Speaker: Don't expect major consolidation in plastics packaging

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Jim Johnson Radke

Miami — Many industries have consolidated over time compared with their history of fragmentation. Think banking, and even air travel.

Anyone remember Allegheny Airlines?

But while plastic packaging — both rigid and flexible — certainly has seen its share of deals in recent years, one man with his finger on the pulse of the business does not believe the industry will ever concentrate into the hands of a few.

Jay Radtke is managing director of Mason Wells, heading up the private equity firm’s packaging materials and converting sector.

“You look at the market share of the rigid plastic and flexible packaging converters, there’s slight consolidation. But it’s still very fragmented,” Radtke said at the Global Pouch Forum in Miami.

“On the flexible side, the top three converters only make up about a third of the market. And after that, the largest player is only at 3 percent market share,” he said. “It’s the same case on the rigid plastic packaging side where the top four players make up about a third of the market. The next largest player has 5 percent of the market.”

The top 10 suppliers account for about 50 percent of North American converted flexible packaging sales, leaving the other half of the market quite fragmented. On the rigid side, the top 10 account for about 55 percent, Radtke said.

That’s part of the reason why Radtke believes those businesses will truly never consolidate into the hands of a few players.

And while plastic packaging companies continue to be bought and sold, there also is a stream of people jumping back into the market to create new firms due to the attractiveness of the business.

“I think it’s very healthy. I really do. It’s a huge market. There are a lot of different niches. I think people complain sometimes there’s too much capacity, and that ebbs and flows. I think if you would take a general poll, the Flexible Packaging Association does this for the converters, they’d say things are generally pretty good,” he said.

“People will always want to get in where there’s growth. There’s lots of good growth,” he said.

“There’s always going to be new entrants coming in, and I think that’s healthy for any industry. Keeps people on their toes. Requires people to innovate and to invest. I don’t think it’s a negative point at all,” Radtke said.

Mason Wells, based in Milwaukee, currently has investments in Nelipak Corp., a health care thermoformed packaging company, and Mullinix Packages Inc., a thermoform packaging company serving the food industry. Previous plastic packaging investments include Charter NEX Films Inc., Coating Excellence International LLC and Oliver Products Co.