On the occasion of its 150th anniversary, CH Dahlinger Managing Director Valério d’Adamo discusses the German boxmaker and display manufacturer's priorities for the future, and how he sees the packaging market evolving.
CH Dahlinger is celebrating its 150th anniversary this year. Where does the business stand today, and how has the health crisis impacted your activities?
We operate two business units: jewelry retail, for which we supply standard boxes from our in-house portfolio and which accounts for around 30% of our activity, and our bespoke business, namely packaging for jewelry, watches, writing instruments and a major share in the spirits market. Bespoke items represent some 70% of our turnover.
Although the crisis has of course had an impact on both businesses, the retail portion has been less sensitive than the bespoke activity. This is partially because when consumers are affected in crisis times, they tend to invest in more expensive items. That said, the travel retail channel, which accounts for around 20% of our turnover, was particularly hard hit in light of airport closures and the continued slowdown in air travel.
How has the crisis changed your approach to your markets?
I think the main lesson coming out of the crisis is that the demand for more sustainable packaging solutions is now dominating the market, so this has become a priority in our development pipeline. Two or three years ago, products made of wood-based materials or FSC cardboard were in demand, but today we are opting for FSC-certified paper and wood wherever possible. Even inserts, which typically were in plastic or polystyrene, are now either in cardboard or molded fiber. In the paper industry, PCR offers are gaining ground, as are materials made of vegetal residue like grasses.
Regarding plastics used for the body of the box, we’ve been using recycled PS and ABS for more than 20 years, so this is nothing new, but there is now huge demand for RPET-based options, which can be used to make alternative materials, such as faux suede. New PU options, meanwhile, are being made from fruit skins.
Sustainable options are more costly: before the health crisis demand existed, but brands were weary to pay a premium. Today this has changed a bit: there is growing awareness, so our customers and the end consumer are willing to accept paying more for greener products.
Given brands’ sustainability demands, are you looking to bring some production back to Europe?
European packaging production today is adapted to applications that are easy to produce or call for automation. As a result, we may launch automated manufacturing of flip top boxes or other simple cardboard boxes either in Germany or Eastern Europe in the medium term.
For more complex projects, China still remains the best option. More than 80% of the manufacturing for our Bespoke division is in the region of Shenzhen as all of the necessary materials can be sourced there, and the local workforce is particularly skilled at complex packaging production.
Beyond sustainability, what do you see as the key market trends today?
Packaging-wise, and this ties into sustainability concerns, brands are increasingly looking to give a second life to their packs with clever ideas for reuse.
From a market perspective, the very high-end writing instrument segment is quite buoyant thanks to limited editions and collectors’ products. Jewelry also is performing reasonably well, especially in the wedding ring segment. And while the watch industry has suffered a lot, it is picking up somewhat thanks to the Chinese market.
How will Dahlinger’s product offer develop in the near future?
For our Bespoke business we aim to expand two segments: spirits and watches. In the jewelry retail business, we primarily want to grow through our online shop, which means introducing new product lines, such as exclusive travel collection cases for watches. In this last product segment, there is a huge offer on the market, but our approach is to create new designs exclusive to our retailers.
In terms of investments: our next big projects are new ERP and CRM systems, and we’re also looking to increase production either in Germany or at a new site in Eastern Europe. We already have a production site in eastern Germany, which we may develop and are also looking at how to integrate box manufacturers in Eastern Europe into our network. Quite a program for the months and years to come!