A decade of development

The Canmaker
June 2007

From Europe to the world, from commodity to added-value products, from price war to price recovery - the story of Impress is one of change, says Mónica Higuera

The partnership between Impress and one of China's fastest-growing canmakers, ORG, opens a new chapter for the European canmaker.

It is the culmination of a decade of transformation for Impress, which last month celebrated its tenth anniversary at Lake Maggiore in northern Italy.

A company present in all sectors but the drinks business (except for some beer kegs), Impress was created from the food and general line canmaking operations of Pechiney and Schmalbach - Lubeca in May 1997.

Since then it has made a number of acquisitions that have enabled it to realise synergies and raise its market share in a number of niche areas.

The group's several divisions have also been reduced to four businesses - food, seafood, specialities (which includes general line, aerosol, dry food product cans and peelable ends) and the USAdivision.

Impress claims to be the world's leader in seafood cans, and Europe's number one in paint and coatings, and in specialised consumer products such as milk and infant formula powders. It is also Europe's number- one aerosol canmaker, and second in food cans.

The origins of the company go back to 1994 when French aluminium and packaging company Pechiney started rationalising its operations in the US. Although it produced cans for a number of sectors, Pechiney wanted to concentrate on supplying the beverage and personal care industries and in 1995 sold the food can operations of its American National Can subsidiary to Silgan Holdings.

In Europe, managers in both Pechiney's and Schmalbach-Lubeca's food and general line operations knew they would be better off within a larger and more powerful group.

At the end of 1996 Pechiney and Schmalbach-Lubeca agreed to merge what was essentially their non-beverage activities to create an organisation better able to compete with Crown's newly-acquired European division, CarnaudMetalbox.

The deal was backed by London-based venture firm Doughty Hanson which planned to float the business within four years of its formation.

In 1997, Impress claimed about 25 percent of the European market and sales of around 1 billion euros.

The European food can price war followed in 1999, and the battle for market share led to price erosion. Impress'current chief executive Francis Labbé, then at Crown in Europe before moving to Rexam, remembers it well.

"Impress did a good job during the price battle," he said. "I remember that the first day I moved to the food, aerosols and specialty products division at CarnaudMetalbox in Paris I was visiting a food can plant to hear that Impress had won the Heinz account from CarnaudMetalbox. It wasn't a good feeling. "But Impress lost Friskies at the same time. There was no loss of market share but the prices fell. Everybody lost," said Labbé.

The following year provided Impress with the chance to increase market share in Europe to about 30 percent with the acquisition of French canmaker Ferembal.

Also in 2000, the company set up its first new operation - a hole-in-the-wall facility supplying tuna cans for Heinz in the Seychelles, and took over Heinz's canmaking assets in the US.

Three years later Impress acquired Nestlé's end-making facility at Hjoerring in Denmark, securing a long-term supply contract of peelable ends and closures to Nestlé operating companies.

But the acquisition spree really took off in 2005 - the company bought Poland's largest supplier of general line and aerosol cans, PAK; Clover Leaf's sardine canmaking operation in Canada; and it entered the DWI food can sector with the takeover of UK-based Alcan Packaging Sutton (one of Europe's two plants with DWI food can manufacturing facilities and with key customers such as Masterfoods and Premier Foods).

While looking for growth opportunities, the strategy of the company has also been to streamline its operations in order to align capacity with demand.
Impress also divested a number of assets. The most recent include its metal lithography and battery jackets plant in Belgium, sold to Indian canmaker Shetron; an Italian metal printing operation at Magenta sold to Metalprint; and the closure of its Grantham, UK, food can plant.

Then in 2005, Doughty Hanson put up Impress for sale but the bid by CVC Capital Partners, which had acquired leading Spanish canmaker Mivisa the previous year, was rejected.

Subsequently more cash was invested into Impress. The company juggled various loans to incrementally reduce debt while at the same time being able to finance a range of acquisitions, looking for business opportunities with growth potential.

In 2006, it took over aerosol and food canmaker USC Europe - the largest ever acquisition of the group adding about $295m in sales.

Developing markets became then the target, and Ukraine the first stop, with the acquisition of Himpack, a Kiev-based aerosol and general line canmaker.
This was followed by the takeover of the interests of Global Investment LLC, a canmaker based in the Moscow area, and the buying of a share in Russkaya Banka, a canmaker in the southern agricultural region of Krasnodar near the Black Sea.

The assets purchased included equipment for the manufacture of two- and three-piece food cans and steel aerosol cans.

