special magazines, discussion with people and trade show e.g. Interpack in Germany


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Type of company Multinational (Nestle)Size of company Small

Category ConfectionerySubcategory Chocolate confectionery

1 Yes2 "We see companies going East and Western becoming more focused on highly sophisticated products. "

3"Raw material is becoming increasingly costly, there is also a need to look for premium products with more added value and promotion."

4"Much of the growth will come from items affected by heavily promotional initiatives and on the other hand initiatives to make premium offers which are more on niche products."

5 N.A.6 N.A.7 N.A.8 "Today we have to use recyclable material. This is an important requirement of the market."9 N.A.

13"Flexographic is good for a design point of view, but when it comes to details we see gravure as better. We use much more gravure in the confectionery line."

14 N.A.19 N.A.

19 - b N.A.20 "Bemis. Not because we do not want to work with them but because they do not work with flexible packaging"

20 - b "Wipak, for the same reason stated before (on question number 20)"21 N.A.

22

"In our promotional lines we look for costs and production capacity with differences for 5% and 30 % respectively when compared to our current suppliers. In Premium products we look for new material types and new technologies. Basically it is important to have suppliers where we can get input from and offers an advanced research centre."

23

"I am missing a little some developments but as fas as I am concerned we have not got much difference in terms of equipments technology when compared to 20 years ago. We see much of the same in terms of machine technology and film types."

24"In case of changing suppliers, price should be 5% lower comparing to market rate for high volume and more than 30% cheaper comparing market rate for low volume."

25

"Usually we get together to develop new ideas and process, but normally this attitude comes from us. There is the minority that has a more pro-active attitude in coming to us and offer new solutions. I would like to see more initiatives in this area, but generally speaking we are happy with our current suppliers."

26"In new development products we look at time and category material and if we demonstrate an interest in going further, the purchaser checks for the price."

27

"When we evaluate our suppliers we analyse three levels of requirements: Firstly, basic facts such as certificates and structure of the company. Then we check whether or not they have a specialized offer/service and thirdly we check for specification of material and whether or not the material fulfils our requirements ."

29Current suppliers do not locate close to customer's plant. However, they prefer to have suppliers within 1,000 Km.

33

"In confectionery most of our products are in cold seal. So it is important to look at the technology that the supplier can offer in cold seal, their equipments. We also use monofilm and we observe the supplier quality on this area as well. I believe that there is some space for developments in areas such as (a) low temperature areas (b) close sealing material, synthetic cold seal which is not currently price competitive (c) laser sensitive coding (d) individual coding used for promotions - 1 item and print colours where you have to scratch to get money. They are all areas with rooms for development."

34 N.A.35 N.A.


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Type of company Multinational (Ferrero)Size of company Large

Category ConfectionerySubcategory Chocolate confectionery

1 No

2"Trends are more on how do develop better displays to call attention of the end user for our product. End-user's purchase is made at the point of cash by impulsively and we have to be able to get their attention."

3 N.A.

4

"We have a volume of 60 million boxes a year. By developing better boxes we can better advertise and display our products. We can also save money in transportation, we can better communicate our brand, save shelve space, support retailers with internal transportation issues which reduce their labour costs and helps them to sell per m2 and catch more the customer's attention at the moment of the purchase."

5 N.A.

6

"Boxes and packaging have to be much more informative and facilitates the retailer internal operations. Our previous boxes were not well presented. They used to be considered for transportation purposes only. Our current boxes are much better, well presented they facilitate retailer operations. To scan our codes is much easier now."

7

"Small packages have to be easy to carry , opened, and be simple. Our boxes facilitate retailer's operations because they have this characteristics such as modularity, functionality and they are now much more easier to open."

8 "Recyclable material is a requirement and focus of our attention. Our boxes are all recyclable."

9

No information specifically given about product but the client stated that : "We are focus on the retailer needs as we can sell more per package. I see a trend in products being displayed together rather than individually, in that sense the box becomes important. We see this sharing pack as a trend."

13 N.A.14 N.A.19 N.A.

19 - b N.A.20 N.A.

20 - b N.A.21 N.A.

22

"I do not deal directly with suppliers, but what I can say is that they have to be flexible to work together in new programmes and projects. I have also seen large equipments that can attend us when we need to change requirements quite rapidly. For instance we may come up with a change in the production line for a specific label for Finland and the supplier has to be able to answer to those requirements in large scale at a short notice."

23 N.A.24 N.A.

25

"I have personally led a project for changing our packaging requirements in the last two years. So we asked to our suppliers to attend us in a series of new requirements. This project involved many team internally and with the suppliers and we today have a good result as you can see."

26"This project, the CSI project that stands for Company standardisation process is an example of how a typical project works for developing a new packaging programme."

27 "You have to ask purchase department."29 N.A.33 N.A.34 N.A.35 N.A.


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1 yes

2 "Basically, there are no significant changes on Food Business."

3

"Crisp market is not growing. So, we have to adapt to gain market share. For instance, in the market for snacks we have an option for people who like to drink and we offer an snack with spicy flavours typical from Mexican and Asia."

4"There are many competitors in the snack sectors. Wasa is more oriented in the premium segment, Burg in the middle price segment and then we have low priced products leading by private labels."

5 N.A.6 "Label to better inform customers and recyclable requirement are already usual here."

7

"In our perspective, in terms of packaging use machines that we are satisfied with such as Swiss machines SIG. We also have German Machines namely Zwieback. In terms of End user the general expectation with packaging is that they last, are easy to use/manipulate and they can reuse it. We can not ignore certain technical requirements such as in order to protect crisp, humidity needs to be kept below 5%, so we need high barrier protection."

8 "In general we can not charge Food Manufacturer."

9 No changes concerning packaging

13 Preference for Gravure as Flexo has not achieved the same quality

14

"Our plants are located here in Burg. The main reasons are that they are closer to suppliers that are located in this area because this is an fertile area to grow crops, it is the largest in Germany. And it is also close to customers as we are close to Berlin."

19 no particular preferences

19 - b no particular preferences

20 no particular objections, but small and middle size suppliers tends to be more flexible

20 - b no particular objections, but small and middle size suppliers tends to be more flexible

21 "We currently have 5 suppliers. 2 of them are for Cardboard and the others supply flexible plastic."

22 "The ratio price / performance comes first. But it has to be reliable, flexible and deliver on time."

23 "Requirements and deliverables attended in 48 hours for instance."

24 "5% (price/performance) reduction is a option to consider change."

25 "Short notice such as to anticipates a request in one day is still difficult, but communication is important."

26"Normally I am contacted, and I decide whether we should procedure or not. We have cases where the first sample is good, but later deliveries do not follow the same quality, but in general we are satisfied."

27"I am contacted by them and when I need I can consult their leaflet. If I have a special requirement I usually look at the internet for a search."

29

"No, suppliers being located at long distances are not a restriction. We have seen suppliers for flexible packaging located in Denmark and Sweden. They are located in different countries because the distribution costs still compensates the price here in Germany."

33"There are some influences from retailer that affect us, for instance. We have to adopt our box with 24 pieces because the retailer asked one box with 12 pieces and this is primarily done with our supplier for Cardboard."

34 N.A.35 N.A.


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Category ConfectionerySubcategory Sugar confectionery/ gum

1 yes

2"Our business is in the chewing gum. We see trends towards the use of more fruit flavour and sugar-free products and more healthy oriented products."

3

"In lines with less sugar. In terms of children, the majority goes for bubble. However we still have barriers to overcome such as when you reduce sugar, you lose some linking properties of the product and they become less consistent. We still need to deal with this."

4

"If you look for Kraft for example, they have products for niche markets but we have more "classic" products so we face price pressure as we are in the low cost corner of the market. But at the same time customers want new ways. So we have decided to maintain chewing gum in Germany that requires more innovation and produce other low value added products in Slovenia."

5 N.A.6 N.A.

7

"We do not advertise in TV and Radios, so our product has to be packed and displayed in a way that we can call attention of the customer at the point of sales. And our customers are sensitive to packaging. My boss for instance said that he wants our products to look "fresh" at the supermarket."

8 N.A.9 N.A.

13

"Today we have preference for Gravure. But I have said internally here that we can achieve excellent results with Flexo, but I think our preference for gravure will maintain while my boss is here. We see trends for more flexibility for small requirements. Machines are going from 30 mm roll wide to 300 mm, with larger printing area and digital printing as well. All trends are promising."

14

"We are facing pressure for raw material costs such as carton price which increased 30% in the last year, oil and raw material in general. On the other hand the retailer wants better packaging, high coloured definition. We are in the middle with squeezed profit. So we need to outsource to Turkey for instance where our suppliers such as Alcan has a plant."

19 N.A.19 - b N.A.

20 N.A.20 - b N.A.

21 "Suppliers are not a problem and I am not married with our current ones."

22"Costs is the most important factor, then we look at delivery times and then service. For instance I can call them and say I need one sample , can you send me in two days? "

23 N.A.

24

"There is the hard fact such as percentage in reduction in costs, but we also look at the soft side. How we get engaged with the supplier, how they understand our needs, how we communicate with each other. We want suppliers who can understand our business."

25 N.A.

26

"When deciding about a new supplier, we test the material in the market and see the feedback of the retailers. You look at all points you need to improve. So, we have to be quicker. When you have a new idea or a problem what you can do? You have to go and test. It is about going faster to the market."

27

"As I said, I am not married with our current suppliers. We have plenty of them coming in. We analyse their offer and how much they can absorb for a given requirement. We look for their cost around the whole packaging offer. IF we came up with a new requirement such as a new foil film, we could absorb the development costs, but for regular deliveries we expect them to absorb those costs."

29 N.A.

33"In terms of waste we believe we have a level of waste at around 4,000 meters square a years from 150,000 meters of production."

34"We have reduced our packaging requirements last year. We reduced the number of packaging purchase from 18,000 meters to 17,000 meters. But we aim to achieve 14,000 meters in packing purchase."

35 N.A.


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Category ConfectionerySubcategory Gum

1 yes

2"I am from Purchase, you have to ask the Marketing people about this, but I believe that there is pressure for less sugar products in the market."

3

"I think part of the growth came from successful innovations we have made. Look at this product, Juicy Fruit for instance. They sold a lot last year, was a successful case in terms of customer acceptance and I believe that this innovative packaging was the reason. It is easy to carry you can put everywhere and at the same time it keeps the product properties."

4 "To offset the competition you have to be able to call the attention of your product at the moment of sales."5 "You have to ask this for the marketing people."6 "I think recyclable material is an important fact nowadays."

7"The packaging has to be nice and has a clean look, but the importance thing is how to better display at the point of sale."

8We do not see this as a problem here, I have never come across with this issue in my department, I usually lookat the overall cost

9 "What I can say is about paper material, I think they are important. All of them are recyclable."13 N.A.14 N.A.19 N.A.

19 - b N.A.20 N.A.

20 - b N.A.

21"Usually we do this when we have a requirement and the company is always doing this sort of decision. There isn't a specific timeline. It is according to marketing department's needs."

22

"What I can say is about suppliers for our displays. They have , in the first place to be creative, innovative, then we expect them to be flexible to deal with short notices and obviously we look at the commercial part, it has to be commercially viable."

