Perfect PET Products

As one of the pioneers of South Africa’s Polyethelene Terephthalate (PET) industry (try saying that three times fast) Boxmore boasts a clientele including international beverage brands like Coca Cola, Pepsi and Smirnoff. And with its recent acquisition of the plastic closure division of MCG Industries, Boxmore is now focusing on consolidating the businesses to provide a customer-friendly, one-stop shop for all your bottling needs.

Boxmore Packaging, formerly known as Boxmore Plastics, is a manufacturer of PET bottles and pre-forms for the beverage industry and is known as one of the largest converters of PET resin in Southern Africa.

The company was established in Harrismith, South Africa in 1996 by Irish packaging group Boxmore International and later amalgamated into the United States-based Chesapeake Group. In 2009, during the American recession and chapter 9 bankruptcy of the parent company Chesapeake, Boxmore was sold to a local investment bank and management in a leverage buy-out deal.

With the tremendous growth of the industry over the past decade, particularly due to the rise in demand for bottled water and growing popularity of beverages like sports drinks, the PET bottling and packaging business has become much more competitive.

David Drew, commercial director of Boxmore, says the last three to five years have showed the industry entering a steadier maturing phase, but paired with events like the global recession, some industry players have been feeling the strain, which has led to market consolidation.

This is exactly what Boxmore experienced the past few months with its recent acquisition of MCG Industries.

Strategic Growth

“[MCG] was looking for a way out and we were looking for acquisitions to build. It seemed like the right time to take on something new,” says Drew.

Boxmore had built a reputation of offering end-to-end solutions from the bottle design using the latest CAD software to labeling the bottles. Now, through its newly acquired specialised manufacturing division, Boxmore can provide customers a true one-stop solution because it can ‘top’ off its offerings with a selection of plastic closures.

“Both businesses shared a lot of customers, although they weren’t competitive because Boxmore didn’t make any closures and MCG didn’t make any PET products,” says Drew. “There was also a lot of new ground that gave the acquisition a potential upside. This interested us as a management team but also interested our shareholders who believed it was a good growth strategy for the business.”

Moulding Milestones

Boxmore has seen many successes over its 16 years in the business including a significant growth in its sales outside of South Africa.

“We’re really proud of the growth our export business has seen over the last five years,” says Drew. “It certainly has helped us through the recession as we’re exposed to markets that are growing slightly faster than us, but it also means we have quite a diverse customer base.”

According to South African Food Review’s Soft Drinks Report 2012, Boxmore has seen a growing presence in countries like Botswana, Zambia, Angola, Namibia, Mauritius and the Seychelles.

Boxmore’s mastery of multi-layering – the practice of combining stock standard PET with other materials to improve the shelf life of a product – has also contributed to its growth not only through its positive relationships with Coca Cola and Pepsi, but because the reputation it has gained throughout its journey of understanding the technology has helped open doors to several new business opportunities across the African continent.

A couple of new projects Boxmore has been involved with have been glass-to-PET migrations.

The first, Appletise, is a customer with an iconic brand that has taken its product, traditionally sold in glass and cans into a novel PET format. “The new 350 ml is recyclable multilayer bottle that provides six months of shelf life,” says Drew. “It’s been sort of a combination of all of our skills and expertise to develop something that really delivers to the customer. It’s changed their product mix from glass and cans only to a point where PET is a growing proportion of their portfolio.”

The second project is with premium alcoholic beverage company Diageo on its Smirnoff 1818 brand. Boxmore helped the brand introduce South Africa’s first 200 ml PET “nip” bottle to replace the traditional glass format and has been on the market for about six months now.

“It’s really gone very well, we’re just trying to keep up with demand, which is great because it’s a really premium PET product that looks and basically feels like glass, but at a significant cost advantage. It’s been a project that demonstrates what Boxmore is about: working with our customers.”

Sustainability

Producing a high volume of PET bottles is great for a business like Boxmore’s, but that also leads to a high volume of potential waste. Or, in this case, recyclable material.

Being acutely aware of the impact PET products can have on the environment, Boxmore stepped up as a green leader almost 10 years ago by being a key part of the industry movement to create an environmentally-conscientious ecosystem, while also creating jobs in South Africa.

As a founding member of PETCO – a not-for-profit organisation working to minimise the impact of post-consumer PET products on the South African landscape – Drew says the main goal was to encourage movement towards recycling and establish and support a PET recycling industry.

“PETCO’s approach was to be proactive and start something so we would never be confronted later about not doing enough or realising 10 years later, ‘Oh, we should have really done something about recycling’,” says Drew.

In essence what happens is that Boxmore pays a voluntary levy on every ton of resin it purchases. Then that money gets used for recycling by PETCO by pumping it into the recycling value chain. “PETCO uses part of the money to help create enterprises that are involved in the recycling system,” says Drew.

“Recycling not only has a green edge to it, but it has a community involvement and creates jobs.”

However, Boxmore strives to keep a green mindset even before its products are distributed across the country by influencing customers to make recyclable-friendly choices right from the design process.

“Things like avoiding dark colours, sticking to the clears and the blues,” explains Drew. “The reality is that those products are nominally no different so it’s not like blue is biodegradable or anything like that. But, blue PET has a higher value in the recycling stream and so does clear. By encouraging people to stick to products that have a high recycling value, you’re adding to the recycling value chain and that means it’s sustainable.”

Looking Ahead

Although Boxmore is not the biggest player in the industry, the company has always been able to stay ahead of its competition due to its technical expertise and its incomparable customer service.

More often than not, customers like Coca Cola will come to Boxmore on issues or problems unrelated to their current collaborative projects to seek guidance or advice, which Drew believes reflects the respect the industry holds on the company’s skill and knowledge, not only with manufacturing PET, but also on application and the general business.

Boxmore also has great passion for its customers and excellent customer service. The company’s reputation is at a point where the customers now expect nothing less, says Drew. Boxmore’s honesty and high-level of support is a major differentiator for the company, something Boxmore will need to continue while it focuses on consolidating its new acquisition, as well as their customers.

“The immediate future is to make sure we can really put two businesses together and create one, both internal and external,” says Drew. “The first challenge is to make the new members of the Boxmore team feel at home and then to really pin down the synergies of the business. We don’t want to be like these other conglomerates where you speak to one person for closures and another person for pre-forms. We really want to have a one-focus customer approach.”