Narrow Web Europe

Monroe Doctrine

October 11, 2010

The acquisition of Monroe Etiquette by US-based Multi-Color Corporation (MCC), reported in the e-news version of L&NW and in the Industry News in this issue, could be a taste of things to come. With the notable exception of CCL, few British or North American label converters have acquired or set up operations in continental Europe. Now, fresh from its acquisition of an Italian label converter, MCC has bought out Monroe, a family-owned converter ranking 25th in France, with 2009 sales of €6.9 million ($8.8 million) and a profitability record in both of the past two years that puts it among the healthiest converters in the French label business. This profitability is reflected in the reported sales price of €8 million, paid in cash.

Monroe Etiquette was founded in 1986 by the father of the present CEO, Stanislas Monroe, and today employs 45 people. “My father fell into the wine label business almost by accident,” says Stanislas. “Today we specialize in offset-printed wine labels, and our strengths are in the label design artists we employ, our knowledge of wine label legislation in all the major wine importing regions, and of course our print quality and reliable delivery.” Direct exports of labels are less than 10 percent of Monroe’s business, but “wines bearing our labels can be found in every major country.”

Anglo-Saxon invasions?
The shortage of British and US-owned label converters in continental Europe may be connected to the faint whiff of chauvinism which pervades many European business circles. Charles De Gaulle reinvented the word Anglo-Saxon as a term of distaste to describe the English-speaking world, and today this still mildly abusive word seems to have spread to Germany (which is ironic when you think where the Saxons came from). Many US companies have run into difficulties by placing Americans at the head of their European operations (ask Disney); success in the wine label business is as much a matter of who you know as what you know, and in the case of Monroe Etiquette, MCC has wisely announced its intention to keep the present owners on as managers.

Watershed in Poland
Economic recovery in Eastern Europe seems to be patchy, but the Polish economy, which suffered less than its neighbors during the recession, is doing very nicely, thank you. It is also the region’s biggest economy (outside Russia), so what happens in Poland matters. Water is being shaken up there, as the Naleczowianka brand (owned by Nestlé) locks horns with Danone’s market-leading Zywiec Zdroj; the two companies together control 40 percent of the Polish water market, and this pattern is to some extent repeated over the whole spectrum of fast-moving consumer products.

What happens in Poland matters particularly to the label and packaging business, since the country is home to such a large number of plants making consumer goods for international brand owners. On the retail side, too, new shopping malls are continuing to spring up even in the provinces. Down in Gliwice near the Czech frontier, a shopping mall of 400,000 square feet is nearing completion. Among other tenants it will have Auchan’s twentieth Polish supermarket. Auchan, one of Europe’s biggest retailers, sees Poland as one of the bright spots on its network and is continuing to invest there.

Western multinationals are not the only ones to vie for a place in the sun on the Polish market. One of the more arcane news items lately tells us that leading Georgian wine producer Teliani Valley, from its headquarters in the capital Tblisi, is planning to get itself quoted on the Warsaw stock market.

Generation change at German Label Association
Helmut Schreiner, who has just stepped down as president of VskE, the German pressure sensitive label association, is undoubtedly one of the grand old men of Europe’s label business. A quietly spoken man who would probably protest at being called grand (and probably at the other adjective as well), Helmut Schreiner can just remember the bleak days of reconstruction after 1945, when his father set up a label printshop in his garage and his mother mixed the inks in the bathtub. For the past 29 years he has been on the board of the German industry association, including 15 years as its president.

In his retirement speech he looked back over the remarkable development of the label industry in Germany, and remarked that during his time as president the economy had suffered more than one crisis comparable to the most recent one, but the label business had never suffered more than a temporary setback to its expansion. His own company, the Schreiner Group, today employs 600 in Germany alone and has worldwide sales of the order of $130 million. It develops high-tech labels for security and other specialty applications, and its Medipharm division now has a plant in US. As an owner-manager, Schreiner places a high value on employee welfare (only cynics call him paternalist); teambuilding, training and celebrating together are high on his list of priorities. How many companies of similar size exist where the boss knows every employee by name, and makes sure they get a present on their birthday?