23 "Our requirements for new displays are around three weeks, but for production line is at around 4 to 5 weeks."24 "It will be the one who manages to offer the best overall offer in terms of creativity, flexibility and price."

25

"We usually have suppliers specialized in their areas. There are some of them do provide our sorts of materials , but we like to ask to companies that have expertise in a given area. Here, we have currently 5 suppliers for Cardboard that attend us well."

26

"We have had a recent bid for the display of our products. They entered in a process to offer the most creative display. Three competitors were short listed and we chose one display that was the most innovative. Then we asked for the other two competitors if they could offer the same price for producing a similar display. And we scored these suppliers in terms of creativity, flexibility and cost. The winner was the one with the higher overall results."

27

"Decisions about flexible purchase are centralized in US, but here I have autonomy to purchase materials such as cardboard displays. We have an example for instance of the STI Group and Thimm Duanhasser. They have made a big deal with German Post and they have expertise in this sort of displays. In developing a new requirement for displays for instance we get the sales team or marketing team requirements, then we develop a script board which basically is build the idea in a white paper, we test it, and if they are good we define the final artwork. At the beginning this process takes 2 to 3 weeks, and for regular production our lead time is 4 to 6 weeks."

29 N.A.33 N.A.34 N.A.35 N.A.


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14 INTERVIEW SCRIPTS, POLAND 14 in depth semi structured interviews have been carried out in the Polish market. food producer companies. These companies produce food in 3 market categories, that of dried and processed food, pet food and confectionery. The contact table below is intended as a list of reference contact points. All the interviewees which name figure below has agreed to for their names and contact details to be made available in the market research results along wit the interview content.

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Company Interviewee name PositionInterview

Date

Interview

lengthAddress Telephone e-mail

UnileverMrs Dagmara Stepien

Junior Marketing Specialist Innovation in dry food solutions (restaurants, schools etc…)

25/02/2008 11:30 - 12:30ul. Batlycka 43 60-960 Poznan, Poland

+48 61 876 45 24

[email protected]

Unilever Mrs Eva Lakoma

Flexible Packaging Product Development for Poland

25/02/2008 12:30 - 13:30ul. Batlycka 43 60-960 Poznan, Poland

+48 61 876 45 24

[email protected]

Unilever Robert Haak Packaging Group Leader - Poznan

12/03/2008 14:00-14:45ul. Batlycka 43 60-960 Poznan, Poland

+48 61 87 64 514 /

+ 48 695 855 066

[email protected]

UnileverMrs Joanne Linouske

Marketing Director

no noul. Batlycka 43 60-960 Poznan, Poland

- [email protected]

UnileverMrs Joanne Olkieuricz

Personnel Assistant to the Marketing Director

no noul. Batlycka 43 60-960 Poznan, Poland

+48 61 876 45 24

[email protected]

Terravita Mrs Anna DebskaPurchasing Manager

25/02/2008 14:30 - 15:30ul. Szarych Szeregow 23 60-462 Poznan

+48 (0)61 822 15 02

[email protected]

Ludwig Czekolada

Mrs Anna Sochacka

Manager for Packaging purchasing

26/02/200810:30-12:30

amUl. Kaszubska 2, 78-640 Tuczno

(+48) 672593085

[email protected]

Ludwig Czekolada

Mr Piotr Kosowiec

Manager for project development and cooperation

26/02/2008 10:30-12:30 Ul. Kaszubska 2, 78-640 Tuczno

(48) 67 2593085

[email protected]

CargillMrs Katarzyna Jarosz

Pet food product development, production and purchaser

27/02/2008 10:15-11:15 52 Domaniewska str. 02-672 Warsaw, Poland

(+48) 225260135

[email protected]

Delecta (Rieber &Son)

Mr Prsemyslaw Borkowski

Pruchasing manager

28/02/2008 10:00 - 11:00ul. Wyszynskiego 14, 87-800 Wlooclawek, Poland

+ 48 54 41 26 000

[email protected]

Nestle Mrs Agnies Dzialak

Flexible packaging purchaser for Poland

29/02/2008 15:00 - 15:30 2 Szturmowa, Warsaw, Poland

+ 48 22 60 72 247

[email protected]

Miesko Mr Barttosz Niewiadomski

Marketing director

20/02/2008 10:00 - 11:00ul Chrzanowskiego 8b, 04-392 Warsaw, Poland

+ 48 22 810 2196 (w)

[email protected]

Miesko Mrs. Dananuta Dabrawska

Purchasing director

04/03/2008 16:30 - 15:30ul Chrzanowskiego 8b, 04-392 Warsaw, Poland

+48 601 899 171

[email protected]

Promivi Mr Piotr NogalaPlant Manager

03/03/2008 11:00 - 12:0063-642 Perzow 13-14, Perzow

+48 (0) 62 786 14 15

[email protected]

Promivi MRs Anna Pinkosz Purchaser 03/03/2008 11:00 - 12:0063-642 Perzow 13-14, Perzow

+48 (0) 62 786 10 11 +48 667671437

[email protected]

Promivi MRs Ewa WilkR&D Manager

03/03/2008 11:00 - 12:0063-642 Perzow 13-14, Perzow

+48 (0) 62 786 10 11

[email protected]

Promivi Mr. Piotr CzajkaQuality Manager

03/03/2008 11:00 - 12:0063-642 Perzow 13-14, Persow

+48 (0) 62 786 10 11

[email protected]

CadburyMrs Barbara Kubiak

Purchasing director

04/03/2008 10:00 - 11:0028 Zamoy Skiego, Warsaw, Poland

+ 48 22 670 78 46

[email protected]

HFP Mrs Katarzyna Brona

Purchasing Manager

22/05/2229 12:00 - 13:00

ul. Ryżowa 1 Bielany Wrocławskie 55-040 Kobierzyce, POLSKA

+48 71 311 06 60

[email protected]

Royal CaninMr. Guillaume Charles

Global purchasing director

28/03/2008 18:00 - 19:00 +33 (0)4 66 73

04 71 [email protected]

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Name of company UnileverType of company Multinational Size of company Large

Category Dried FoodInterviewee name Miss Dagmara Stepien supported by Mr Robert Haak

Number years in the position 1.5 year Type of interview Face to face interview

1 No 2 Currently have switched from carton to plastic buckets (larger - 3kg) and euro containers (smaller)

3They see more growth into flexible packaging such as pouches and one of the brands that has been growing considerable is Unox

4The major competitors for this market segment in Poland (dry food solutions - i.e. soups, dry ice cream etc…) are KAMIS (leader in seasoning, paper sticker on buckets) ) and HUGLI ( lower quality products - use paper labels and tetra pack cartons)

5she indicates not "seeing how this happens". She says that they work with flexible material that remain constant value on the market but that they always keep in mind the consumer's perspective when considering market prospects.

6In Poland at the moment she can not comment. But she actually sees environmental issues are a concern and advertised as such. She mentions to this effect that "Unilever is always following EU legislation in order to satisfy their clients."

7Consumers are very strict with unlevel and legislation inside the company. She indicates that " I would like to see the consumer feel happy or have the “woo” effect when they see our product". Thus she indicates the end product needs to have certain cha

8Environmental issues are always part of Unilever concern's when it comes to implementation. Unilever always tries to be green and one step ahead. Difficult to say where to allocate the cost along the value chain, but she indicates she thinks the client (or end consumer) could bare part of the cost.

9No as they have recently changed their packaging format in the dry soup range from carton boxes to plastic euro containers and buckets recently.

10 Preference and cheap to manufacture11 NA12 NA13 NA14 NA15 NA16 Alcan, Amcor, big players17 Only with big players but She does not name any of them.18 NA19 NA

19 - bShe indicates that such questions would be better answered by her colleague from the product development department.

20She indicates that such questions would be better answered by her colleague from the product development department.

20 - bShe indicates that such questions would be better answered by her colleague from the product development department.

21She indicates that such questions would be better answered by her colleague from the product development department.

22The relationship with he suppliers it has been lasting for long time, but she does not know how often the recognition come into place.

23 Global suppliers24 Not shared25 She does not know

26Product development process: from marketing together with technical managers (TM=Joanna MATULKA) to testing with chefs and sample testing on the field then to collecting the sales reps opinion through electronic consultation (opinion pool). In fact there are 60 Unilever sales reps all over Poland.

27 They buy flexible packaging on the regional bases and they try to stick with the big suppliers in the market

28The interviewee is not involved in the decision process of choosing suppliers but has some relations with them indirectly in the product development process.

29 Product innovation 30 Preferred communication can be web platform with forecast, phone with the preferred suppliers 31 Electronically32 He does not know33 Nothing particular to say about the material34 NA35 Trough magazines, internet and colleges around the world.

3670 people in the centre of excellence800 people in the manufacturing facilities

37 NA38: How often do your suppliers visit you ( or alternatively how often do

you visit the suppliers) ?

She indicates that such questions would be better answered by her colleague from the product development department.

206 / 235

Name of company UnileverType of company Multinational Size of company Large Category Dried FoodInterviewee name Eva LakomaNumber years in the position 11 years Type of interview Face to face interview

1No, those decision are taken in the ESM centre (European Supply Management Centre) in Switzerland - Perter Eisenhoefer is the flexible packaging ESM manager until the end of March 2008.

2 Looking for new technologies and materials 3 "Sorry, but I'm not able to answer this question"4 "Sorry, but I'm not able to answer this question"5 NA6 Does not know 7 NA

8"I have no idea and I'm afraid that there is no quick win, this will last for very, very long and although people understand necessity of using recycling packaging nobody would be willing to accept additional cost."

9"This is too general question. There are projects within Unilever regarding searching for different materials for different product, the aim is to find alternative material which is either less expensive, either better perceived by the consumer"

10 Paper aluminium PE is the most used flexible packaging by Unilever Poland 11 NA12 NA13 NA

14 "I don't have such information. This is a business decision and is not shared with low level workers."

15 The preferred suppliers are : Huhtamaki, Amcor and Constantia - never heard the name Printpack

16 Amcor, Constantia17 No reply18 NA19 NA

19 - b NA20 NA

20 - b NA

21She suggest we get in contact with the ESM person. This person was very busy and did could not answer our request.

22 "Long time, I do not know exactly"23 The big ones





281. Cost (including environmental issues when it implies less material use and the location of the supplier plant) 2. Quick supplier reaction (lead time ) 3. Safety (drives what lamination and characteristics of packaging - usually 3 layers lamination - so

29 The location of the supplier plant comes in the cost

30"We have e4us on-line system and we communicate with our suppliers via this system. We put there order demands a few months forward and they prepare delivery according to this information."

31"If we talk about Unilever FB than I have no idea, if we talk about Poznan factory than most of products are packed into flexible primary packaging. But I don't know percentage"

32"It depends what we are talking about. Are we talking about Unilever Food Business at all or are we talking about factory in Poznan. If we talk about Unilever FB than I have no idea."

33 Multilayer laminate with paper or PET

34 "I don't know."

35 "I'm trying to read trade newspaper or look for an inspiration on shelf in shops, very often suppliers"

36 800 people

37 NA

38: How often do your suppliers visit you ( or alternatively how often do

you visit the suppliers) ?All preferred suppliers visit the Poznan plant once a year.

