A true all-rounder
The dynamics of the can making industry have changed significantly over the past few months with the recent Ball acquisition of Rexam. In an industry exclusive, Evert van de Weg speaks with the recipients of Ball’s divested part of its business, Ardagh Group. He speaks with the chief executive officer of the Ardagh metal food and speciality division, Woep Möller.
When Ball Corporation took over Rexam, it was immediately clear that Ball would have to sell a certain part of its newly acquired business to get the permission of the anti-trust authorities. After the bidding procedure, Ardagh turned out to be the winning bidder for the sum of approximately $3.1 billion. The financial market and large buyers of beverage cans reacted quite positively to the acquisition. Moody’s Investor Service even upgraded Ardagh’s corporate rating from B3 to B2 because of the improved scale and market position of Ardagh and the synergies and cost savings that can be expected from the deal.
Woep Möller has seen a lot of changes in the metal packaging market in the past few decades having made his way up in the former Dutch part of the organisation in the 1980s.
The CEO of the Ardagh metal food and speciality division explains how the acquisition appears to have been received positively so far.
“We already have a positive track record as an international can supplier for food and non-food cans and I have received positive reactions from existing major customers about this latest acquisition, though I am personally not in charge of the future beverage can business unit. Customers obviously see us as a reliable strategic buyer for this beverage can business with an innovative attitude and an established research and design contribution in metal packaging production.”
With the acquisition of the metal beverage facilities of Ball and Rexam, Ardagh now operates 110 glass and metal facilities in 22 countries, employs over 23,000 people and has global sales exceeding €7.9bn. This is impressive when you consider that the company has grown from a European business with 3,000 employees in 2007, to a leading global company with more than 23,000 employees today.
The Irish Ardagh Group is a prominent player, not only in metal packaging, but also in glass packaging. In the recent deal, Ardagh acquired ten beverage can manufacturing plants and two end plants in Europe, seven beverage can plants and one end plant in the US, two beverage can manufacturing plants in Brazil and some innovation and support functions in Germany, UK, Switzerland and the US.
“Funnily enough, for the employees of some ex-Ball plants in the Netherlands and Germany, they have gone full circle,” explains Möller. “Some 15 years ago, their plants were sold to Ball and now they have returned to the Ardagh organisation. When I recently visited some of these plants, I met former colleagues whom I had not seen in the last 15 years.
“It may look strange to have two competing material in one company, but in practice they work well together. Glass and metal are both permanent materials and part of the Circular Economy where materials can be infinitely recycled without any loss of quality.
“From a commercial perspective, volumes for the two materials have stabilised over the past 30 to 40 years. Both materials have been available for a long time, they are both represented in retail and there is very little ‘cannibalism’. As we manufacture packaging for the world’s biggest brands, combined with our global footprint, it is actually beneficial that we are able to offer both glass and metal packaging solutions.’’
Integration of the beverage can unit
If you look at the Ardagh website, beverage cans are already presented as an integral part of their portfolio and the integration of the Ball activities has started right from the beginning. For Möller, the recent acquisition brings all kinds of synergies with it.
“In areas such as processes and technologies we are able to share best practices. But also in many other areas such as human resources, procurement, logistics and supply chain we can exchange knowledge and experience. In particular, for DWI production processes we experience great synergies because Ardagh Group had already built up a lot of experience in DWI cans for food, whereas for decades the former Ball plants gathered decades a huge experience in DWI technology for beverage cans. To bring these experiences together is a great benefit.
“Looking at the R&D potential, we are in a unique situation where we now have two very competent R&D Centres in France and Germany, in which we can exchange expertise and knowhow about DWI processes, but also about opening systems, shaping and many more aspects of can manufacturing. Bringing together the expertise of both sides of the business and have them freely exchange their ideas is now a unique opportunity.”
Ardagh’s metal packaging for food products
Möller assesses the headline trends and innovations in the major markets in which he operates as convenience, single serve and easy open. “These food trends also related to our aging population,” he says. “We also notice consolidation within our customer base. There is more and more attention for food waste.
“As an industry this is something we should anticipate and as a company we try and think ahead with our innovations. An important development we brought to this market is our Nemo DWI can, which allows considerable down gauging. We do have high expectations for this can type, but it takes time for the filler and the consumer, as well to get equipped and accustomed.”
Not long ago, Ardagh commissioned market research specifically aimed at the attitude of consumers versus food cans. Möller explains: “Consumers value food cans as the best package for food, giving very good value for their money. The image of the 200 year old food can is changing rapidly. Young entrepreneurs like the company CoCo Conserven in the Netherlands and Heiko Langhans in Germany show how many good qualities food in cans has to offer like nutritional value, food safety, the potential to avoid food waste and most importantly, sustainability. More and more food companies in the world are helping to spread that message.’’
Historically Ardagh has a strong position in the market for seafood cans; in fact it is the number one in the world for this market segment as Möller notes: “In the seafood market there is a consolidation trend amongst our customers. Shaping and printing technologies play a larger role here than in the food sector. It is almost unbelievable what fantastic seafood cans you see on the supermarket shelves in Spain, Portugal and France.
“Not long ago, we presented the world’s lightest seafood can with a conical wall thickness of only 0.17 mm, much thinner than its nearest competitor at 0.215mm. Convenience in opening solutions plays an important role in the seafood sector. Customers are looking at lightweight packaging, while at the same time requiring a robust and strong can. One of the biggest challenges for the metal packaging industry is the strength of a can which sometimes revolts against the convenience story’’.
The nutrition market, covering milk powder and infant formula for babies, is another important market for Ardagh he says. “Important factors in the nutrition market are safety, quality and differentiation. At Ardagh we try and meet these requirements with for example our DDE (Deep Drawn End) innovative ‘spoon out of powder’ solution which we developed exclusively for one of our customers. Moreover, we recently launched for another customer a fully new baby nutrition can with a unique shape for added differentiation. The shaped design is unique for a metal can in this market segment. It is formed through a process called mechanical expansion.”
If you look at the aerosol can market, there has been a growth in the pharma and deodorant market, mainly due to the introduction of body sprays. As deodorants are often in aluminium aerosol cans, we have seen an increased volume in aluminium aerosol cans versus tinplate aerosol cans,” says Möller. “Some brands even switched from aluminium to tinplate aerosols. On the whole the aluminium versus tinplate market seems to be well balanced now. As far as innovation is concerned, we are focussing on developments in respect of anti-counterfeiting, beading and shaping for added shelf appeal for our customers.”
Ardagh Group in favour of sustainable packaging
For many years now, Ardagh is quite active in promoting the very favourable sustainability message for metal packaging in countries where the group is active, but also on a supranational level in circles like the European EMPAC organisation.
“We promote wherever possible the strong environmental credentials,” explains Möller. “Metal is (like glass) a permanent material. Metal forms a part of what is referred to as a ‘circular economy’ – where materials can be infinitely recycled in a closed loop without any loss of quality. As a result, metal (like glass) is regarded as ‘permanently available’. The materials are not lost as long as they are recycled into another metal or glass product.
“Ardagh initiatives that focus on recycling – both of our source materials and within our facilities themselves – showcase our commitment to energy efficiency. This endless recyclability is one of the major themes in the book ‘’Why Metal’’ which we recently distributed amongst many players throughout the whole supply chain of food and non-food products packed in metal packages.”