De Jong boxing clever to stir up corrugated packaging market
May 29, 2015
The UK’s corrugated packaging sector has a new player and it’s a player with a loud voice. De Jong Packaging has begun its assault on the UK this year and its commercial director Arie Barendregt tells Produce Business UK that buyers have been getting a raw deal from packaging suppliers in this country. Here, we look at how the company has set itself up to maximise its impact in the UK market
Arie, on the surface, it appears you’re making a bold move in entering the UK market. What’s the history of De Jong Packaging and how is it set up to succeed here?
Arie Barendregt (AB): Our owner Henk de Jong was one of the bigger growers of salad products in Holland and a member of The Greenery 20 years ago, but like others, he wasn’t making any money. When he was approached by one of the Dutch retailers to serve them direct, it was an attractive option therefore.
Obviously that is commonplace now, but at the time it was fairly unique. Henk decided this would make sense for his business. But when he informed The Greenery of his intentions, they told him that not only would he no longer be able to purchase packaging through them, which was to be expected, but that they would also instruct all of their packaging suppliers not to supply him.
Henk is an entrepreneur and he recognised that there were plenty more packaging suppliers in the world and he bought a box making machine for his own crop. He soon realised that his knowledge of produce put him in a good position to adapt and improve the design of the trays and cartons he was using and he also had plenty of ideas of how the strength and durability of the boxes could be enhanced through more effective construction.
Before long, the inevitable happened and other farmers were contacting Henk to produce, glue and erect their boxes for them, so he bought tray and box erecting machines and De Jong Packaging was born.
His background means that, better than other packaging companies, he understands the importance of being able to have a say about the packaged fresh produce, His next step was to procure the paper that was required, he designed and improved many types of packaging, he improved the inventory management system and the required delivery periods – and stripped all the frills from the entire process.
Fast forward to 2007 when he bought his first corrugator and that was really the time that he switched from trader to manufacturer of trays and began to take the rolls of paper and do the whole process, from converting it to board, through to the production of the blanks.
The purchase of a second corrugator in 2014 has made us a serious international player with the capacity to produce 600 million square metres of corrugated board each year. We have a full complement of machinery, from corrugated board machinery to processing machines, which manufacture a wide selection of packaging and convert the corrugated blanks into boxes. And there is more to come; our 2014-2015 investment in additional machines is €30.5 million (£21.7m).
All of this resulted in De Jong Packaging developing into the market leader in the area of corrugated board and solid cardboard for the fresh produce sector. We have a turnover in excess of €130m a year and 250 employees in De Lier, just outside The Hague, and we’re the only independent corrugated board manufacturer in the Netherlands.
We have also bought a few wholesale packaging companies in Holland over the last couple of years and integrated them into the group, which is like buying an outlet. They buy a substantial amount of corrugated sales for us and we provide them with capital to invest in their own expansion in whichever way they wish. So overall, we have more like 350-400 employees in the group and around 125 box and tray erectors in Holland.
You’re the only Dutch corrugated company trying to make serious inroads in the UK. You’ve been leading the charge for the company; what are your thoughts on what you’ve found in the market?
AB: I’ve been struck mostly by two things: there is a lack of innovative corrugated tray suppliers out there and the industry is wasting a lot of money. Many of the innovations we have seen in Holland in the last few years, from us and other companies, have simply not become part of the mainstream in the UK. As a result, people are spending money unnecessarily and not getting the best products that are out there.
There seems to be an emphasis amongst suppliers on keeping the costs high. We were fully expecting that it would be a constant battle on price in this market, but we are extremely competitive and surprisingly, it just doesn’t appear to be the case. That’s fine – we offer another option.
The first stop for us was Packaging Innovations, a show at the NEC in Birmingham in February. It was a real eye opener and the best show we’ve been to for some time in terms of leads. We had many conversations from end users, from the wholesale, production and manufacturing sectors, and also a lot for general packaging. The overwhelming impression was that a lot of the people we spoke to were being supplied by UK manufacturers and were happy to discover an alternative. We’ve already got orders from some of these firms, so we’re off and running. But there’s a lot more to come.
Next week, we’ll be at the London Produce Show and Conference and we look forward to meeting a lot more people there. We want to talk directly with the retailer and foodservice buyers in the UK, to learn more about what they are looking for from their corrugated packaging. There are many ways we can improve the protection, presentation and transportation of product and we are also approaching large fresh produce growers, who buy the blanks and erect the trays themselves. Everyone we’ve spoken to so far has been interested in the possibilities to save money while doing these things.
Corrugated, of course, is suitable for packing virtually any type of fresh produce. And just because we can justifiably claim to be the cheapest, that does not mean we reduce the board grade or the material. Customers will get exactly what they need to optimise performance of their fresh produce with a ‘me-too’ product. We do lots more besides adding value, but that is our core offer.
I’m not William the Conqueror – maybe Wilhelm the Conqueror! – but this is the start of an invasion.
De Jong Packaging is also an agent for two machinery manufacturers. Is there any difference between the approach to selling corrugated packaging and to selling machines?
AB: We sell Boix Tray Erectors, which I would have to say is like selling the Rolls Royce of these types of machine. And we also represent, sell and maintain Lantech case erectors, which in a previous role, I sold into Unilever. In both cases, it’s fair to say they are not the cheapest machines, but there is an important difference between buying machinery and packaging. Customers don’t just buy a machine, they buy a product that enables them to create a rapid, efficient and cost-effective output system, in order to ship their products to customers in a timely manner and send their invoices out for payment. They have to be consistent and reliable – any downtime at all can be extremely significant. A 100% uptime is what we offer.
You have an interesting approach to selecting clients – can you explain it to our readers?
AB: We have more than 500 customers and they are all small and medium enterprises (SMEs). We do not, as a policy, supply pan-European companies as we do not want the large players to be at the front of our production capacity all the time. By taking this approach, we assure that we can remain flexible to the needs of our SME customers and always have capacity to meet demand. Also, by leaving the larger players out of our customer profile, we are able to operate with fewer layers of staff and reduced overheads, which means that our customers don’t have to pay for that through our prices.
So not only can we provide high performance product using modern machinery, we can supply the service and performance to match and still be a cost leader. We aim to supply the cheapest trays, with the highest, most flexible service possible and to date, I’d say that has been the core element of our success.
And how about you Arie, what’s your own background?
AB: I have been working in the packaging industry for 20 years – some of which was spent working in sales and marketing for De Jong Packaging’s competition in the corrugated sector. I also have a fair bit of experience in case and tray erectors as well as with machinery. So I know my way around the packaging sector, but I also know my way around the UK, having gained an MBA and a Doctorate from the University of Kingston-on-Thames. My MBA looked at creating a strategy to successfully enter the German market and my Doctorate analysed how SMEs should analyse their competition when developing their business strategies.
Arie and De Jong Packaging were at the London Produce Show and Conference on June 3-5. He promised to bring “everything we can do in terms of packaging for the UK market”. He joked: “We do like to have beautiful cars and girls on our stands at shows, but as this is a boutique show, we made do with pictures.”