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Name of company TerravitaType of company NationalSize of company Small Category confectioneryInterviewee name Anna Debska

Number years in the position 10 years ?

Type of interview Face to face interview 1 Yes

2 Improve the standards so as to better compete. Those standard refer to production.

3 The growth is in the chocolate and tablets market for them.

4Hard competition - lots of similar products both in Confectionery and chocolates - A major competitor is KRAFTS, particularly for Confectionery

5 NA6 Is not aware of any regulatory changes 7 NA8 NA9 Not considering replaying laminated foil or carton packaging.

10 NA11 NA12 NA13 NA14 History since family owned

15Preferred supplier is ERGIS for monofoil wraps for single twist candies - has not heard of Printpack .

16 The question could be further explored to meet the final format ! 17 NA18 NA19 NA

19 - b NA20 NA

20 - b NA21 Does not answer the question 22 1. Cost 2. delivery time 3. quality 4. reactivity 23 Good and satisfactory levels 24 Would not look to improve supplier performance 25 Intimate long term relation

26The product development are event and seasonal driven - process for launch involves the following managers : marketing, purchasing, technology and production.

27 NA28 1. price 2. delivery time 3. quality 4. reactivity29 NO. It is more trust which would comes into play. 30 The order system is managed by e-mail and one to one.31 NA32 Laminated foils - explore to see another per product category ! 33 The service with technical assistant is quite important when considering a supplier34 Was not willing to give more information. 35 NA36 NA37 NA

38: How often do your suppliers visit you ( or

alternatively how often do you visit the suppliers) ?

NA

208 / 235

Name of company Ludwig Czekolada (part of the German Mauxion Kruger group)Type of company Pan-EuropeanSize of company Small Category confectioneryInterviewee name Anna Sochacka

Number years in the position 3 years

Type of interview Face to face interview 1 NO. Decisions has to be made in Germany HQ..

2Improve standards in plastic, foil and metal foil as usually there is a change in package every important holidays such as Easter

3 Sweet Chew (Fritt)

4Hard competition but Ludwig is growing very fast, currently they have got 3 extra production lines for the sweet chew

5 This decision relies on the plant director. 6 They are aware of regulation but they leave this to the trusted suppliers

7"I asked Mrs. Mrozek from our Marketing Department in Poland to answer shortly on this question. She told me that we sometimes organize meetings with selected group of our consumers to recognize their preference or send them enquiries to fill up. "

8 Up to the suppliers

9Not considering replacing laminated foil or carton packaging but they are more keen when the product show off very good. In fact their own clients are low cost or medium range retailers in both Poland and Germany.

10"We use roto for foils and flexo or offset for box and trays. Usually we order in flexo technique because it is good and cheaper then offtet. "

11 NA12 NA

13"Our preference depends on final outlook, quality and price of package. Usually we receive from Ludwig Schokolade from marketing department packages specifications (kind of material, printing process etc.). If we will receive from our actual or from new suppliers"

14Low cost employment/country. The most important when the group decided to buy this plant was employment costs and duty level.

15 Preferred 5 or 6 suppliers (KAPPA, MONDI, STRENZO). Has never heard of Printpack16 NA17 NA18 NA19 NA

19 - b NA20 NA

20 - b NA

21For many years they have had 1 supplier as a Partner and adviser and here is the decision goes for time of hiring suppliers. They engage in renewable contracts of about 1 year in length.

22 1. Price 2. Quality (=reliability and safety) 3. Delivery time 4. Credit23 Good and satisfactory levels

24They are concern in terms of price but this decisions are taken in Germany by the sales manager

25With 1 supplier some type of partnership and with THE other 5 they have a trusted relationship.

26 Sales manager Germany

27The marketing and package department choose printing process. "we hardly ever do not change this process."

28 1. Price 2.Quality and 3.Delivery time

29No. "It is more trust which would come into play". They currently have relations with what they called trusted suppliers.

30 The order system is managed by e-mail, phone calls and one to one.

31A lot, they said in millions of meters and could/would not (or were not in the position to do so ) answer more precisely

32Laminated foils (Silver and Gold) We tend to use foils and flow packs from polypropylene PP, OPP most.

33 Line of credit quiet important when selecting supplier.34 Could not say exactly

35We look after information about packaging developments on papers or internet. Our suppliers inform us about news in packaging market too.

36 200 average but in holiday season such as Easter they have around 50037 NA

38: How often do your suppliers visit you ( or

alternatively how often do you visit the suppliers) ?

Suppliers come too often !

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Name of company Ludwig Czekolada (part of the German Mauxion Kruger group)Type of company Pan-EuropeanSize of company Small

Category confectioneryInterviewee name Piotr Kosowiec

Number years in the position 1.5 years to be verified ? Type of interview Face to face interview

1NO/ Decisions has to be made in Germany HG by Stefan Klein ([email protected] (+49 6831 89 71 33)

2 Improve standards in plastic, foil and metal foil and try to get a package that show off more the product

3 Sweet Chew

4Hard competition but Ludwig is growing very fast, currently they have got 3 extra production lines for the sweet chew

5 This decision relies on the plant director. 6 They are aware of regulation but they leave this to the trusted suppliers

7"I asked Mrs. Mrozek from our Marketing Department in Poland to answer shortly on this question. She told me that we sometimes organize meetings with selected group of our consumers to recognize their preference or send them enquiries to fill up. "

8 Up to the suppliers

9Not considering replacing laminated foil or carton packaging but they are more keen when the product show off very good. In fact their own clients are low cost or medium range retailers in both Poland and Germany.

10"We use roto for foils and flexo or offset for box and trays. Usually we order in flexo technique because it is good and cheaper then offtet. "

11 NA12 NA

13"Our preference depends on final outlook, quality and price of package. Usually we receive from Ludwig Schokolade from marketing department packages specifications (kind of material, printing process etc.). If we will receive from our actual or from new suppliers"

14Low cost employment/country. The most important when the group decided to buy this plant was employment costs and duty level.

15 Preferred 5 or 6 suppliers (KAPPA, MONDI, STRENZO). Has never heard of Printpack16 NA17 NA18 NA19 NA

19 - b NA20 NA

20 - b NA

21For many years they have had 1 supplier as a Partner and adviser and here is the decision goes for time of hiring suppliers. They engage in renewable contracts of about 1 year in length.

22 1. Price 2. Quality (=reliability and safety) 3. Delivery time 4. Credit23 Good and satisfactory levels

24 They are concerned in terms of price but this decisions are taken in Germany by the sales manager

25 With 1 supplier some type of partnership and with THE other 5 they have a trusted relationship.26 Sales manager Germany

27The marketing and package department choose printing process. "we hardly ever do not change this process."

28 1. Price 2.Quality and 3.Delivery time

29No. "It is more trust which would come into play". They currently have relations with what they called trusted suppliers.

30 The order system is managed by e-mail, phone calls and one to one.

31A lot, they said in millions of meters and could/would not (or were not in the position to do so ) answer more precisely

32 Laminated foils (Silver and gold) We tend to use foils and flow packs from polypropylene PP, OPP most.

33 Line of credit quiet important when selecting supplier.34 Could not say exactly

35We look after information about packaging developments on papers or internet. Our suppliers inform us about news in packaging market too.

36 201 average but in holiday season such as Easter they have around 50037 NA

38: How often do your suppliers visit you ( or alternatively how

often do you visit the suppliers) ?Suppliers come too often !

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Name of company CargillType of company Multinational Size of company Large Category Dog and Pet food Interviewee name Katarzyna JaroszNumber years in the position 2 yearsType of interview Face to face interview

1 yes2 Big enough to follow the trends such as selling the pet food in small bags

3They collaborate a lot with LIDL (German discount store) and BIEDRONKA (lady bird = Polish discount store ) by selling small pouches no bigger than 10 kg

4 Competition is very strong as the pet food market is one which develops very fast. When further inquired she indicated that she could not tell us.

5 NA

6They are aware of regulation but they leave this to the trusted suppliers. She indicates that the major concert are sanitary ones when relating to regulation. She mentions that the level of AMENS in lamination is big concern for pet food.

7 NA

8She mentioned that pet food trend need to be very small around 3kg. They are following the trend and that is here where they would like to see their customers engage.

9 Most of the packaging are flexible if not all of them10 "we use only flexo, we used to use roto , but changing rolls is to expensive"11 NA12 NA13 NA14 NA15 Low cost employment/country16 Not Shared17 Local ones18 NA19 NA

19 - b NA20 NA

20 - b NA

21She indicates that relationship with suppliers are on the long term. She also mentions that contracts do not last longer than a year.

22 1.Quality 2. Price 3 long payment (Credit) and 4 Delivery time23 Good and satisfactory levels

24 They have concern about price, that's why they prefer polish suppliers rather than external suppliers

25 Very strong relationship with 3 suppliers which are based in Poland26 There is a lot of people involve such a production but Kartazyna has the last word27 Not shared28 Not shared29 NO. It is more interested in local suppliers, Low cost30 The order system is managed by e-mail, phone calls and one to one.31 Not shared32 NA

33

She mentions that they look quite closely at the time of choosing suppliers. Their inclination goes to choosing local supplier and the credit line possibility is quiet important when selecting supplier. They also favour suppliers with their own PE production. She explains that they have their own bag production. Those bags produced by the company are of low quality. She bring pouches to show us the difference in quality between those that the company producers and those which the suppliers produce. She has never heard of Printpack.

34 NA35 NA36 mainly internet37 80


often do you visit the suppliers) ?Very often at least 1 time per month

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Name of company PromiviType of company National Size of company Small Category Dog and Pet food Interviewee name All four together : Piotr Nogala, Anna Pinkosz, Ewa Wilk, Piotr CzajkaNumber years in the position 5 yearsType of interview Face to face interview

1The ultimate person responsible for the purchasing decision supplier choices is the plant manager (Piotr Nogala) together with Anna Pinkoz (purchaser)

2In five years time from steel cans to alu cans (which are smaller) and pouches. Flexible Pouches are also gaining grounds.

3There is growth in every product and line ! These are private label products. However, the biggest growth is in the steel cans.

4 The level of competition is based on price - The biggest competitor is PUPIL a private label company

5 Lots of consolidation - for example the Promivi group is looking to acquire an additional plant

6No real regulatory changes noticed - then in a second instance they mention the veterinarian EU regulations. Vague, no specific answers were given

7the consumers engages through surveys carried out by the sales and marketing department through trade associations

8It is private companies which collect recyclable packaging - The recycling is charged through taxes. These taxes are charged to costumers (TESCO or else) who then pass on these charges to their suppliers.

9Well for the time being going from steel to alu . Pouches are also a high potential for the future for the Provimi group. Issues which changes motivate those changes are cost. Substitution changes are always initiated by Promivi's customers e.g. Tesco

10They use paper label and PICTOGRAME printing with five colours. Just as with substitution changes or the type of printing is dictated by Promivi's customers e.g. Tesco

11 NA12 NA

13Not considering changing the print process - The decision to change is driven by the customer's brief requirements

14Location of the current plant is historical - in the middle of the agricultural grounds thus available raw material ( meat, wheat etc…) . Furthermore this current location is close to 4 main districts.

