Brenntag AG History

Company Perspectives:

Brenntag is a quick and reliable supplier for the processing industry with industry- and special-chemicals for over 100 years. Satisfied customers are our strength.

Company History:

Brenntag AG is Europe's largest distributor of industrial chemicals. A multibillion dollar company and affiliate of Germany's largest transportation and distribution firm, Stinnes AG, Brenntag is headquartered in the small city of Muelheim on the Ruhr River, the country's most industrialized corridor. Also a global leader in the distribution of chemicals, the company has more than 80 distribution centers in Europe and 50 in the United States, its most important non-European market.

19th-Century Roots

Brenntag has been in continuous operation since it was founded in 1874. The early 1870s were a propitious time for establishing new businesses in Germany, which had recently been unified after a series of bloody wars. Germany's nationalistic government was anxious to put an end to centuries of economic stagnation and to assert the country's primacy in Europe.

In this favorable climate, Philipp Muehsam, a young German entrepreneur, founded a small business dealing in the transportation and sale of raw materials on the river Spree, the chief artery of Germany's new capital, Berlin. Named after its founder, the Philipp Muehsam Company did a flourishing business. As the capital city of the largest European country, Berlin was rapidly becoming the showplace of everything modern in the late 19th century, and also the center of the country's new chemical industry. In fact, the modern German chemical industry was by the turn of the century the most advanced in the world and the first to employ academically trained researchers.

Contributing to Germany's emerging chemical industry became the chief role of the Philipp Muehsam company. By the turn of the century, its core businesses focused on petroleum as well as on the purchase and distribution of industrial chemicals. Such activities necessitated an international transportation network, which would be upset temporarily during the upheavals of World War I and the subsequent civil unrest. Back on its feet during the 1920s, the company expanded its network under the leadership of Muehsam's successors, and despite the worldwide economic depression of the 1930s, the firm remained the largest distributor of petroleum and industrial chemicals in Germany.

Wartime Shift in Production

During this time, one of Germany's largest industrial concerns, the Hugo Stinnes corporation, had been eyeing the Philipp Muehsam company. In 1938, it made a bid for the company and acquired it. The name of the firm was changed to Brennstoff-Chemikalien-Transport AG, and while its traditional operations in petroleum and industrial chemical distribution remained, a new and important branch was added--the allocation of mineral oil byproducts of petroleum--which would be indispensable to the manufacture of cosmetics during the postwar era.

Wartime, however, generated other needs. While raw materials such as petroleum could still be obtained in the vast Nazi-held territories of eastern Europe during World War II, daily allied bombing took its toll on Brennstoff's business, which during this time consisted wholly of distribution and transportation. By the end of the war, Brennstoff-Chemikalien-Transport AG lay in utter ruin. The parent company, the vast Hugo Stinnes corporation, was confiscated by the occupation authorities, with only a small branch of the company left in the hands of the Stinnes family. Brennstoff, renamed Brenntag AG after the war (in order to disassociate itself with its prewar past), belonged to this branch. Meanwhile that part of the Stinnes firm that had been confiscated by the Allies was reconstituted by the able Dr. Heinz P. Kemper, who was chosen by the U.S. occupation authority in West Berlin because of his lack of party affiliation. In 1964, the Hugo Stinnes firm bought the Brenntag company for what was considered the immense sum of DM 13 million.

Postwar Recovery

Brenntag had been slowly recovering from the turmoil of the war years. Headquarters were moved in 1948 from Berlin in Germany's eastern zone to the more secure town of Muelheim on the Ruhr, in western Germany. With only 20 employees, the company slowly recaptured its former lead in the chemical transportation industry.

Recovery would not have been possible without major currency reform in the western zones in 1948; the unification of the three occupation zones into the Federal Republic of Germany in 1949; and the onset of the Marshall Plan for European economic recovery which followed unification. Brenntag became decidedly more attuned to the market, especially in the international arena. Management divested the company of its former shares in various manufacturing enterprises, as well as of its shipping business, and concentrated instead on broadening its product lines and increasing its focus on chemical distribution and transportation.

Of great urgency in the postwar years was expansion into international markets. Aggressive inroads, most particularly in the biggest and richest market of all--the United States--were made in the 1950s, in the company's first venture on the North American continent. During this time, thousands of tons of industrial chemicals landed in the ports of the low countries for transshipment throughout Europe by Brenntag AG. Inroads were also made into Eastern Europe, an area to which Brenntag had had commercial ties for decades. In the following three decades, the Communist countries of the East would constitute a stable but limited market for Brenntag's chemical products. This market would explode in significance and range with the fall of Communism in the late 1980s.

