Quadpack ceo Tim Eaves tells us what Louvrette and Inotech, its latest acquisitions, bring to the table. You purchased German primary packaging company Louvrette last month.
What was behind the acquisition?
First, we wanted to increase our manufacturing capacity in Europe to reach more than 33% of our acitivity (compared to around 12% pre-acquisition) and we’ve achieved that with Louvrette. Within the next five years we aim for European production to reach 50% of our sales. It’s a question of sustainability and agility—we have to be much faster in the market and closer to our customers, which also has a social and environmental repercussions as by manufacturing locally, we’re improving our carbon footprint not to mention creating jobs. That said, we want to remain a hybrid company—one that manufacturers, but also sources—as this gives us flexibility. At the moment we see the ideal balance between these two activities at around 50/50. In 2019 our turnover will reach 130 million euros, a 25% increase, due mainly to the acquisitions. We’ve grown from 420 to 600 employees and made no layoffs following the acquisitions.
Louvrette brings expertise in thick-walled plastic injection and airless products.
Yes. Thanks to Louvrette, we’ve further strengthened our skincare portfolio, which now accounts for 63% of our business (23-24% is in makeup and the remainder in fragrance). It also means that most of our skincare production is predominately in Europe rather than in Asia. From an industrial standpoint, Louvrette operates two factories and recently inaugurated a 6,500m2 plant on a 27,000m2 site, so there is plenty of room for expansion.
It also gives you a strong presence in the German market.
Quadpack has always been present in Germany, but it has been difficult to increase our market share there. The German market for us is now the same size as Spain, the UK and Italy, while France remains our biggest market.
You also purchased a portion of German engineering company Inotech earlier this year.
Inotech, specialized in the transformation of plastics, is a much smaller transaction, but one that is equally exciting. Quadpack acquired Inotech's cosmetics business (which includes the product portfolio and client base), as well as the global commercial licence for its bi-injection blow-molding technology. Their main business is in the automobile or technical components field, but they had a small cosmetics activity that they were struggling to develop. What particularly appealed to us is Inotech’s engineering excellence when it comes to materials and plastic transformation. The cross pollination is also interesting, as what’s happening in technical components is very different from what we are familiar with in the area of cosmetics.
Are Louvrette and Inotech looking into the potential of bio-plastics?
Both companies have done considerable work in this area with Finnish material supplier Sulapac and Louvrette is the only company so far to have been able to produce a Sulapac component—a jar—on an industrial scale. Inotech is also producing with Sulapac, while at Quadpack we are also experimenting with cork, cement and stone.
With brands embracing reusable packaging concepts, what does it mean for your bottom line?
I see it as an opportunity. We’re mainly talking about refill systems, which will give us a chance to come up with more luxurious packaging that will be “built to last”. It’ll be a chance to upgrade, which could compensate for producing higher volumes. Quadpack is also looking at producing pouches for refills. One of the technologies we acquired from Inotech is a bag-in-bottle airless system; it’s economical and very light on materials and can be inserted into a more premium outer pack. Louvrette meanwhile has a concept called Repack (recycle, reuse, replace and reduce). In the future, every one of our products will have to adhere to at least one of those conditions, if not more.
How do you approach innovation at Quadpack?
This facet of our business is currently being reorganized, so I can’t reveal too much, but what I can say is that with the arrival of Inotech and Louvrette, we’re in the process of building a fully-fledged R&D team.
Quadpack is gearing up for an IPO. What more can you tell us?
The company is entering Euronext Growth in the next few weeks and an IPO will follow sometime in the next two years. We want to be fully prepared when it comes to corporate governance and our reporting structures so that when a good expansion project comes along we’ll be ready to seize it. For now we’re digesting the deals we’ve just made. As to the future, we are looking to the US and Asia-Pacific with the aim of producing for local brands—for the region in the region. We want to keep our spirit as a “little big company”. Our aim is not to become a monster controlled by venture capital. Of course we want to be profitable, but profit should be a consequence of working well, it shouldn’t be our only driver.