15 Alcan

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16None on the list. They have 3 suppliers: ZEMAR (http://www.zemar.net.pl/), Hala, I did not catch the last one. As for me he only mentioned two of those three preferred suppliers. Anna's follow-up response is ALCAN.

17 Not shared - even in follow up18 Not shared - even in follow up19 Not shared - even in follow up

19 - b Not shared - even in follow up20 Not shared - even in follow up

20 - b Not shared - even in follow up

21Has maintained a relation with the current supplier ZEMAR ( I think that the name of the supplier is called Zyma) for 1 year and the other 2 suppliers has maintained relations with 8-9 years. Contracts are re-negotiated annually or less.

22All on the same stands : quality, price, time of delivery and long term payment. However price is the over-riding factor.

23Very satisfactory relations with current suppliers. Service is acceptable as deliveries are on-time and in full. The suppliers are quick to react to Promivi's needs

24Improvements : Promivi has asked their suppliers to hold a minimum of 2 weeks stock . Did not provide an answer when asked again

25 See question 23

26The purchasing department chooses suppliers to require offers from . The supplier offers are then submitted and discussed with the plant manager before reaching an agreement. In other words, purchasing puts out a tender and receives bids from about 20 sup

27 A tender is open to around 20 selected suppliers.28 see question 22

29The location of the supplier definitely comes into account as it impacts price directly .Zyma is about 300km from the plant but the other two supplier are within 50 to 80km from the plant. Promivi requires some flexibility

30The order are managed over the phone, via e-mail and confirmed via fax. Every three weeks Promivi visits a different supplier. Promivi carries audits of suppliers 2/3 times a year or more according to needs. Sales reps don't come to visit. In general, the

31 NA32 NA

33The suppliers of machinery are decided by the holding company - further information would not be communicated. Current wet food in pouches are produced by PROMIVI France and Hungary

34 NA

35They keep informed through web sites. The purchasing dept gets updated in several ways: current suppliers send them regular update, they learn from colleagues in other countries and they use internet. The internet is also used to find new supplier. INTERN

36 about 100 employees soon when expansion 130 employees. 37 NA


often do you visit the suppliers) ?see answer to question 30.

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Name of company Delecta (part of the Reiber&Son group)Type of company Multinational Size of company Large Category confectioneryInterviewee name Mr Prsemyslaw BorkowskiNumber years in the position ?Type of interview Face to face interview

1 Yes- Mr Borkowski

2The opening of Polish borders have resulted to price increases and poor availability of raw materials particularly grains and glass

3Convenient food (ready-meal with shelf life of up to 1/2 year to 1 year). Did not state the specific brands which he sees growth coming from

4 Main competition is Dr Oekter. No information on how Delecta is going to off-set the threats5 NA

6No specific answer the regulations are usually , concerned with text or components of the raw materials. Most importantly the impact of regulation is increase cost

7 NA

8Environmental regulation costs is shared across the value chain and the retailers spread it backwards. Thus Delecta also incurs part of such costs.

9No plans of moving from cartons to flexible. However they have recently started using shrink sleeves for glass jars which they produce for other markets i.e. they internally export these products to Norway & Czech

10 Did not state specifically11 Did not state specifically12 Did not state specifically13 an14 NA15 NA

16Huhtamaki for Reiber, Kety and Fiomo (check republic) and Fonti ( Italy). It is important to note that the suppliers are the same for Czech and Norway

17 NA18 NA19 NA

19 - b NA20 NA

20 - b NA21 Long term for about 3 years. Renegotiate contracts annually22 Quality & Price

23Quality more important than Price. They are market leaders in some categories such as Cake mixes, thus cannot afford to compromise on the quality of their packaging. In the contract for supplier, there is a clause that states 4-month storage.

24 NA

25Good relationship. The suppliers sales team visit 2-3 times a year. Lead time is usually about 2 days. The supply is always to full order but flexibility is not very good, delivery takes about 2 days, particularly due to the bad roads. Flexibility's requ

26Selection of a supplier for flexible packaging is typically done by the Purchasing Director-locally. However the parent group-Rieber & Son is looking to have the purchasing function carried out on a regional scale

27 NA28 Quality then Price. Service was not mentioned29 Question not asked directly but from his answers, the plant location was not much of a concern

30 SAP for internal use, this generates an order request which is sent electronically ie.email to the supplier

31 Did not ask directly but , Desserts and cake addictives use the most flexible packaging see question 33

32 NA

33For the two products with the highest amount of flexible packaging used last year is as follows: Desert 2 million pouches, Cake ingredient (vanilla + bakery)- normally 3 million pouches, peaks 8 to 10 million pouches

34 NA35 NA36 NA37 NA


often do you visit the suppliers) ?NA

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Name of company MieszkoType of company nationalSize of company Small

Category confectioneryInterviewee name Mr Barttosz Niewiadomski

Number years in the positionType of interview Face to face interview

1No- Dananuta Dabrawska, the Purchasing Director (+48 601 899 171). We spoke to Bartosz Niewiadomski, the Marketing Director

2Did not really answer this question. Mieszko made a strategic decision to move its focus from candies to chocolate. For chocolates: the product more important than the packaging, for candies the packaging is more important than the product

3 Jellies and Chews4 NA5 NA

6Nothing at the moment other environmental regulations (no specific) and legal regulations concerning text

7 NA8 NA

9No plans of moving from cartons to flexible. Assorted chocolates will still be in cartons, while candies and chocolate tabs in flexible packaging

10 We did not ask specifically but client stated hybrid print.11 Did not state specifically12 Did not state specifically13 The interviewee clearly states to refer to his purchasing manager colleague.14 The interviewee clearly states to refer to his purchasing manager colleague.15 The interviewee clearly states to refer to his purchasing manager colleague.16 The interviewee clearly states to refer to his purchasing manager colleague.17 The interviewee clearly states to refer to his purchasing manager colleague.18 The interviewee clearly states to refer to his purchasing manager colleague.19 The interviewee clearly states to refer to his purchasing manager colleague.

19 - b The interviewee clearly states to refer to his purchasing manager colleague.20 The interviewee clearly states to refer to his purchasing manager colleague.

20 - b The interviewee clearly states to refer to his purchasing manager colleague.21 5-6 years duration, did not ask about re-negotiation22 The interviewee clearly states to refer to his purchasing manager colleague.23 The interviewee clearly states to refer to his purchasing manager colleague.24 The interviewee clearly states to refer to his purchasing manager colleague.

25Long term relationship typically 5-6 years - with 30% of market being a 2 year product cycle driven by product innovation (every year reconsider pralines and candy products)

26 R&D and Purchasing are usually the people that have contacts with the supplier27 The interviewee clearly states to refer to his purchasing manager colleague.28 Quality> Price> Position of Certificate29 The interviewee clearly states to refer to his purchasing manager colleague.30 The interviewee clearly states to refer to his purchasing manager colleague.31 The interviewee clearly states to refer to his purchasing manager colleague.32 The interviewee clearly states to refer to his purchasing manager colleague.33 The interviewee clearly states to refer to his purchasing manager colleague.34 The interviewee clearly states to refer to his purchasing manager colleague.35 The interviewee clearly states to refer to his purchasing manager colleague.36 The interviewee clearly states to refer to his purchasing manager colleague.37 The interviewee clearly states to refer to his purchasing manager colleague.



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Name of company MieszkoType of company nationalSize of company Small Category confectioneryInterviewee name Mrs. Dananuta DabrawskaNumber years in the position ?Type of interview Face to face interview

1 Yes she is the purchasing director and decision maker

2

The raw material markets will remain within similar trends i.e. the prices will continue to grow. The packaging markets may see some evolution in that, countries like UK, Germany and Italy may comply to Western European standards of changing from PVC to other alternative flexible packaging materials that are environmentally friendly. These requirements are driven by the market possibilities. Markets in countries such as France Spain and Italy may see a later development in accepting such evolutions.. These trends particularly apply for products of Miesko that use single and double twist pvc printed wraps as well as products like minerals.

3

The major growth is perceived in chocolate products which have benefited as growth of 20% per year in the lat years. Mrs Dabrawska believes that such growth will slug back in a downward trend starting 2008. Such growth trends particularly applies to Miesko products like pralines and wafers so says Mrs Dabrawska. Later, Mr Dabrawska mentions that in her view, being able to buy/offer boxes of pralines and chocolates as gifts is perceived by Polish people as a way to demonstrate social recognition.

4The competition may come from Polish players like SOLICAROWSC, local Polish producers of pralines. They don't view Kraft and Nestle as their direct competitors as they have too strong a position

5

Consolidation in the market place has been observed in the last years. Mrs Dabrawska mentions the buy back by a Polish formally exclusively spice company, of JUTRENKA (originally owned by Walker). The same company has acquired KOPLANA (from Nestle, specialise in Confectionery and candies) and will probably be looking to buy KALENA ( from Walkers).

6Nothing particularly new to mention regarding regulatory changes in the EU. She explained that most of the EU changes are initiated from the West

7She explains that considering her position and role, her suppliers are also consumers. She takes her suppliers views into consideration. She said that they perceive MIESKO products as one of best quality.

8 The cost should be shared between producers and suppliers -

9Those packaging which Mrs Dabrawska relates could be changed in the future are those single and double twist wraps going from PVC to OPP+paper. Such attempts are currently being studied with Spanish and Slovakian suppliers.

10 Roto and felox. Offset printing is used for carton boxes.11 Offset>Roto>Flexo12 See Question 11

13

Regarding possible printing technology changes : For the single and double twist wraps. Mrs Dubrowask indicates the she would be open to study the possibility of changing from Roto to flexo printing in the instance that the change of material from PVC to OPP is done, because flexo can be done on OPP and not PVC. However flexo is possible on mini-wrap. In terms of bags the change from roto to flexo would depend on the graphic design brief requirements.

14Location of plants : 2 in RACIBIORZ (main production) and 1 in WARSAW (acquired 5 years ago). Reason : does not know .

15 Does not know of Bemis or Nordenia but has heard of every other supplier on our list including Printpack

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16 Unwilling to state at first, but later on in the discussion she mentioned Constantia later17 NA18 NA

19

She does not mention any of the previous suppliers as those which she would particularly consider developing relations with, rather she mentions that she is currently considering and checking partnerships with Confic (Spain), BANETA (Slovakia), other supplier in Ukraine. She mentions one of the preferred suppliers which she has relations with as Constantia in two of their plants including that of Humkvolia.

19 - b


20


20 - b


21Length of relationship is about 4 years with a few up to 10-15 years. She mentions that she reviews and re-considers contract terms for wraps about once year

221. Quality( this includes capability, consistency, requirement to technical specs) This is usually assessed by technology, marketing, R&D 2. Price, including payment conditions, delivery, service and complaints

23The current level of relations are satisfactory - There have been no major time related delivery issues in the past years. Products are always on-time and in full, exceptions are only limited to once or twice a year.

24 Does not mention that anything better could be expected.

25Satisfactory, suppliers visit when they negotiating or renegotiating contracts. Other visits occur as in when required. Supplier are usually audited every year.