New product lines were developed in the prosperous 1950s, including aromatic petrochemicals for the cosmetics industry, synthetic materials and resins, and chemical solvents, all of which would be purchased and distributed to the major European chemical manufacturers from sources in Europe and overseas.

New Parentage in the 1960s

The largest transportation and distribution company in West Germany, Hugo Stinnes AG, purchased Brenntag from the Bank für Gemeinwirtschaft in 1964. With one stroke, Stinnes had plunged into the lucrative industrial chemical distribution market, which complemented its other businesses in the distribution and transportation of raw materials and petroleum, as well as overseas shipping. The transaction represented a major step towards diversifying Stinnes (which altered its name in 1976 to Stinnes AG) as well as towards greatly broadening Brenntag's customer base. By then Brenntag's sales revenues were in the hundreds of millions of dollars; 20 years later, they would exceed a billion. Another advantage of Brenntag's acquisition by Stinnes was the greater financial resources of the parent company, which continues to endow Brenntag with a secure economic base. In 1965, Stinnes AG and Brenntag were acquired by Germany's largest firm, the energy company VEBA AG. Stinnes remained a wholly owned subsidiary of VEBA.

After becoming a member of the Stinnes Group of companies, Brenntag's growth was dramatic. Branch offices were established throughout Germany and the rest of Europe. Out of necessity the company became involved in more than just the buying and selling of a wide array of products, including industrial chemicals, agricultural chemicals or made-to-order specialty chemicals. Large investments were also made in fleets of trucks, storage facilities, and tanks that remain indispensable in the distribution of Brenntag's products. Sales offices expanding in key geographical areas rapidly transmitted and facilitated customer orders.

Great Changes in the 1990s

In the late 1980s, Brenntag underwent tremendous expansion. The fall of Communism in Eastern Europe and the demise of the Soviet Union enabled Brenntag to expand its bases in the East and open new branches in Warsaw, Prague, and even Moscow. With the fall of the Berlin Wall, Brenntag was one of the first West German companies to expand into eastern Germany, opening up fifteen branches in a year, and establishing Brenntag affiliates in Erfurt, Chemnitz, and the former East Berlin.

In the early 1990s, chemical firms and their suppliers came under increasing scrutiny for their possible roles in polluting and diminishing the world's natural resources. In addition, stringent new environmental laws forced many of these companies out of business, and burdened the remaining ones with enormous cleanup and safety costs. This was just one of many economic factors influencing a shift toward consolidation as a means of rationalization--that is, greater efficiency in use of financial and other resources.

As Chemical Week reported in 1995, the German chemical distribution industry was the largest in Europe, and at its pinnacle was Brenntag, which according to board member Ernst-Hermann Luttmann had experienced two percent growth in the preceding fiscal year--its first increase since 1991. The company's more efficient use of resources received much of the credit for this improvement. In Berlin, for instance, Brenntag jointly operated a warehousing venture with Biesterfeld, the second-largest chemical distributor in the country. In Nuremberg, Brenntag subsidiary Staub & Co. similarly cooperated with Biesterfeld in its logistical operations. Such cooperation might have seemed strange a few years before, but the new business climate would be characterized by fewer companies possessing more resources and applying more efficient methods--even joining forces with a competitor.

In line with moves toward consolidation, Brenntag shut down several smaller warehouses and brought together a number of its operations. When in 1994 it acquired F & A Wulfing of Gevelsberg, Brenntag closed down two other warehouses in Solingen and Wuppertal. From 1990 to 1995, according to Chemical Week, the company had gone from 22 distribution centers in Germany to just 12, six of them operated with partners. In fact, its cooperation with Biesterfeld had caused some in Germany to speculate that the companies might merge, though as of early 1998 this had not materialized.

Consolidation of resources did not stop the company from continuing to acquire subsidiaries, and indeed its acquisitions in the 1990s were consistent with the industry-wide trend toward larger companies. Just as Stinnes AG consisted of many companies, Brenntag also came to represent a group of firms specializing in different chemicals and services. For instance, in the same city on the Ruhr where the parent company was located, Brenntag Eurochem GmbH provided made-to-order specialty chemicals.

