Luxury Packaging – Sector and M&A report

Game-changing innovations drive growth in luxury packaging

The dynamic luxury packaging market continues to outperform general packaging, supported by strong industry fundamentals. That said, very few manufacturers can be considered ‘pure players’ and even fewer are operating at scale in Europe, where the majority of the luxury packaging market and customers are located. This is presenting opportunities for deal-making: acquisitions are being used to improve scale efficiencies, product portfolios (eg. sustainability & digital solutions), geographic growth, and to consolidate what is a widely fragmented market.

Key insights:

  • The luxury packaging market in Western Europe is posting positive growth numbers – the top 100 are averaging a CAGR2015-2018 of 4%, while the top 5 are averaging 7%. Meanwhile, the general packaging market worldwide is expanding at a CAGR2015-2018 of just c. 3%.
  • Earnings are typically high – the average EBITDA margin for the top 100 European luxury packaging players was 11% in 2018; while the top 5 generated average EBITDA of 18%, thanks mainly to scale efficiencies, which the M&A market is delivering (synergies).
  • M&A activity is running hottest among larger strategic buyers, in pursuit of external growth and market consolidation. However, in a new development, we are seeing growing Private Equity (PE) interest. PE funds already own some of the leading players (Albea, Fedrigoni), and are on the lookout for buy & build platforms that tap new growth trends.
  • Luxury packaging leads the wider packaging market in product development and innovation, as customers (luxury brands) demand more value-added inputs such as ‘smart’ labels and closures. Remy Martin recently launched a smart closure for its premium cognac that is tamper-proof and uses Near Field Communication (NFC) technology to engage with consumers – the first of its kind in the spirits industry.
  • Valuations among listed peers are 10x EBITDA, on average, while the Capitalmind transaction database shows that valuations in the non-listed mid-market space typically lie between 7x and 10x EBITDA. As a general rule larger businesses are receiving premium valuations, as well as those that operate in innovative niche markets such as digital solutions.
Jonathan Bursztyn
Jonathan Bursztyn
Director
France

" We are seeing consolidation accelerate in the fragmented luxury packaging market, as deals are used to improve efficiencies, product portfolios, and access to new markets and customers. Also, industry trends such as digital security in the labelling segment and innovative closures are disrupting outdated business models, which is providing growth opportunities for smart and agile midcap companies.”

Bart Jonkman
Bart Jonkman
Managing Partner
Benelux
Ervin Schellenberg
Ervin Schellenberg
Managing Partner
Germany
Stig Madsen Lachenmeier
Stig Madsen Lachenmeier
Managing Partner
Nordics

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