Newell Rubbermaid Inc. is ready to accelerate its move into the reusable water bottle business with the purchase of two on-the-go drinkware brands.
Newell Rubbermaid announced July 21 that it had an agreement to buy Ignite Holdings LLC, owner of the Contigo and Avex drinkware brands, in a deal valued at $308 million.
Plastic water bottles represent about 63 percent of the Contigo and Avex brands, Ignite CEO Sami El-Saden told Plastics News. Ignite does not own any production facilities and obtains its products, which also include stainless steel bottles with plastic caps, from outside suppliers.
The brands are expected to deliver sales of $125 million in 2014, El-Saden said.
Newell Rubbermaid, headquartered in Sandy Springs, Ga., reported 2013 sales of $5.7 billion. The company plans to reinvest some of Ignite's profits in aggressively building the new brands, according to its statement on the deal.
“This is a category we've long admired and have been working very hard with our own development plans to enter more aggressively,” Mark Tarchetti, Newell Rubbermaid's chief development officer, said in a video news release. “We've done a lot of development work with Rubbermaid and it's been a major focus for our design community. This business is a leapfrog for us and can really accelerate those plans with some of the best products in the market.”
The Contigo and Avex brands will be run alongside the Rubbermaid line of water bottles, to “combine the best of both ideas,” Tarchetti said.
Ignite's El-Saden called the acquisition “a matrimony of two very compatible companies.”
“I think the underpinning is like-minded companies coming together, bringing together two businesses that are very compatible from a business and philosophical perspective,” he said.
Driving growth in the category are environmental concerns over the huge number of single-use PET water bottles that end up in landfills and waterways, as well as growing consumer attention on the importance of hydration for healthy living, El-Saden added.
“These containers become almost a permanent accessory,” he said. “Holding bottles that are cool-looking, that are the right colors or the right graphics, design is very important. And as people adopt the usage of these products it just continues to fuel the importance of design.”
Newell Rubbermaid has in recent years placed an increased focus on product development and design, enlisting Chuck Jones, the former design chief at Whirlpool Corp., and opening a 40,000-square-foot design center in Kalamazoo, Mich.
“What attracted us to this business first and foremost is the quality of the design and the product,” Tarchetti said. “This is an innovation engine with a 35 percent growth track record over the last five years. That innovation is centered on product performance and design. And that couldn't be a better fit with the growth game plan.”