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Topics Mergers & Acquisitions, China, Packaging, Injection Molding, Thermoforming
EVANSVILLE, IND. (Updated) — For Berry Plastics Group Inc., an investment in Qingdao P&B Co. opens up a door to China for a company that has aspirations to be a bigger player in emerging markets.
And for P&B, a partnership with Berry Plastics brings expertise and research and development resources.
Berry Plastics, of Evansville, Ind., is planting a flag on Chinese soil for the first time by acquiring a 75-percent controlling interest in P&B, a packaging company that is being renamed Qingdao Berry Plastics Ltd.
P&B, with annual sales of $34 million, is partly owned by Chinese liquor giant Wuliangye Group, one of China's largest and best known makers of baijiu liquor. Peter Song, who founded P&B, will retain a minority interest in the company and continue to serve as general manager.
"Their expertise and R&D resources are what we need to give more value to our customers in China," Song said about Berry Plastics. "Our customers in China move very fast and they want access to a supplier like Berry."
Berry Plastics sees P&B as a springboard.
"There is much growth potential in the Asian markets. P&B is an established and well-respected packaging business in China. P&B shares Berry Plastics' same focus on safety and quality and is also dedicated to bringing innovative products to markets," said Eva Schmitz, a spokeswoman for Berry.
P&B uses thermoforming, injection molding and automated assembly manufacturing processes to make packaging for multiple markets, predominately food and personal care, in both China and globally, Berry said.
Products include facial tissue packaging, packaging and applicators for feminine hygiene products and food storage containers, Schmitz said.
P&B, which formed in 2005, has operations and headquarters in the Qingdao free-trade zone. The company is itself a joint venture owned by a mold making unit of Wuliangye based in Yibin, Sichuan province, and a company owned by Song. Wuliangye subsidiary Sichuan Yibin Push Group Co. Ltd., which makes thin wall molds, has a 51 percent stake in P&B, Song said in a Jan. 23 interview with Plastics News.
"Berry's international expansion initiatives will allow the company to serve our customers' needs on a global basis. Secondly, it would allow the company to establish relationships with new customers that may be specific to that particular region. And then, third, it would allow the company to establish a presence in geographic regions where there has been historical economic growth and there are predictions for continued economic growth, such as the case for China," Schmitz said.
Song said P&B has been a supplier to Berry for more than seven years, and said the joint venture is a natural evolution of that relationship.
He said Qingdao will be Berry's first factory in China. Berry's website indicates it has a handful of other facilities in Malaysia, India and Australia. But most of its manufacturing is in North America.
"I also feel that Berry has a big plan to grow in China," Song said.
Berry Plastics CEO Jon Rich, in a statement, talked about capitalizing on "combined business strengths to bring an increased number of innovative products to the Chinese and Asian markets."
For P&B, joining with Berry, a $4.6 billion company, offers significant research and development skills that can be applied in China, Song said.
P&B has 550 employees in its Qingdao factories, along with 30 injection molding machines, mostly Husky and Sumitomo models, along with five thermoforming machines and two extruders from U.S. and German companies, Song said.
He said he partnered with Wuliangye after buying Husky molding machines to enter the thin-wall packaging market and wanting to upgrade the quality of his molds.
"Originally we tried to buy the molds from Wuliangye but they proposed to form a joint venture with us," he said.
Terms of the deal, expected to close by February, were not disclosed.