Paolo Recrosio, CEO at Berlin Packaging EMEA, sat down with Luxe Packaging Insight to discuss his ambitious acquisition strategy for the months and years to come for this US-based “hybrid packaging supplier”.
Can you give us a bit of background on Berlin Packaging?
Berlin Packaging is a North American company based in Chicago, founded more than a century ago and currently owned by two private-equity funds: Oakhill and CPP Investments. We are a distributor, and not a manufacturer. In the packaging space, we are by far the largest distributor in the glass, metal and plastics sectors with a portfolio of some 40,000 skus.
In North America the company expanded through acquisitions. It seems you are taking the same route to build the business in Europe.
At the end of 2016, a strategic decision was taken to expand the business into Europe given the region’s large packaging market and its focus on premium – spirits, beauty and food. The European packaging landscape is very fragmented as well, meaning that there are numerous acquisition targets.
The first company we bought was Bruni Glass, at the end of 2016. Over the last three years, we’ve grown the business from $200m to nearly $1bn today in EMEA, currently the group's growth engine. In terms of staff, we have 1,200 employees in the EMEA region.
Has this growth been solely due to acquisitions?
It is both organic and inorganic. We’ve made 22 acquisitions over the last three years. When we make an acquisition, we look at two main components, the first of which is the end market. Bruni Glass, for example, was specialized in spirits and food, namely olive oil and vinaigrette. After they joined Berlin, we began to tackle new segments, including wine, personal care and beauty. The second dimension of our strategy is a company’s geographical situation within EMEA.
Today, Berlin has more than 60 offices and we are also making significant inroads in the Middle East and Africa.
Berlin Packaging has historically worked with smaller brands. Is this changing?
Yes, our DNA was geared towards smaller players, but as we scale up, we are increasingly addressing mid-sized and larger customers. In 2022 we launched a new division called GAM (global accounts management), which is fully focused on global accounts. One such account is Rituals, our largest customer to date and the brand size we are targeting.
Is premium packaging a focus?
In the premium sector, we are looking to expand mainly in the beauty, spirits and wine segments. Our GAM division doesn’t sectorize by market positioning, in other words an account can be in masstige, prestige or premium, but it’s the size that matters, as well as potential and addressable markets.
What is your management model in light of all the acquisitions you’ve made over the last few years?
I’d say it’s highly entrepreneurial. Typically, in private equity, when you buy a company, you replace the founders/entrepreneurs with your own managers. This isn’t our model; our approach is to target healthy, high-performing companies in a specific niche, geography and end-market and keep the existing management in the driver’s seat. We want them to continue operating their business as usual, but for them to be able to tap into our resources. It’s quite rare to find a company that blends an entrepreneurial approach with a global reach. This is part of what defines us as a “hybrid packaging supplier”.
What are your plans for the short-term?
Our strategy is to accelerate. We announced five acquisitions since the beginning of 2022 and we expect to reveal five to seven new acquisitions this month in the primary packaging sector in the areas of wine, spirits, food, beauty, personal care and flexibles.
Berlin Packaging EMEA has made a significant push into the beauty market.
Just one year ago, we were in personal care, but the beauty segment was not a priority. That has changed; we’ve identified beauty as a great opportunity for rapid expansion. That was why we went for Premi at the end of last year. But that was just the starting point, as we believe we can go above and beyond packaging. We need to be a one-stop shop so we are seriously looking at smart vertical integration: value-added manufacturing, primary and secondary decoration, brand marketing… this is our roadmap for expansion. In 2022 we’ll complete between two and four acquisitions in beauty and probably another 10 in the next 24 months.
How much larger can Berlin Packaging get?
Do you mean is there still room for growth? Yes, the potential is huge give the market’s fragmentation. If I look at the pipeline in terms of inorganic growth, we could continue buying companies for the next five years.
What about Berlin Packaging’s presence in Asia?
Asia-Pacific, so mainly China, Japan and South Korea, is our third region; we are investing there and foresee a few acquisitions in the coming months. Beauty will play a very big role. Our global strategy is based on three regions: the Americas, EMEA and APAC. APAC is the newest, but given the potential there and the fragmentation, we can copy and paste what we’ve done in EMEA.
It seems that Berlin has unlimited funds for this acquisition spree!
Let’s put it this way, we have unlimited funds for the right investments. At the end of the day, money is never a problem if you have a good return.
