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Growth through acquisition

By Nick Coombes | May 27, 2014

The CEO of one of South Africa’s largest label producers explains how consolidation has enhanced his company’s sales opportunities.

Founded originally in the 1950s as a steel merchant by Mr. Hawl and Mr. Pickles, what is now HP Labelling began to produce metal and plastic tags in 1962 for the steel industry, and even today steel tags represent some 15% of the company’s business. As the company's CEO Chris Bobbert quips: “We have no competition for the work, and process 10 to 15 orders each day on machines that would delight a museum!”

The company moved into the label business proper in the late 1970s, but it was the installation of Mark Andy inline flexo presses in the 1990s that saw the beginning of real growth, and today the HP Labelling Group, which includes the former Peter Frey & Sons operation in Cape Town, has the largest number of label presses of any company in South Africa, and all are Mark Andy. Products flowing off the presses include self-adhesive labels, wraparounds, promotional labels and peel and read labels. According to Bobbert, HP Labelling is one of the country’s top five label converters, and supplies a wide range of products and services to a growing portfolio of customers across southern Africa.

Growth has come organically and by acquisition, with Bobbert himself joining as recently as 2013 when his company Multiprint Labels was merged into the HP Labelling group. “The merger was made easy because of the synergy between the two companies.  The products we manufactured and the markets we served as separate companies were complementary, and it helped that we used the same presses.” In all, HP Labelling has 10 Mark Andy lines: six 2200 presses in Cape Town, three more in Johannesburg, plus one of Mark Andy's award-winning Performance Series P5 lines. The two plants combined employ 125 people, who are proud of the ISO 9001:2008 quality accreditation they have achieved, which was further enhanced with the modification of the premises that allows a better workflow pattern.

Chris Bobbert with his company’s Mark Andy P5
Markets served include the food, beverage, bakery, cosmetics, and pharmaceutical industries, while Bobbert claims he is making progress in the wine industry, which traditionally has not been self-adhesive inclined. But while the label business offers high growth potential, it brings a fierce level of competition, with top quality printing seen as "a given" and the rising costs of raw materials and production squeezing profit margins hard as brand owners maintain the pressure for keen prices. “Our future vision is towards expansion because we believe that is the way to combine offering the best value to customers with a good financial return,” says Bobbert.

South Africa, as a label converting country, is blessed with a high level of new technology. Of the estimated 500 label presses in commercial operation, more than 30% are Mark Andy flexo lines, and the latest P5 at HP’s plant in Johannesburg represents the latest in servo technology for flexible production capability, with fast make-ready times that suit today’s shorter run work. According to Bobbert: “The P5 is highly specified, and is ideal for the peel and read work that we are developing to cope with the demand for more information on each label. Like its predecessors, the P5 is a real workhorse, and cements our commitment to Mark Andy technology.  We can add value inline in a single pass across a broad range of substrates, and turn jobs around quickly – it’s what the market is demanding, and we are well set up to cope.”

One of the keys to success with the new P5 has been the Mark Andy VPM plate-mounting system, complete with dual cameras and monitors. It has simplified and speeded up production procedures, and is operated by one person who prepares each job and mounts the plates with absolute precision, before moving on to the next job. The VPM, allied to the CtP system that HP has installed has cut plate production time, improved plate quality, and by removing the need for toxic solvents, provided an improved operator environment.  “It’s another link in the quality chain that we have established, from which our customers benefit by receiving consistently high quality work, and we improve our efficiency and profitability,” he adds.

But as Bobbert acknowledges, quality production is not all about quality machinery – it’s also about quality staff, and the company places great emphasis on up-skilling its workforce. The management team of Barry Morris, Graeme Cawthorne, and Neville Gibbs, together with Chris Bobbert bring a wealth of experience and expertise to a company that boasts many long-serving members of staff, and these are seen as the platform on which future growth and success will be built.  “It’s all part of our plan.  We continually benchmark ourselves against what we see as world-class standards, and this has helped us to compete in international markets, and export to other countries in Africa. Our commitment is to create a supply chain that ensures our customers’ products make a striking impact on the retail shelf,” he said.

With sales expected to top Rand 90 million in 2014, HP Labelling is seeing growth in demand from neighbouring countries Mozambique, Kenya, Zambia, Nigeria and even Zimbabwe. With average run lengths now around 20,000 labels, the company is taking a close look at digital technology.  “We need to keep a close eye on costs, and digital may offer a solution on short run work as long as we can maintain a high service level. Most of Africa is US dollar-based, so competition from India and Asia is tough. It’s a case of striking the right balance,” he concludes.

About the author: Nick Coombes joined the print industry in 1977 as Marketing Manager of a UK company that imported bookbinding and finishing equipment from the former East Germany. In 1980, he established The Publicity Studio, a marketing consultancy for the print industry.

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