Among Brenntag's acquisitions in 1997 were Spanish, American, Franco-Belgian, and Swiss companies. With yearly receipts of DM 145 million, Productos Quimicos Sevillanos, S.A. of Seville was Spain's second-largest chemical distributor; by putting it with its other holdings, Brenntag became the leader in the Spanish market. In 1997 Brenntag also acquired the Franco-Belgian company Bonnave, with cumulative annual sales of DM 165 million in the two countries. This acquisition solidified Brenntag's leadership in the French market, and put it in first place in Belgium as well. Also, Brenntag acquired Christ Chemie AG of Switzerland.

Outside of Europe, Brenntag was most heavily represented in the United States, where SOCO Chemical Inc. in Pennsylvania coordinated all U.S. activities, involving seven American distribution firms with branches in more than 50 locations throughout the country. Even during the recession of the early 1990s, Brenntag's U.S. business fared well, although cost-cutting and streamlining accounted for much of the gain in profitability. In 1997 SOCO acquired Burris Chemical Inc. of Charleston, South Carolina, the largest independent distributor of industrial chemicals in the Southeastern United States. Burris also maintained operations in North Carolina and Alabama.

As it approached the end of the century, Brenntag offered an increasingly sophisticated and detailed list of chemical products and services to chemical processors. In the increasingly vital environmental area and related fields, a host of Brenntag companies provided recycling services, packaging materials, drying and cleaning assistance, waste hauling, consulting and marketing. A visit to its web site offered an A-to-Z sampling of the company's wide array of products, from absorbent, acetic acid, and acetone to zinc oxides, zinc stearates, and zinc sulphate. Among the services Brenntag offered in the late 1990s was online tank sensor equipment. When supplies of a chemical fell to a certain point, this registers on the sensor, and it transmitted the information online to the company. This alerted the latter to dispatch a resupply delivery.

As the largest chemical provider and transporter in Europe, Brenntag has survived the onslaught of environmental legislation and public criticism and has managed to adapt to and even profit from these challenges. Recycling and waste disposal loom as strategic business segments in the future. In any case, with its widespread global distribution and transportation network in an era of increasingly free trade, Brenntag's future seems promising. Even if the world market for chemical raw materials contracts, the possibilities for recycling and efficient waste disposal are numerous.

Principal Subsidiaries: Brenntag Chemiepartner GmbH; Brenntag Eurochem GmbH; Brenntag International Chemicals GmbH; Chemische Fabrik Lehrte Dr. Andreas Kossel GmbH; CVH Chemie-Vertrieb GmbH & Co.; Industik GmbH; Staub & Co. Chemiehandelsges, mbH; Brenntag (U.K.) Ltd.; Brenntag Guzmán Ibérica S.A. (Spain); Brenntag Nederland B.V. (Netherlands); Brenntag Portugal Productos Quimicos Lda.; Brenntag Eurochem Sp.z.o.o. (Poland); Brenntag International Chemicals (Russia); Brenntag International Chemicals spol.s.r.o. (Czech Republic); Brenntag International Chemicals Sp.z.o.o. (Poland); Brenntag S.A. (France); Brenntag SpA (Italy); Brenntag Spezialchemikalien GmbH (Austria); Brenntag Volkers Benelux S.A.; Brenntag Volkers Loosdrecht B.V. (Loosdrecht); Bonnave-Dubar S.A. (France-Belgium); Chemproha B.V. (Netherlands); Christ Chemie AG (Switzerland); E. Brunner S.A. (France); N.V. Boucquillon S.A. (Netherlands); PQS Productos Quimicos Sevillanos, S.A. (Spain); Brenntag International Chemicals Inc. (U.S.); Delta Distributors (U.S.); Eastech Inc. (U.S.); PB&S Chemical Company (U.S.); SOCO Chemicals Inc. (U.S.); SOCO-Lynch Corporation (U.S.); SOCO-LYnch Corporation Division Crown Chemical Corp. (U.S.); SOUTHCHEM Inc. (U.S.); Textile Chemical Company Inc. (U.S.); Brenntag (Taiwan) Co. Ltd.; Brenntag AG (Singapore).

Further Reading:

• Brenntag, Your Partner in the Market, Düsseldorf: Econ Verlag, 1974.
  Making Sure the Chemistry Is Right, Muelheim an der Ruhr, Germany: Brenntag AG, 1991.
• Young, Ian, "Consolidation Benefits Leading Distributors," Chemical Week, May 24, 1994, p. 30.
• ------, "On the Road to Quality in Europe's Competitive Market," Chemical Week, July 22, 1992, pp. 30-32.
• ------, "Stinnes Agrarchemie Builds Five Centers," Chemical Week, February 3, 1993, p. 13.

Source: International Directory of Company Histories, Vol. 23. St. James Press, 1998.

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