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While many in the packaging sector have lost business to overseas firms, contract packing in the UK has become a formidable force, finds Josh Brooks

Put a group of contract packers in a room and they're a refreshingly upbeat bunch. While much of the packaging industry spent 2009 making cutbacks and waiting for the upturn to come, there was little such hatch-battening in the contract-packing arena. Instead, for this market the last year has brought a story of expansion and investment.

Be it swine flu, the weakness of the pound or simply the desire of brands to take manufacturing off their own budget sheets in the recession, circumstances have come together in the past 12 months to make contract packers and manufacturers an increasingly important force. In fact, some have seen such an uplift in sales in recent months that they have privately suggested the UK contract-packing market may not have enough capacity within five years to cater to demand.

That's not to say, though, that the UK packaging market is small or niche. The range of exhibitors at Contract Pack, which is organised by both easyFairs and the British Contract Manufacturers and Packers Association (BCMPA), proves the diversity of an industry sector that is sometimes hard to define. Services covered at the show range from manufacturing and packing drugs - with suppliers such as Catalent Pharma Solutions (stand 802) and Chester Medical Solutions (stand 805) - to specialist chemicals manufacturers such as Safapac (stand 823), fulfilment and logistics firms such as Widdowson (stand 832) or food specialists such as Aimia Foods (stand 830).

Recession boost for outsourcing

BCMPA chief executive Rodney Steel says the show, now in its third year, has gone some way to establishing its position as an outsourcing exhibition that runs alongside the packaging-focused exhibitions - a trend that reflects the buoyant mood of the sector but also the difficult economic environment.

"The recession is putting pressure on all businesses to look at how they might be able to cut out costs. For the contract-packing sector, it's focused the minds of retailers and brand owners and that's been positive. Brand owners are not necessarily closing their own packing facilities but there's certainly a trend of them moving work to contract packers," he says.

Another factor pushing work into the hands of UK contract packers is the diminishing attraction of Chinese production to UK businesses, says Steel. "Four or five years ago members were complaining about losing work to China. Now it's the opposite. With retailers and brands destocking, they can't wait four or six weeks for product to arrive. They are reacting very quickly and they expect their contract packers to do the same."

Winning in Europe

If contract-packing is coming back from the Far East, there is evidence that the UK industry is also winning work in continental Europe thanks to the strength of the euro compared to sterling. One UK-based contract packer recently told Packaging News that his current sales strategy was to "get off a plane anywhere in the eurozone, plant the Union Jack and announce that I'm 30% cheaper than the local competition".

Barbara Ryan, site manager for SCA Contract Packing Solutions (stand 803), describes the UK's contract-packing industry as "vibrant and versatile" and argues that in the recession, it is the perfect antidote to customers' internal cost-cutting. "Many businesses have had to cut their overheads to remain afloat and this can mean reducing the number of employees," she says. "It is in this arena where contract packing can really demonstrate its key attributes and benefits."

And the positive air looks set to be reinforced by the range of successes in the past year that the 30 or so exhibitors at this year's Contract Pack are coming to promote.

Catalent Pharma Solutions (stand 802), for instance, specialises in outsourced clinical and commercial packaging services for companies in the pharmaceutical and biotechnology sector, The US-headquartered group, whose UK arm is in Corby, will be coming to the show after a year in which its contribution to the international effort against swine flu led to it winning a prestigious award. The company was called in by pharmaceutical brand owner GlaxoSmithKline to help produce Relenza, a key antiviral product for the treatment of the H1N1 virus.

The project led to Catalent winning the Best Contract Manufacturing Project gong at the European Outsourcing Awards - for the second year running.

Online retail growth

Complete Core Business Solutions (stand 821), too, is coming to the show on the back of a momentous year. The South Wales company added around 1,000m2 of storage capacity - its first dedicated warehouse unit - to its 1,600m2 contract-packing facility last year to handle growing demand from online retailers. It is now aiming to hit £3m turnover in the current financial year, up from £2.4m in 2007/08.

Managing director Steve Nicholls says: "The growing requirement for order, pick and pack facilities prompted our decision to invest in the dedicated warehouse unit. This is proving particularly popular with clients who operate online retail businesses."

BCMPA's Steel says that online retailing is another area of potential growth for the contract-packing sector. "A lot of people are setting up online retail businesses from home and all they have is a phone and a computer," he says. "They naturally turn to contract packing and manufacturing businesses for services such as storage and fulfilment."

Focus on accreditations

Another message coming over at the show will be a focus on accreditations. Granby Marketing Services (stand 820), based in Blackburn, has recently earned two qualifications that it plans to talk about at the show: the Accredited Response Management (ARM) scheme and the British Retail Consortium (BRC) Global Standard for Storage and Distribution. Chief executive Stephen Bentley says that the accreditations are key because they certify to clients that a company holding them has the procedures in place "to consistently deliver outstanding response and fulfilment services".

Elsewhere, Glowcroft (stand 801) will be talking about its full contract-packing services in its all-new factory in Needham Market, Suffolk, that was rebuilt after a fire almost two years ago, while Universal Flexible Packaging (stand 815) will be promoting its range of products, including pillow packs and specialist popcorn tubbing.

For the future, Steel sees growth in the contract packing industry in the UK. "We've got one of the most developed contract-packing industries in the world, and certainly in Europe. The good companies and the infrastructure are there in the UK. It will undoubtedly expand."

And with confidence like that from the top, you can't blame contract packers for being upbeat. n

Case study: Mailway Packaging Solutions

One of the big successes of the contract packing world in the last year has been Mailway Packaging Solutions (stand 811).

Mailway, based in Bradford, typifies the kind of growth and ambition that can be seen across the contract-packing sector. The last year has brought growth across the UK and expansion into new markets.

It established a foothold in Scotland through the acquisition of Glasgow-based Benchmark Promotional Support Services in April 2009, and during the summer entered into a strategic partnership with Kent-based Lenham Storage, giving it a location to serve southern England.

Then in August it bought Perpack, then based in Wakefield, the day after it went into administration - giving it a new set of expertise in food packing. The deal propelled Mailway into a leading position supplying flow-wraps in perforated bandoliers for dispensing into bagging and cartonning lines, with work mainly coming from the print and premium 3D sectors.

Steve Whitehouse, group commercial director at Mailway, puts the company's success down to a refusal to relax. "We are not the kind of company that will sit back and rest on its laurels," he says. "Instead we are constantly looking for ways to improve, whether through enhancing existing solutions or developing and introducing new solutions into the market."

As well as its new capabilities and markets, at this year's Contract Pack the company will be showcasing its Sunpaq packaging format, which first launched in 2007. The format is patented and is a visual carded pack that, Mailway says, combines the best elements of blister, skin and shrink packaging and allows products to be visible through the pack.

And don't miss...

Complete Core (stand 821) has promised to tackle the show's visitors head-on with a rugby-themed stand. The company, based in south Wales, will be running a prize draw on its stand for a magnum of champagne or a signed rugby ball.

SCA Contract Packing Solutions (stand 803) is offering a 10% discount on any business placed with the Leeds facility, either at the show or as a direct result of it. Site manager Barbara Ryan says that the move will make the trip worthwhile for visitors: "I've been to many exhibitions in the past where I've gathered lots of brochures and business cards but always felt that the day wasn't productive enough from a business-generation point of view," she says.

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