The takeover of the independents

John Weedon, Managing Director of the Weedon Group, considers the impact of the recently announced take-over of two independent corrugated packaging companies by one of the giants of the industry.

In April, Smurfit Kappa announced that it was acquiring Inspirepac and a majority shareholding in Beacon Packaging. These companies are currently two of the largest independent UK corrugated manufacturers.

The corrugated market is dominated by four multi-national paper-making groups: DS Smith, Rigid VPK, Saica and Smurfit Kappa. Together they supply 70% of the corrugated market. The independent sector – those companies that are not part of the big four – are thought to produce about £500 million of sales a year. That figure will be reduced by 10% following the sale of Inspirepac and Beacon Packaging.

Does this matter?

Presumably the expertise in Inspirepac and Beacon Packaging will not be lost to the industry. It could be argued that these acquisitions might enable Smurfit Kappa to provide better, more economical services to its customers. There is an argument that big is beautiful – after all, it can create significant economies of scale. All of which is surely good news for the customer.

But what will undoubtedly be lost is choice. And perhaps a different sort of service.

With the take-over of Inspirepac and Beacon Packaging, there will be only six significant independent corrugated manufacturers left in the UK equipped with their own corrugator – only six companies that can both manufacture their own corrugated board and convert it into packaging. In the last ten years, many independent companies have been swallowed up by these global paper-making groups.

The Weedon Group is a family-run operation. We have been trading since 1987 and have developed into a business in three locations nationally, with a combined turnover of over £20 million – compared with Smurfit Kappa, for example, we are small.

Nevertheless, our Manchester factory, Weedon Corrugated Products, is one of the largest independent corrugated packaging manufacturers in the North West. We have our own integrated corrugator, which also supplies Weedon PSC in Staffordshire, the UK’s leading manufacturer of Retail Ready Packaging and Point of Sale displays. With i2i europe, our retail own label packaging specialists, together the Weedon Group offers a one-stop-shop from concept and creative design through manufacturing to in‑house fulfilment and Europe-wide distribution – proving you don’t need to be a giant multi-national to provide a complete packaging solution!

But what we and the other independent corrugated manufactures offer that the big four cannot is a different sort of approach.

Because we are independent, you could argue we have to work harder. Every customer matters to us and there can be no room for complacency. So developing a relationship with our customers is central to our business philosophy, and we take the time to understand their concerns and the pressures under which they operate.

Because we are independent, making decisions at the coalface, we can be more flexible. If our customer has an emergency, we can adjust our procedures to meet a tight deadline, or change a design at short notice. And our structural designers are experts at finding solutions to difficult problems – in fact they relish the challenge. We take the time to meet our customers’ individual needs.

Many prefer this sort of approach. Perhaps some regular customers of Inspirepac and Beacon Packaging will look around for an alternative supplier from the diminishing pool of independent corrugated manufacturers. If they can gather in these disenfranchised customers, Smurfit Kappa’s expansion could be good for the remaining independents too.

But the downside, of course, is that size does bring economic advantages and security – and those of us who are left to fly the independent banner will find increasing competition as the big four seek to take over the corrugated packaging world.