Not only do few people in the West know exactly where it is, but nobody can agree on how to spell it. Belarus, Belarussia, Byelorussia… this former republic of the Soviet Union is big in real estate terms (half the size of California) but gets little attention and even fewer visits from Western businessmen. Its president, Alexander Lukashenko, is an old-style ruler whom not even his worst enemies would accuse of being a free-marketeer. However his popularity is such that ever since he came to power in 1994 he has won every election, often with more than 80 percent of the vote.

Apart from periodic invasions by its neighbors, and the famously short-lived peace treaty signed in 1918 in its second city, Brest, history has largely passed Belarus by. The country’s capital, Minsk, was almost totally destroyed in World War II and rebuilt in the Stalinist style. But while it has few tourist attractions, Minsk does boast an active exhibition center, with events including the Packaging, Storage and Modern Label Show taking place end September 2010. Few Western exhibitors are to be found among the 80 exhibitors listed, although some may be lurking behind the names of their local agents. The German narrow web machine manufacturer Mühlbauer is not hiding from anybody, and will be exhibiting its RFID-making machinery at the show.

Public announcements for the Minsk show focus on the local packaging sector and have much to say about packaging and the environment, including the efforts of the Red Star Paper Factory to cut its pollution. Other comments, though no doubt pertinent in Belarusian (example: “Enterprises produce dickers of tare and package’s types of nutritional production”), have obviously lost something in translation. And somebody should recommend a name-change for one local company: “Very large in Belarus but also in abutting countries markets is the Brest Milk Factory.” Er, quite.

From research lab to profitable production
When manufacturers team up with researchers, the results can be surprising. In the print world, two centers of research stand out. One, in Germany, is the Printing Methods Institute at the Darmstadt University of Technology, which has been working with Heidelberg and which aims to bring to market “new surface-finishing technologies that enable print shops – and packaging printers in particular – to stand out from the crowd.” These include display elements based on 3D effects, electroluminescence and inks that change color with temperature. Heidelberg is supporting the research project with the loan of a Gallus combination press supporting four print processes: flexographic, screen, offset, and gravure.
The other research center, dubbed Silicon Fen, is in the damp flatlands of Eastern England, just outside the university town of Cambridge. Home to 1,600 high-tech firms, the Cambridge Science Park uses its symbiotic relations with the university’s research department to develop many marketable new products – including new inkjet technology as exemplified by Xaar, whose inkjet print heads are at the heart of many of the well known presses in the narrow web inkjet printer market.

Déjà vu all over again
Back in 2006 the highly reputable German financial newspaper Börsen Zeitung reported that a mooted merger between printing machinery giants König & Bauer AG (KBA) and ManRoland had been dismissed by both companies as “having no foundation.” Now in September of this year the proposal was back on the table, with “an indirect offer” by KBA which was “fiercely rejected” by ManRoland’s main shareholder, a German insurance group. Neither KBA nor ManRoland currently make narrow web presses (their strengths are in sheetfed and wide web machinery), but rumors have recently been leaked that one or other or both might be looking to buy into the label press sector, which is seen to offer better long-term profit opportunities. This, of course, is what Heidelberg did some years ago when it took a 30 percent holding in Gallus. KBA boss Helge Hansen, in a recent newspaper interview, said he was opposed to any idea that his company might merge with Heidelberg “as that company’s debts are too high.” Heidelberg boss Bernhard Schreier is said to be steering clear of any merger talks. Some people would call that making a virtue of necessity.

The writhings and wranglings of these three German print machinery giants call to mind the days of the Wild West: “This place is too small for the three of us, someone’s gotta go.” At all events, Germany being Germany, the likelihood of a shoot-out in the form of a hostile takeover bid is remote, but not so an arrangement of some kind in no-longer-smoke-filled back rooms.
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