26 A team involves R&D, technology, production marketing and purchasing. 27 NA

28From the answers which Mrs. Dabranska gives I gather that those would come in the following order ; 1. Service and innovation 2. Price I beg to differ on this one, as she mentioned quality then price- pls refer to the answer for Q.22

29The plant location does not interfere with the criteria she mentioned as she is open to offers from China (though the suppliers there are not responsive enough given that there is an 8 week delivery time), France and Poland last year.

30Communication through e-mail Other points to note. She prefers suppliers that make their one raw materials. Mieszko exports to other European countries, Canada, US, Japan

3120% of cost is in flexible packaging (out of all costs for products including raw material labour and other overheads) Again I beg to differed as I gather it as 20% of all packaging cost. Perhaps we could clarify this question with her.

322X lamination ( minerals and wafers) / Simple metalized PVC lamination- monoweb no coating (twists) / Triplex (hard candies filled with powder)

33 NA34 Volumes 1t/year to 10t/year for twist wraps. Total flexible packaging is over 200 tonnes per year

35She collects info in papers, conferences and trade association fairs (mentions the one in Cologne Germany) Suppliers also organise seminar which they get invited to.

36 1000 employees on 3 plants ( white and blue collars)37 NA


often do you visit the suppliers) ?Their number of visits depends on cooperation - the audit of suppliers takes place about 2/year.

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Name of company NestleType of company Multinational Size of company Large Category Dried FoodInterviewee name Mrs Agnies DzialakNumber years in the position Agnies has been working at Nestle's purchasing department for 16 years, but 11 years in PolandType of interview Face to face interview

1 Yes- Agnes Dzailak and Caroline May in Germany Poland is responsible2 Paper and triplex flexible packaging are now becoming a common place

3She mentioned that for marketing questions we should contact her and she will put through the questions to her marketing colleagues. Agnies ' latest response is that Marketing is "unwilling" (unable?) to support such queries at the moment.





8If it is a strategic direction of Nestle to use biodegradable flexible materials then the company will be happy to bear the cost

9 Cannot answer, a bit of a strategic issue10 They prefer Gravure11 They prefer Gravure12 NA

13Gravure printing gives the better print result. In case of flexo print - there was a risk of ITX not healthy for consumers.

14 Their plants are located in the following places: Culinary-Calisk, Ice-cream -Normen.15 Amcor, Constantia, Kety

16Kety but unwilling to mention the others. The interviewer mentioned that Ketty had very modern equipment, clean facilities and are collaborative, willing to change.

17 Did not ask because unwilling to answer question 1618 Did not ask because unwilling to answer question 1619 Did not ask because unwilling to answer question 16

19 - b Did not ask because unwilling to answer question 1620 Did not ask because unwilling to answer question 16

20 - b Did not ask because unwilling to answer question16 21 Length of relationship is usually about 3 years but contracts are renegotiated every 3 months

22Cost Price), Location, Quality number of service claims, etc), Service( level of interaction with the supplier)

23 Did not ask because unwilling to answer question 1624 Did not ask because unwilling to answer question 16

25Unwilling to say but the lady seems to have a good impression of Ketty as she made the following statements: modern equipment, clean facilities, collaborative, willing to change

26 The regional purchaser liaises with the local purchaser

27We select the best possible suppliers basing on our company requirements (quality, price, service, know-how).

28 Cost>Quality>Service29 On one side yes - flexibility of supplier.30 SAP for internal use but moving to VMI this year-2008, 31 NA

32For confectionary the technology used is Cold Seal, Culinary it is Triplex. Agnies response from follow-up: Sorry, I cannot answer, this is strategic information.

33 NA34 Unwilling to disclose35 Trade magazines, trade shows.36 "Sorry, I cannot answer, this is strategic information."37 NA



218 / 235

Name of company Cadburys

Type of company Multinational Size of company Large Category confectioneryInterviewee name Mrs Barbara KubiakNumber years in the position 12 yearsType of interview Face to face interview

1Yes- Barbara Kubiak, purchaser responsible for flexible packaging in Poland and Toby Chapple purchaser responsible for flexible packaging in Europe.

2Looking to upgrade the packaging of small chocolate bars in order to enhance their visibility on the shelf through increasing the stiffness and thickness of these materials and making these material more glossy. Cadbury's are not big plays in the small chocolate bar segment.

3

This is the question to marketing people however from my point of vew we see the most growth coming from birds milk, bars and bites size categories (i.e. nuts in chocolates, raisins in chocolate...) on the Polish market. In terms of our brand this growth concerns mainly birds milk (this is milk & sugar foam covered by chocolate). Barbara suggested we contacted Marketing

4The client mentioned the increase of labour costs along with the increasing raw material costs - she said these were linked to the increase in oil prices. But the client mentioned that increase material cost is a big threat.

5She mentioned that Cadbury's will to acquire plants where they can find synergies. Barbara suggested we contacted Marketing

6 Cadbury's is big on eco-friendly regulations and are looking to reduce its flexible packaging consumption

7Through its website (but did not know the specifics) and through customer survey conducted by Marketing and a Market research agency

8 Cost of biodegradable materials should be split across the value chain.

9Looking to move from polypropylene to biodegradable flexible material and also to move from flexible packaging materials in general to paper/cardboard. Marketing dept are usually responsible for initiate changes in packaging materials.

10 Gravure and Flexographic

11Gravure because of its better quality and ability to accommodate shadows and other graphical effects. However as part of purchasing dept's value optimisation program, we are looking to change the printing in some categories from rotogravure to flexo.

12 Gravure > Flexographic

13Gravure because of its better quality and ability to accommodate shadows and other graphical effects. The marketing department is usually responsible for initiate changes in packaging materials.

14

She mentioned that Cadbury's took E. Wedel from Frito-Lay in the 1990s. The plant in Warsaw is responsible for bird milk( form covered with chocolate, chocolate tabs, chocolate candies, wafer pralines and barrel liquors). The new plant in the south of Poland is responsible for gums. Barabara's response-this is economic area - special treatment by government, lower taxes...Barbara's response again: I think the main reason was that there is the Special Economic Area (in Polish: Wałbrzyska Specjalna Strefa Ekonomiczna „Invest-Park”) where the taxes are lower. Besides in this region the labour cost is lower.

15 Alcan, Amcor, Constanta, Kety, Huhtamaki, Printpack

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16 Unwilling to state17 Did not ask unwilling to answer Q 1618 Did not ask unwilling to answer Q 1619 Looking to consider other suppliers for the future but unwilling to state which ones.

19 - b Did not ask as unwilling to answer Q 1620 Did not ask as unwilling to answer Q 16

20 - b Did not ask as unwilling to answer Q 16

21Their length of relationship varies, Cadbury's has been using some suppliers for up to 10 years. Contract is renegotiated usually after 2 years

22Cost Price), Location, Quality number of service claims, etc), Service( level of interaction with the supplier)

23

Did not state specifically but state that Cadbury has a very robust system of evaluating the performance of its suppliers. The evaluation is usually conducted annually. For example in assessing the level of quality the assessor examines if the orders are according to specification e.g. colour, quality, thickness. there is no real expectation not he how of visits suppliers make. Primary mode of contact is usually via the phone and a quarterly meeting.

24 Currently happy with current level, a bit unwilling to say more

25

Cadbury's aims to have at least 3 suppliers in each category of packaging materials. The firm currently has very good relationship with the three and half suppliers (3 large, 1 small). The relationships could be described as collaborative and the suppliers are very proactive in proposing new ideas and solutions and innovation for example packaging with easy opening, packaging with special effect. These innovations are particularly useful during promotions. There is a program recently established in Cadbury's to build relationships with its suppliers

26

Toby Chappel the regional purchaser works in partnership with Barbara the local purchaser. Toby's responsibilities include: collating material requirements and related information form all the plants in Europe, developing a strategic direction for flexible packaging, generating the tenders for bids and liaising with key account managers of suppliers, working in partnership with the local market purchasing manager

27Barbara's response: "if we have new item we collect the offers (at least 3) and chose the best one. But generally we prepare the tender or e-auction for all our flexible items for 2 years on the regional level".

28 Cost> Location=Quality=Service

29

Yes, the location of the plant is a key criteria. The idea is to have at least one of the three supplier close to a plant particularly to deal with any contigencies (back-up service) . Cadbury's has three plants one in Warsaw and two in the south west of Poland -did not catch the name, but I guess we could get if off their website

30Demand forecast( order request) sent via email. Not connected via VMI and it is unlikely to use VMI within flexible packaging because delivery is usually once a week or sometimes once a month

31 About 15 - 20% (determined by the level of purchase and the frequency of delivery)

32Duplex lamination 20 OPP/20 OPP for bag, Monowebs with coating for small chocolate bars, twist wrap special monofilm (developed with supplier) for candies, Multi-layer lamination not required

33 None34 >200 tonnes of flexible packaging material per year

35Update on packaging development obtained usually from the suppliers and sometimes from attending trade shows in Poznan in Poland, Cologne & Dolffy in Germany

36 Between the 2 plants - 1300 ( white + blue collar)37 Not necessary


often do you visit the suppliers) ?Usually once per quarter.

220 / 235

Name of company HFP Type of company National Size of company Small

Category Dried food Interviewee name Mrs Katarzyna Brona

Number years in the position 2 1/2 years Type of interview Telephone (follow up interview)

1Yes she is involved in the process - this is a collegiate decision making process between two purchasing managers (herself + Kornol Solowmiska) and the general director (did not want to give the name of the Director.) The Director makes the ultimate decision.

2Her vision is to have the HFP brands of crispy bread in the number one position in the Polish market. She also mentions that they are currently undertaking a collaboration with a Western European partners ( would not name who) in order to export products.

3The growth in the SAMOCO brand is very promising, in her opinion. She mentions that this brand contains products such as crispy bread and rice bread, light bread, rice cakes.

4Their main competitors are WASA (crispy bread, rice cakes) KUPIEC (rice and cashews) GOODFOOD (rice cashews). Why ? WASA is a long known brand and HFP is new on the market. KUPIEC and GOODFOOD are less competitive, particularly as GOODFOOD is currently in

5 Does not really know… does not think so.

6She mentions that there are no particular regulations which concern them. Then she mentions that they would not consider any foil supplied from India as the quality is not consistent

7 Do not engage consumers regarding packaging. In her words: she does not care

8She mentions that retailers and suppliers should bear the cost (I heard her say suppliers only) and does not know who should lead the process.

9Currently replacing carton to flexible packaging. This change is initiated by marketing and general director. Why ? Because they want to attract consumers toward the HFP packaging and products. Another reason for changing is to reduce storage space on the

10 Flexographic , Rotogravure and Roto offset

11They favour flexographic at this point in time for cost reasons . Yet would also consider rotogravure if the design required such a technique. In other words for complex designs

121. Flexographic 2. Rotogravure 3. Offset (as this technique particularly applies to paper printing - but why not explore how this can apply to plastics, she mentions.