This year, Impress is additionally commissioning two new plants in markets it used to supply from European plants.

At Casablanca, in Morocco, start up is due this month of a facility to make both aluminium and steel cans for local fish canners.

And a new plant for making aluminium luncheon meat cans is planned for December this year in Korea. It will be dedicated to producing rectangular drawn cans for Daesang, a competitor to local Spam licencee CJ International.
But the latest trump card for the company comes in the shape of a partnership with fast-growing Chinese canmaker ORG. The companies first met in Spain at The Canmaker Summit at the end of last year, and in April its chief executives announced a strategic partnership during the Cannex 2007 convention in Las Vegas.

Under the terms of the agreement, ORG will become Impress' agent to sell its valued- added products, such as drawn decorated cans and peelable easy-open lids, in China. If successful, the companies plan to set up a joint venture for the local production of such products.

Impress has come a long way and the confidence its financial backers have placed in the company is further proof of the opportunities that the metal packaging sector provides.

Global spread
Impress now has four key operating divisions and an R&D centre for its 54 plants in 18 countries. Its divisional managing directors described how they view their activities:

o Food Division - Guy Ducrot: "Food is the largest division of Impress, amounting to approximately 40 percent of group sales. Almost all our products are retorted and we supply all the major brands, Heinz, Bonduelle, Cecab, Conserve Italia, Nestlé, Masterfoods and many others. Metal is now thinner, lighter yet robust and can sustain both high temperatures and pressure, allowing rapid, large scale, low-cost filling. The key to our business is a comprehensive, efficient and lean global supply chain.

o Specialities Division - Woep Möller: "My division covers aerosols, cans for paints and coatings, babyfoods, coffee, beer, peanuts, cigar tins and Easy Peel. We are at present prioritising eastern Europe, but there are risks so we have to be critical and select markets and customers carefully. We have a very modern and important R&D facility at Crosmières, near Le Mans, France, which concentrates on large projects, new technologies and complicated new production techniques. This is where perception becomes reality."

o Seafood Division - Dominique Kieffer: "We are worldwide leader in seafood. Today, 85 percent of our sales are in aluminium cans and 15 percent in tinplate. We focus on added value and sell cans to all the big fish processors in the world, John West, and marine world brands among others. Impress cans have special shapes and convenient openings, which are essential for seafood. The success of our innovations in the market place, increases our motivation to keep on investing in R&D."

o Impress USA - Dennis Kester: "Impress USA has factories in four countries - the USA, Canada, Puerto Rico and American Samoa. We find it very exciting to be part of such a dynamic and innovative European company. We can take advantage of the best technologies and techniques developed by our European colleagues. This has allowed us to use best global practices."

o Impress R&D - Philippe Gimenez: "We've built a substantial database on shelf life and a unique system for predicting shelf life, that supports customers' decisions and reduces test times from months to weeks. We know our customers' processes well and offer technical assistance and support in addition to providing our customers with opportunities for strong differentiation and eye-catching shelf presence to attract the consumer. We have major projects on hand and more innovation on the way, to further enhance the image of the can and stimulate the market."  

Architects of change
Two chief executives have been responsible for transforming European leading canmaker Impress.

In 1997 the company's owners, London-based equity fund managers Doughty Hanson, hired former chief operating officer of Alusuisse-Lonza, Dominique Damon, to lead Impress Metal Packaging.

She formed a new business structure and led an evolving management team in changing a company which was operating both across national European boundaries and a number of business sectors of the canmaking industry.

Performance and quality were also paramount for Damon, who told The Canmaker: "We have to move from a commodity-driven organisation to a business focused on market demands."

Francis Labbé succeeded her at the end of 2003. He joined from Rexam where he managed the plastics and glass division, and had previously worked for Crown and CarnaudMetalbox.

Labbé's objective then was first to improve margins, but now the focus is both on growth and exploiting the can's environmental qualities.

"Impress is 'green and growing', he said last month. "We're 'green' because metal is a truly renewable material with the highest recycling rates and the strongest environmental credentials of all packaging materials.

"We're 'growing', because in 10 years we have gone from sales of 900 million euros to more than 1.6 billion euros today.

"We've done this mainly through focused acquisitions, but our highest priority is to get growth by rejuvenating the market and making metal more attractive to the final consumer.

"We believe we have the best packaging material with the best environmental credentials, and logically, our ambition is to become the best metal packaging company in the world."

Impress
t: +33 2 4348 5100