Packaging
Frövi – a successful deal
Monday 14. January 2008 - "The synergies have exceeded expectations," says Korsnäs CEO Peter Sandberg.
After six years on the market, Frövi was acquired by Korsnäs two years ago for appr EUR 350 million. Six months later, after the purchase was reviewed and approved by the competition authorities in Brussels, the restructuring began. A clearly articulated goal was to make this one company, not two separate business units operating in the same group. How has it gone? Highlights caught up with Peter Sandberg and asked a few questions.
Has integration proceeded as you hoped?
The analysis we carried out prior to the purchase matches well with what we have actually achieved. Our businesses have similar orientations when it comes to product development and production equipment. The organisations have merged together, resulting in synergies and improvements and giving us a powerful boost when it comes to product development and improved efficiency.
What is the biggest challenge in the next few years? What makes us competitive?
As a supplier of fibre-based packaging materials, we need to sharpen the focus on environmental issues and recycling, and then successfully communicate the clear environmental and other advantages of fibre-based packaging over competing materials. Consumers are increasingly aware of these issues. The forest as a resource permeates our business, and our strong point is that we can offer a range of packaging materials that make the most of the strength properties of the raw materials. This concept is not easy for others to copy, since it is dependent on our climate and sustainable forestry. In addition, we have a high level of organisational competence in the interplay between machines with the latest technology and qualified personnel. I would say that high quality defines our business.
Can we afford to launch new products that require major investments?
To ensure our survival as a company, we must continually adapt to changing consumer patterns and be at the forefront with the packaging materials we offer. Society and its needs change with new generations of consumer groups. In the spring we launched Frövi White after a comprehensive market survey on what consumers prefer when it comes to cartonboard packaging. This year we launched a new light-coated liner product. In the kraft paper segment, we have cut way back on production of brown grades and are concentrating on white products, which we believe have more potential.
“Fibre-based products with certain strength properties” is one way to describe our offerings. Packaging Impact is another. What are we offering our customers?
I see it more as an overall concept: product quality, service tailored to the customers needs, product development (such as PackLab) and sales impact, with the brand owner communicating with their customers through a packaging solution made of our material. In other words, we help brand owners differentiate themselves in the brutal competitive environment of the store shelves.
What are three key concepts you would use to describe Korsnäs?
Innovation, value creation and quality.
The main market for cartonboard packaging is currently Western Europe. Do we have the ambition to expand?
– Today the major growth markets are in the East, where we see a great deal of potential.
Korsnäs Gävle and Korsnäs Frövi. They have a lot in common, but do you also see differences in attitude?
Of course there are cultural differences, but our strength in the integration process has been everyones willingness to stick to the issues and set aside turf wars and prestige struggles. I would describe the process as typified by idea-sharing and useful benchmarking. Frövi’s client focus in particular has been a big asset.
Korsnäs AB is the worlds second largest manufacturer of liquid packaging board. We are number three in Europe for white top liner. We are also a major producer of cartonboard packaging, sack paper and kraft paper.
Within Korsnäs, there are four machines that produce a combined total that exceeds one million tonnes of cartonboard and paper per year. More than 90% is exported to over 70 countries around the world. The company has a turnover of EUR 750 million and 1,800 employees in Gävle and Frövi. The headquarters are located in Gävle.