13They favour flexographic at this point in time for cost reasons . Yet would also consider rotogravure if the design required such a technique. Changing printing techniques will depend on design and marketing requirements. The determinants of the types of p

14 No real reason behind the location of the plant. HPA has got only one plant15 Has heard of Alcan /Kety/ Humataki / Mondi - has never hear of Printpack

16All she could say was that HFP has a relationship with one of the suppliers on the list. Mondi (yet has currently a high printing cost) Caroline I did not hear here mention that HFP was in relationship with Mondi

17 None of these18 None of these 19 none of these

19 - b none of these20 none of these

20 - b none of these

21The current relationships have been going for 3-5 years. The contracts are re-negotiated when they think of changing packaging design. If the order quantity increases significantly then they will also re-negotiate supplier contract. The current relations

221. Quality (in terms of printing - depends on the suppliers machine quality and the quality of the material) HFP tend to have very complex designs and as such quality of printing is a key requisite 2. Price considers a supplier with a least the current price

23 currently satisfactory24 No better level required25 Did not ask

26A typical project team would involve the marketing, packaging designers and purchasing. The purchasing team is involved in the choosing the suppliers and negotiation of supplier prices. Decisions are made locally

27 Did not ask this question ? 28 See question 22

29I remember that this would not nbe an issue for her … but do you have the same answer ? I cannot recall asking her this question

30 They use e-mail and other communication mediums. But she does not use VMI 31 80% of products use flexible packaging 32 Duplex lamination (2 webs)33 None provided but we did not ask due to time constraint34 about 50 tonnes not sure if this is annually35 Supplier events, internet searches, trade shows (at Poznan called Polagri) . 36 between 100- 500 employees37 ?


often do you visit the suppliers) ?

Once in 3 weeks to once every six months This depends on the quality issues that may arise. Usually one person form the supplier usually for an hour or two

221 / 235

Name of company Royal CaninType of company Multinational Size of company Large Category Dog and cat food Interviewee name Mr. Guillaume Charles Number years in the position ?Type of interview Telephone (follow up interview)

1 Yes2 NA3 NA4 NA5 NA6 They have adopted ISO 14001 legislation 3 years ago. This is an environmental legislation. They have started 7 NA8 Reducing packaging thickness will allow to absorb the cost for development and for the consumer. Such 9 If there was a change of supplier considered it would be towards looking for those which offer opportunities of

10 Gravure (helio) and Flexographic ( 8 colours) are the two printing technologies used. The interview mentions that 11 No preference12 No preference 13 It is the volume requirements and the supplier's decision which guides the use of one or the other printing 14 -15 Alcan, Amcor, Bemis, Clondalkin Group (Not known), Constantia (Not known), Huhtamaki (Not known), Kety (No), 16 Was not willing to state 17 Was not willing to state 18 Was not willing to state 19 -

19 - b -20 -

20 - b -

21Contracts with suppliers last about one year. The relationships with suppliers are long term. During the year prices can be renegotiated at any moment. Orders are placed every month.

22First and foremost the decision to choose a supplier rely on ensuring that the product specifications ( in terms of quality) can be met. He explains about the quality of the bag. He mentions that a bag should look brand new to the consumer even after long

23 -

24If there was a change in supplier it would be on the basis of a high value added. He mentions he would consider relations with a supplier which would bring a biodegradable solution to the table, which meet she specs, could run in there machines, at a low

25Their current relations with suppliers are good. Yet he mentions that one of the challenges for Royal Canin today is to find robust suppliers who can match to supply the volume requirements whilst delivering quality.

26He mentions that both the purchasing department and the development department are involved. The development department often drives the process of product development. The purchasing department looks for the appropriate supplier to answer the specificity

27 -

28When asked specifically about those three criteria's he mentions that : 0. Low Cost not concerned 1. Superior Service very important - this means delivery time for him.2. Product Innovation - he mentions this can be interesting but in a long terms rela

29The plant location of the supplier is a factor considered. For example in they supply from NAFTA for the North American markets and from South America for their Brazilian plant.

30 The suppliers relations are managed with e-mail and manually (visits and phone). The VMI system is not in place.

31In terms of volumes 50% are paper and 50% are plastic. With a tendency for higher plastic volume since the company has replaced all smaller bags ( from 60g to 10kg) by plastic ones.

32 The favoured material is triplex metalized PET and PE.

33He mentions that they have a specific metallised process. They keep products under controlled atmosphere by injecting azot gas in the bags. The second coat of polyester is metalized PET in order to support injection of Azot.

34 He mentions the quantity of 500g bags ordered per year in the cat food = 30m bags / year

35He mentions that he consults trade magazines (give examples such as LCA packaging magazines… ). Does not consult the internet. He mentions attending professional fairs, that of Chicago, one in Japan (could not remember the name) and that of Paris (once ev

363500 employees across the world, with 450 employees in the French plant in Aimargues and about 70 employees in the Brazilian plant.

37 -38: How often do your suppliers visit you ( or alternatively how often do

you visit the suppliers) ?-

222 / 235

Appendix 4 Budget

The budget for this project was agreed with Printpack’s management at £15,180.

The actual costs to date are £12,209 (as of 26 March 2008). A break of the currently

expensed budget is in the below table. It is 80.4% of total budget.

Table B1 : Budget

Consultancy (School Supervising) £3,000.00 Computer Supplies Services £227.98 Printing £20.09 Telecommunications £89.09

Stationery and Office Suppliers £42.07

Travel & Transport (incl Vehicle Hire & Subsistence) – UK

£157.79

Travel & Transport (incl Vehicle Hire & Subsistence) – EU

£8,672.17

Total Costs £12,209.16

Budget £15,180.00

Under £2,970.84

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Appendix R1 Poland market potential of flexible plastic packaging and potential sales To calculate potential sales of flexible plastic packaging, we use

(A) Sales value at retail; Source - Euromonitor

(B) Packaging spending to sales; Source – International Journal of Physical Distribution & Logistics Management, Volume 26 (1996), Packaging, marketing, logistics and the environment: are there trade-offs?,

Gerard Prendergast, Henley Management College, Henley on Thames, UK and Leyland Pitt, Henley Management College, Henley on Thames, UK

© Potential packaging usage by deriving from (A) x (B)

(D) % Flexible plastic packaging usage to total material; Source – Euromonitor

(E) Potential sales of flexible plastic packaging by deriving from © x (D)

Below is the raw data that we use. All the companies highlighted are multinational. Green ones represent

customers that Printpack has relationship either in the UK. Yellow ones represent potential target.

Chocolate Confectionery Company Shares

(A) (B) (C) = (A) X (B) (D) (E) = (C) x (D)

% retail value rsp 2006 Sales value (Million Euros)

% Packaging spending to sales

Potential packaging usage (Million Euros)

% Flexible plastic packaging usage to total material

Potential sales of flexible plastic packaging (Million Euros)

Cadbury Wedel Sp zoo 17.98 172.86 10% 17.3 73% 12.62

Kraft Foods Polska Sp zoo 16.06 154.40 10% 15.4 73% 11.27

Master Foods Polska sp zoo

12.91 124.12 10% 12.4 73% 9.06

Nestlé Polska SA 12.49 120.08 10% 12.0 73% 8.77

Ferrero Polska sp zoo 5.8 55.76 10% 5.6 73% 4.07

FPC Kaliszanka Sp zoo 4.96 47.69 10% 4.8 73% 3.48

Wawel SA 4.26 40.96 10% 4.1 73% 2.99

Jutrzenka SA 4.24 40.76 10% 4.1 73% 2.98

Storck Polska Sp zoo 3.08 29.61 10% 3.0 73% 2.16

Terravita Sp zoo 2.86 27.50 10% 2.7 73% 2.01

Solidarnosc Sp zoo 1.93 18.56 10% 1.9 73% 1.35

ZPC Mieszko SA 1.27 12.21 10% 1.2 73% 0.89

Lindt & Sprüngli (Poland) Sp zoo

1.24 11.92 10% 1.2 73% 0.87

PPHU Milano Sp zoo 0.9 8.65 10% 0.9 73% 0.63

ZPC Skawa SA 0.65 6.25 10% 0.6 73% 0.46

Ludwig Czekolada Sp zoo 0.45 4.33 10% 0.4 73% 0.32

LU Polska Sp zoo 0.37 3.56 10% 0.4 73% 0.26

ZPC Vobro 0.35 3.36 10% 0.3 73% 0.25

Fazer Polska Sp zoo 0.32 3.08 10% 0.3 73% 0.22

Inda Polska Sp zoo 0.16 1.54 10% 0.2 73% 0.11

Private Label 3.47 33.36 10% 3.3 73% 2.44

Others 4.26 40.96 10% 4.1 73% 2.99

Total 100 961.40 10% 96.1 73% 70.18

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Sugar Confectionery Company Shares (A) (B) (C) = (A) X (B) (D) (E) = (C) x (D)

% retail value rsp 2006

Sales value (Million Euros)





Perfetti Van Melle Polska Sp zoo 13.93 42.92 10% 4.3 55% 2.36

Jutrzenka SA 10.68 32.91 10% 3.3 55% 1.81

Cadbury Wedel Sp zoo 10.12 31.18 10% 3.1 55% 1.71

ZPC Mieszko SA 8.51 26.22 10% 2.6 55% 1.44

Ferrero Polska sp zoo 7.21 22.21 10% 2.2 55% 1.22

Storck Polska Sp zoo 6.75 20.80 10% 2.1 55% 1.14

Haribo Sp zoo 4.19 12.91 10% 1.3 55% 0.71

Wawel SA 3.98 12.26 10% 1.2 55% 0.67

Warner-Lambert Poland Sp zoo 3.93 12.11 10% 1.2 55% 0.67

Wrigley Poland Sp zoo 3.67 11.31 10% 1.1 55% 0.62

Nestlé Polska SA 1.89 5.82 10% 0.6 55% 0.32

Master Foods Polska sp zoo 1.77 5.45 10% 0.5 55% 0.30

PPHU Astra Sp zoo 1.48 4.56 10% 0.5 55% 0.25

Fazer Polska Sp zoo 1.4 4.31 10% 0.4 55% 0.24

Argo Sp zoo 1.19 3.67 10% 0.4 55% 0.20

Ricola AG 1.15 3.54 10% 0.4 55% 0.19

Agros Optima SA 0.41 1.26 10% 0.1 55% 0.07

PWC Odra SA 0.36 1.11 10% 0.1 55% 0.06

Leaf Sp zoo - 10% - 55% -

Chupa Chups (Grupo) SA - 10% - 55% -

Private Label 4.11 12.66 10% 1.3 55% 0.70

Others 13.25 40.82 10% 4.1 55% 2.25

Total 100 308.10 10% 30.8 55% 16.95

Gum Company Shares (A) (B) (C) = (A) X (B) (D) (E) = (C) x (D)







Wrigley Poland Sp zoo 92.72 197.31 10% 19.7 3% 0.59

Perfetti Van Melle Polska Sp zoo

3 6.38 10% 0.6 3% 0.02

PPHU Omega 1.94 4.13 10% 0.4 3% 0.01

ZPC Mieszko SA 0.85 1.81 10% 0.2 3% 0.01

Joyco España SA 0.56 1.19 10% 0.1 3% 0.00

Kent Gida Maddeleri Sanayii ve Ticaret AS

0.31 0.66 10% 0.1 3% 0.00

Cadbury Wedel Sp zoo - 10% - 3% -

Warner-Lambert Poland Sp zoo

- 10% - 3% -

Others 0.61 1.30 10% 0.1 3% 0.00

Total 100 212.80 10% 21.3 3% 0.64

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Dried Processed Food Company Shares (A) (B) (C) = (A) X (B) (D) (E) = (C) x (D)

