Taking risks but boxing clever

Taking risks but boxing clever

Have you ever thought about the processes behind the aluminium containers your favourite ready meals arrive in? Frank Holwell learns all about the foil food packaging sector from Peter Reay, chief executive of i2r

When you first meet Peter Reay, he doesn’t come across assomeone you’d label a risk taker. Instead he appears a conservatively-dressed, unassuming, measured man who speaks in modulated tones.

The risks we’re talking about, however, aren’t ‘toss of a coin’ or Russian roulette decisions, but judgments based on years of experience and knowledge in the aluminium food packaging industry.

Reay is chief executive of i2r Packaging Solutions, a business born in Birmingham just seven years ago but which now boasts a £14m turnover and is set to further increase this during 2014. Businesses among its core of 160 clients include all the major food retailers, from Waitrose and M&S to frozen food specialists Iceland, all supplied through many of the key food suppliers in the UK and mainland Europe. Leading retail brands it supplies with its high quality, light weight but robust aluminium foil packaging includes ‘Cook’, ‘Gastropub’, ‘To Cook’, ‘Taste the difference’, ‘Finest’, ‘Simply Cook’ and ‘Go Cook’.

i2r now has a 20% share of the UK market, which is valued at around £60m, and its share is set to increase to 25% in 2014. The company was set up in 2007 by Reay and his fellow business partners Jon West, i2r’s commercial development director, and chief finance officer Richard Chaplin (who left the business in 2012). They had all previously worked for Nicholl Food Packaging in Aldridge, where Reay had risen to chief executive since joining the business in 1990.

Through acquisitions and growth, Nicholl had grown to a business with a £58m turnover with manufacturing plants in the UK France and Belgium, but by 2006 Reay had aspirations to move into different areas and new challenges and left the business – with a view to shaking up what he viewed as “a rather staid” industry.

“The aluminium food packaging market has been relatively stable for the last two or three decades,” says Reay. “The concept of i2r was to really focus on the ‘smoothwall’ side of the business, which is aimed more at the high-end, ready-to-cook offerings from the main retailers; products capable of longer shelf life, minimal packaging without cartons, visibility of the food through the film on top.”

It was here that the risk taker in Reay showed itself. Initially funded to the tune of £1.3m through directors’ cash and venture capitalists ic2 Capital, i2r had attracted core company into the business in the form of Birmingham-based Two Sisters Food Group.

This was 2007, however. And the recession was just around the corner. “Setting up on your own, it’s a risky business,” Reay admits. “Going from a business that is cash-rich with good lines of credit to a start-up is a challenge, and from a timing point of view we were edging towards one of the most serious recessions the country has experienced. We were fortunate enough to survive that process and grow the business in what turned out to be extremely challenging commercial and financial circumstances.”

In 2009, i2r became a subsidiary of Contital Srl, part of the private, family-run Laminazione Sottile Group, based near Naples. “We realised fairly early on that we really needed an industrial partner, and given our previous links with the Moschini family, we structured a swap-out during the final quarter of 2008,” says Reay.

“This has given us a very secure position as a business and given the market and company some significant advantages in terms of vertical integration; within the group we have effectively an independent aluminium rolling mill; a lacquering operation; we also have Contital which is our immediate parent and a major European container manufacturer – and then we have i2r.”

Whilst i2r produces a jaw-dropping 220 million pieces per annum, this is a ‘lean burn’ business: there are just 36 people employed at its factory in Telford, Shropshire, which became its new home in 2011.

High levels of quality, automation and IT are key to the business – and yet there still remains the dichotomy of i2r’s ability to retain its ‘human face’ front. “One of the strengths of the business remains that the company is very flat in terms of its structure, both in i2r and the group,” says Reay.

“When people are talking to us, they are talking to the main drivers within the business; it’s not a faceless organisation, and that enables us to get to the point quite quickly. That won’t change and that’s why our relationship works so well with our Italian partners, because their business, while it has a €350m turnover, is also very flat in terms of its structure – the key people and owners are highly visible.

“The strength of the business lies in the group, there’s no question of that. We see the participation at the highest level being key to everything we do, that’s an absolute core strength. Our ability to think differently and take risks with both our business model and our product ranges has also been a key factor in our growth and flexibility.

“Speed is another key factor; speed to market, in decision making; speed and flexibility in production. We’ve been able to take the best aspects of both businesses and move forward on that basis. It’s been quite surprising and satisfying that some of the techniques from i2r have been deployed by Contital.

“Both businesses, as you’d expect, hold different core competencies. It’s fair to say Contital’s competencies lie in engineering, production techniques, automation and IT structure, whereas i2r’s lie in marketing and development, product design.
“Efficiency is key for us: a number of techniques have been imported from Contital in terms of best manufacturing practice.

We have strong formal maintenance routines, and as a company we’re heavily committed
to staff training both on the job and more formal qualifications. Together we have an incredibly strong business, which in my opinion is certainly out there in terms of
the competition.”

That’s not to say Reay and i2r will be easing up on the risk taking any day soon: “We’re constantly looking for new ideas and new markets and we’d be disappointed if we can’t maintain the level of growth that we’ve previously enjoyed – especially given the fact that the economic conditions appear to be easing somewhat.”

Putting together an ethical package

While it enjoys a global reach and multi million pound turnover, i2r also prides itself on its environmental, employment and ethical credentials.

Recently awarded full accreditation as an ethical company by Ethical Goods, the process included a staff survey, which found that 86.7% of the workforce agreed that i2r was one of the best companies they have worked for.

That workforce, like the majority of i2r’s suppliers, is sourced locally. “In terms of the local labour pool, I don’t think we could be better served,” says Reay. “There’s an excellent supply in the area. Both in terms of direct staff we employ and the supply base, it is technically competent and varied.

“We’re very keen on local supply and also keen on local companies that aren’t necessarily belonging to national chains.”

Reay believes in “rewarding relationships that work both ways” – one example being their recent deal with nationwide distribution partner, Simmonds Transport, to produce new i2r branded trailer curtains.

“That’s a demonstration of both companies’ commitment for the long term,” says Reay. “We’re always interested in that style of relationship with both our customers and suppliers.”

Simmonds Transport also embodies i2r’s environmental commitment; its entire fleet uses B100 biofuel, made from used cooking oils.

Elsewhere in i2r, the green credentials mean all office stationery and outer packaging is made from 100% post-consumer waste, while aluminium process waste is collected and returned to suppliers. As much as 30% of this waste is then re-used in the raw material that i2r buys back.

“The biggest driver for us from the start was weight reduction, especially in light of the packaging waste regulations and the ethos of material conservation,” says Reay.

“Aluminium is 100% recyclable as a product, and we were keen to promote the positive attributes of the product against other mediums such as coated paper and plastics.”