% retail value rsp 2006 Sales value

(Million Euros)




Potential sales of flexible plastic

packaging (Million Euros)

Unilever Polska SA 20.85 106.15 10% 10.6 67% 7.11

Nestlé Polska SA 10.57 53.81 10% 5.4 67% 3.61

Lubella SA 9.4 47.86 10% 4.8 67% 3.21

Malma SA 4.34 22.09 10% 2.2 67% 1.48

Dr Oetker Sp zoo 4.15 21.13 10% 2.1 67% 1.42

Tan-Viet Polska Sp zoo 4.11 20.92 10% 2.1 67% 1.40

Wytwornia Makaronu GOLIARD Sp zoo

2.94 14.97 10% 1.5 67% 1.00

Hfp SA 2.73 13.90 10% 1.4 67% 0.93

Rieber Foods Polska SA 2.67 13.59 10% 1.4 67% 0.91

Gellwe Sp zoo 2.56 13.03 10% 1.3 67% 0.87

Kim Lan Foods Co Ltd 1.6 8.15 10% 0.8 67% 0.55

Sawex Sp zoo 1.4 7.13 10% 0.7 67% 0.48

Czanieckie Makarony Sp zoo 1.28 6.52 10% 0.7 67% 0.44

Ajinomoto Poland Sp zoo 1.28 6.52 10% 0.7 67% 0.44

Index Food Distribution Sp zoo

1.19 6.06 10% 0.6 67% 0.41

PPH Kupiec 1.17 5.96 10% 0.6 67% 0.40

PPH Sulma sp z oo 0.77 3.92 10% 0.4 67% 0.26

Cenos Sp zoo 0.71 3.61 10% 0.4 67% 0.24

Master Foods Polska sp zoo 0.51 2.60 10% 0.3 67% 0.17

Wasa Sp zoo 0.36 1.83 10% 0.2 67% 0.12

North Coast Sp zoo 0.35 1.78 10% 0.2 67% 0.12

Amati ProFood Sp zoo 0.3 1.53 10% 0.2 67% 0.10

Rol Ryz Sp zoo 0.27 1.37 10% 0.1 67% 0.09

Eska Sp zoo 0.14 0.71 10% 0.1 67% 0.05

Delecta SA 0.1 0.51 10% 0.1 67% 0.03

Hanpol Spj 0.04 0.20 10% 0.0 67% 0.01

Bestfoods Polska Sp zoo - 10% - 67% -

Danuta SA - 10% - 67% -

Samsmak Foods Polska Sp zoo

- 10% - 67% -

Miro-Mark SA - 10% - 67% -

Riscossa Srl - 10% - 67% -

Agro-Technika SA - 10% - 67% -

Sarad Kielczanka SA - 10% - 67% -

Private Label 7 35.64 10% 3.6 67% 2.39

Others 17.22 87.67 10% 8.8 67% 5.87

Total 100 509.10 10% 50.9 67% 34.11

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Dog and Cat Food Company Shares

(A) (B) (C) = (A) X (B) (D) (E) = (C) x (D)






Master Foods Polska sp zoo

57 155.50 10% 15.55 60% 9.33

Nestlé Polska SA 16.7 45.56 10% 4.56 60% 2.73

Pupil Sp zoo 2.3 6.27 10% 0.63 60% 0.38

Cargill Inc 2 5.46 10% 0.55 60% 0.33

Royal Canin SA 1.4 3.82 10% 0.38 60% 0.23

Euro-Zoo Sp zoo 1.2 3.27 10% 0.33 60% 0.20

Firma Stopa 1.2 3.27 10% 0.33 60% 0.20

Pabemia Sp zoo 0.4 1.09 10% 0.11 60% 0.07

Sokolowskie Zaklady Miesne SA

0.4 1.09 10% 0.11 60% 0.07

BL de Haan Dierenvoeding BV

0.4 1.09 10% 0.11 60% 0.07

Affinity Petcare SA 0.3 0.82 10% 0.08 60% 0.05

Bosch Tiernahrung GmbH & Co

0.3 0.82 10% 0.08 60% 0.05

Bega-Dogland 0.2 0.55 10% 0.05 60% 0.03

Monge & C Srl 0.2 0.55 10% 0.05 60% 0.03

Provimi Petfood PL Sp zoo

0.2 0.55 10% 0.05 60% 0.03

Ben Perzow Sp zoo - 10% - 60% -

Marbie Graf Granulat Sp zoo

- 10% - 60% -

Canis - 10% - 60% -

Miro Plus - 10% - 60% -

Private Label 5.6 15.28 10% 1.53 60% 0.92

Others 10 27.28 10% 2.73 60% 1.64

Total 100 272.80 10% 27.28 60% 16.37

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Appendix R2 Benchmarking calculation in Poland

We calculated potential sales value for Printpack in Poland by benchmarking average sales of Printpack’s

competitors who incorporated in Poland during 2000-2005 with total value output of packaging industry in

Poland.

Current outputs of packaging in Poland

Based on the estimation from Euromonitor in the table R2.1 below, value outputs (production) of

packaging industry in Poland is estimated at 3.5 Billion Euros in 2005. The growth of outputs has been

decreasing from 18% in 2003, 12% in 2004 to 6% in 2005.

Table R2.1: Value outputs of packaging industry in Poland

Value Output of Packaging Industry in Poland: 2002-2005 (Million Euros)

2002 2003 2004 2005

Wooden packaging 143 166 206 230

Paper packaging 963 1,146 1,234 1,311

Plastic packaging 868 1,042 1,213 1,370

Metal packaging 526 606 672 614

Total packaging 2,501 2,960 3,325 3,525

Remark: Exchange rate conversion rate 1 PLN = 0.28 Euros

Source: Euromonitor International, Packaging Poland : Country Market Insight, March 2007

Global players like Alcan Packaging, Amcor Flexibles and Mondi Packaging entered Polish market during

2000 – 2005 and had average annual turnover around 20 Million Euros or 0.5% market share (20/3,525)

based on total packaging outputs in 2005 with the average employees 160 persons.

Table R2.2: Turnover of Printpack’s competitors who incorporated the plant in Poland during 2000-2005

Turnover ('000 Euros)

2006 2005 2004 2003 2002 2001

MONDI PACKAGING BZWP SP. Z O.O. 2000 19,994 17,528 15,520 17,896 18,654

AMCOR FLEXIBLES POLSKA SP. Z O.O. 2002 27,510 24,518 19,884 17,360 4,573

MONDI PACKAGING SWIECIE SP. Z O.O. 2000 33,604 33,178 30,378 34,533 40,680

MONDI PACKAGING DOROHUSK SP. Z O.O. 2002 18,779 15,867 13,239 10,983 134

ALCAN PACKAGING ZLOTOW SP. Z O.O. 2005 11,942

Source: Amadeus database

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Sales target projection for Printpack

Based on PCI, The World Flexible Packaging Market 2006, flexible packaging consumption is expected to

grow at 5% during 2005 to 2010, meaning the packaging market in Poland will reach 4,285 Million Euros in

2009.

Table R2.3: Projection of packaging industry in Poland

Projection of Packaging Industry in Poland 2006 2007 2008 2009 2010

Value output in Million Euros 3,701 3,887 4,081 4,285 4,499

Growth (assumption) 5% 5% 5% 5%

Source: Author’s analysis derived from table R2.1

We know from the calculation above that average annual market share of new entrants is about 0.5%.

As a result, 0.5% of 4,285 Million Euros in 2009 or 24 Million Euros can be a benchmarking for sales target

of Printpack.

Based on appendix R1, we estimated spending of packaging in confectionery, dried processed food and pet

food in Poland as 226 Million Euros.

24 Million Euros per annum is equivalent to 10.8% (24/226) market share in those target product segments.

Table R2.4: Estimated spending of flexible plastic packaging in Poland in selected product segments

Poland (2006) Potential

packaging usage (Million Euros)

Potential spending of flexible plastic packaging (Million Euros)

Multinational National Total

Chocolate confectionery 96 49 18 70

Sugar confectionery 31 8 6 17

Gum 21 1 0 1

Dried processed food 51 11 17 34

Dog and cat food 27 13 2 16

Total 226 82 44 138

Source: underlying data from Euromonitor, author’s analysis

From the table R2.4 above, we estimated potential spending of flexible plastic packaging from

multinational customers in target product segments as 82 Million Euros. As a result, 10.8% target market

share of 82 Million Euros is 8.8 Million Euros which can be target sales for Printpack to serve those

multinational customers in selected product segments.

229 / 235

Appendix R3 Market potential of flexible plastic packaging and potential sales in Germany

To calculate potential sales of flexible plastic packaging, we use

(A) Sales value at retail; Source – Euromonitor

(B) Packaging spending to sales; Source – International Journal of Physical Distribution & Logistics Management, Volume 26 (1996), Packaging, marketing, logistics and the environment: are there trade-offs?,

Gerard Prendergast, Henley Management College, Henley on Thames, UK and Leyland Pitt, Henley Management College, Henley on Thames, UK

© Potential packaging usage by deriving from (A) x (B)

(D) % Flexible plastic packaging usage to total material; Source – Euromonitor

(E) Potential sales of flexible plastic packaging by deriving from © x (D)

Below is the raw data that we use. All the companies highlighted are multinational. Green ones represent

customers that Printpack has relationship either in the UK. Yellow ones represent potential target.

Dog and Cat Food Company Shares

(A) 10% (C) = (A) X (B) (D) (E) = (C) x (D)






Masterfoods GmbH 38.1 755.26 10% 75.53 60% 45.32

Nestlé Purina Petcare Deutschland GmbH

11.2 222.02 10% 22.20 60% 13.32

H Von Gimborn GmbH 2.7 53.52 10% 5.35 60% 3.21

Vitakraft-Werke Wührmann & Sohn

1.7 33.70 10% 3.37 60% 2.02

Affinity Petcare Deutschland GmbH

1.7 33.70 10% 3.37 60% 2.02

Hill's Pet Nutrition GmbH

1.3 25.77 10% 2.58 60% 1.55

Iams Pet Food GmbH & Co KG

0.8 15.86 10% 1.59 60% 0.95

Effem GmbH - 10% - 60% -

Royal Canin Tiernahrung GmbH & Co

- 10% - 60% -

Friskies Deutschland GmbH

- 10% - 60% -

Private Label 38.9 771.11 10% 77.11 60% 46.27

Others 3.6 71.36 10% 7.14 60% 4.28

Total 100 1,982.30 10% 198.23 60% 118.94

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Chocolate Confectionery Company Shares

(A) (B) (C) = (A) X (B) (D) (E) = (C) x (D)







Ferrero OH GmbH 18.46 1,030.33 10% 103.03 55% 56.67

Kraft Foods Deutschland GmbH & Co

11.69 652.47 10% 65.25 55% 35.89


Storck KG, August 8.42 469.95 10% 47.00 55% 25.85

Chocoladefabriken Lindt & Sprüngli GmbH

7.55 421.40 10% 42.14 55% 23.18

Ritter GmbH & Co KG, Alfred 7.22 402.98 10% 40.30 55% 22.16

Nestlé Erzeugnisse GmbH 5.97 333.21 10% 33.32 55% 18.33

Stollwerck AG 3.71 207.07 10% 20.71 55% 11.39

Aldi Einkauf GmbH & Co oHG 2.54 141.77 10% 14.18 55% 7.80

Ludwig Schokolade GmbH & Co KG

2.45 136.74 10% 13.67 55% 7.52

Lidl & Schwarz Stiftung & Co KG

0.27 15.07 10% 1.51 55% 0.83

Feodora Chocolate GmbH & Co 0.13 7.26 10% 0.73 55% 0.40

Eco Finia GmbH 0.13 7.26 10% 0.73 55% 0.40

Piasten Schokoladenfabrik Hofmann GmbH & Co KG

- 10% - 55% -

Private Label 10.15 566.51 10% 56.65 55% 31.16

Others 9.7 541.40 10% 54.14 55% 29.78

Total 100 581.40 10% 558.14 55% 306.98

Gum Company Shares (A) (B) (C) = (A) X (B) (D) (E) = (C) x (D)

% retail value rsp 2006 Sales value

(Million Euros)

% Packaging spending to

sales

Potential packaging

usage (Million Euros)

% Flexible plastic

packaging usage to total

material

Potential sales of flexible plastic packaging (Million

Euros)

Wrigley GmbH 71.21 392.94 10% 39.29 2% 0.79

Hitschler International GmbH 3.99 22.02 10% 2.20 2% 0.04

Haribo GmbH & Co KG 2.53 13.96 10% 1.40 2% 0.03

SmithKline Beecham GmbH & Co KG

0.74 4.08 10% 0.41 2% 0.01

Fleer Española SA 0.61 3.37 10% 0.34 2% 0.01

Wohlgemuth Süsswaren GmbH

0.48 2.65 10% 0.26 2% 0.01

Leaf GmbH - 10% - 2% -

Chupa Chups Van Melle GmbH & Co KG

- 10% - 2% -

Private Label 9.23 50.93 10% 5.09 2% 0.10

Others 11.21 61.86 10% 6.19 2% 0.12

Total 100 51.80 10% 55.18 2% 1.10

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Sugar Confectionery Company Shares (A) (B) (C) = (A) X (B) (D) (E) = (C) x (D)






Storck KG, August 20.63 422.89 10% 42.29 61% 25.80

Haribo GmbH & Co KG 19.19 393.38 10% 39.34 61% 24.00

Katjes Fassin GmbH & Co KG 7.9 161.94 10% 16.19 61% 9.88

Vivil A Müller GmbH & Co KG 5.41 110.90 10% 11.09 61% 6.76

Procter & Gamble GmbH 3.59 73.59 10% 7.36 61% 4.49

Impuls-Vermarktung GmbH & Co KG

3.42 70.11 10% 7.01 61% 4.28

Ricola AG 2.93 60.06 10% 6.01 61% 3.66

Perfetti Van Melle GmbH 2.82 57.81 10% 5.78 61% 3.53

Mederer Süsswarenvertriebs GmbH

2.34 47.97 10% 4.80 61% 2.93

Ferrero OH GmbH 1.95 39.97 10% 4.00 61% 2.44

CFP Brands Süßwarenhandels GmbH & Co KG

1.62 33.21 10% 3.32 61% 2.03

Dr Soldan GmbH 1.54 31.57 10% 3.16 61% 1.93

Wrigley GmbH 1.51 30.95 10% 3.10 61% 1.89

Zertus GmbH 0.97 19.88 10% 1.99 61% 1.21

Ludwig Schokolade GmbH & Co KG

0.77 15.78 10% 1.58 61% 0.96

Ragolds Süsswaren GmbH & Co 0.6 12.30 10% 1.23 61% 0.75

Siemens & Co 0.53 10.86 10% 1.09 61% 0.66

Villosa Vertriebsgesellschaft mbH 0.37 7.58 10% 0.76 61% 0.46

Frigeo Belte GmbH & Co 0.36 7.38 10% 0.74 61% 0.45

Ragolds Sweet Sales GmbH 0.26 5.33 10% 0.53 61% 0.33

Hitschler International GmbH 0.2 4.10 10% 0.41 61% 0.25

GlaxoSmithKline GmbH & Co KG 0.18 3.69 10% 0.37 61% 0.23

Chupa Chups Van Melle GmbH & Co KG

- 10% - 61% -

Milupa GmbH & Co KG - 10% - 61% -

Private Label 14.39 294.98 10% 29.50 61% 17.99

Others 6.52 133.65 10% 13.37 61% 8.15

Total 100 2,049.90 10% 204.99 61% 125.04

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Biscuits Company Shares (A) (B) (C) = (A) X (B) (D) (E) = (C) x (D)






Griesson de Beukelaer GmbH & Co KG

24.74 376.57 10% 37.66 45% 16.95

Bahlsen GmbH & Co KG 13.97 212.64 10% 21.26 45% 9.57

Brandt Zwieback-Schokoladen GmbH & Co KG

3.88 59.06 10% 5.91 45% 2.66

Lorenz Bahlsen Snack-World GmbH & Co KG Germany

3.57 54.34 10% 5.43 45% 2.45

Barilla Wasa Deutschland GmbH

3.07 46.73 10% 4.67 45% 2.10

Tekrum-Werk Theodor Krumm GmbH & Co KG

2.34 35.62 10% 3.56 45% 1.60

Aachener Printen & Schokoladenfabrik Henry Lambertz GmbH & Co KG

1.45 22.07 10% 2.21 45% 0.99

Hig Hagemann GmbH & Co KG

1.38 21.00 10% 2.10 45% 0.95

Stollwerck AG 1.38 21.00 10% 2.10 45% 0.95

Laurens Spethmann Holding AG & Co

1.15 17.50 10% 1.75 45% 0.79

Coppenrath Feingebäck GmbH

1.05 15.98 10% 1.60 45% 0.72

Manner & Comp AG, Josef 0.98 14.92 10% 1.49 45% 0.67

Dietrich Borggreve KG Zwieback & Keksfabrik GmbH

0.91 13.85 10% 1.39 45% 0.62

Conrad Schulte GmbH & Co KG Feingebäck

0.81 12.33 10% 1.23 45% 0.55

Schneekoppe GmbH & Co KG

0.81 12.33 10% 1.23 45% 0.55

Hans Freitag GmbH & Co KG

0.68 10.35 10% 1.04 45% 0.47

Danesita Ungarn GmbH 0.63 9.59 10% 0.96 45% 0.43

Burger Knäcke GmbH 0.47 7.15 10% 0.72 45% 0.32


Grabower Süsswaren GmbH

0.33 5.02 10% 0.50 45% 0.23

Gutena Nahrungsmittel GmbH

0.12 1.83 10% 0.18 45% 0.08

Nestlé Erzeugnisse GmbH - 10% - 45% -

Kamps AG - 10% - 45% -

Private Label 33.32 507.16 10% 50.72 45% 22.82

Others 2.5 38.05 10% 3.81 45% 1.71

Total 100 1,522.10 10% 152.21 45% 68.49

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Breakfast Cereals Company Shares

(A) (B) (C) = (A) X (B) (D) (E) = (C) x (D)






Kellogg (Deutschland) GmbH

25.57 156.90 10% 15.69 51% 8.00

Cereal Partners Deutschland GmbH & Co oHG

12.66 77.68 10% 7.77 51% 3.96

Dr August Oetker Nahrungsmittel KG

9.96 61.11 10% 6.11 51% 3.12

Peter Kölln KGaA 9.11 55.90 10% 5.59 51% 2.85

H&J Brüggen KG 1.47 9.02 10% 0.90 51% 0.46

Weetabix GmbH 0.49 3.01 10% 0.30 51% 0.15

Schneekoppe GmbH & Co KG

0.49 3.01 10% 0.30 51% 0.15

Seitenbacher GmbH 0.27 1.66 10% 0.17 51% 0.08

Hipp GmbH & Co Vertrieb KG

0.13 0.80 10% 0.08 51% 0.04

Private Label 34.19 209.79 10% 20.98 51% 10.70

Others 5.66 34.73 10% 3.47 51% 1.77

Total 100 613.60 10% 61.36 51% 31.29

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Appendix R4 Benchmarking calculation in Germany

Target market share

There are six companies entering Germany during 2001-2005. They are Avery Dennison Rinke, Rotopack,

Bagel Roto-offset, Cellpack Packaging, Schutz and Vogel & Noot.

Table R4.1: Companies who incorporated in Germany during 2001-2005

Turnover ('000 Euros)

Company name City Date of

incorporation 2006 2005 2004 2003 2002

AVERY DENNISON RINKE GMBH SPROCKHÖVEL 2003 17,131

FIELD ROTOPACK STUTTGART GMBH

STUTTGART 2001 24,115 23,107 21,345 19,364 16,910

BAGEL ROTO-OFFSET GMBH & CO. KG

DÜSSELDORF 2005 27,000 30,000

CELLPACK PACKAGING GMBH LAUTERECKEN 2003 29,758 29,637

SCHÜTZ GMBH & CO. KGAA SELTERS 2000 325,667 266,076

SCHÜTZ GMBH & CO. KGAA SELTERS 2000 325,667 266,076

Source: Amadeus database

Our closest benchmarking for Printpack are Field Rotopack who plays in plastic and paperboard and

Cellpack Packaging who is active not only in food packaged sector but also household and cosmetics.

From the corporate website http://www.rotopack.de/index_001.htm, Field Rotopack has 15% sales

contribution from Plastic and 85% from paperboard. As a consequence, we estimated that 15% of 16.9

Million Euros in 2002 which is equivalent to 2.5 Million Euros came from plastic packaging.

In case of Cellpack Packaging, we estimated sales of plastic packaging for foods contributing 56% of its

annual turnover 29.6 Million Euros or equivalent to16.6 Million Euros per year as shown in the calculation

of table R4.2 below.

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Table R4.2: Estimation method to calculate sales of Cellpack Packaging from foods

(A) (B) © (D)

Cellpack Packaging sales estimation

2006 sales from Euromonitor in million Euros

% Spending on packaging

Sales of packaging in Germany

% Contribution

Foods 61.4 10% 6.14 56%

Household 3.7 10% 0.37 3%

Cosmetics 11.14 40% 4.456 41%

Sources:

(A) Underlying information from Euromonitor database- estimation of foods, household and cosmetics

market in Germany

(B) Source – International Journal of Physical Distribution & Logistics Management, Volume 26 (1996),

Packaging, marketing, logistics and the environment: are there trade-offs?, Gerard Prendergast, Henley

Management College, Henley on Thames, UK and Leyland Pitt, Henley Management College, Henley on

Thames, UK

(C) Deriving from (A) x (B).

(D) Deriving from © divided by total summation of ©

As a result, we estimated target turnover of Printpack in flexible plastic packaging around 2.5 – 16.6 Million

Euros per annum if they were to enter Germany.

final report printpack 280408 doc - daum

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