Huhtamäki Oyj History

Company Perspectives:

Inspired and fueled by the entrepreneurial energy of our founder we aspire to be the global company of choice in specialty packaging by consistently providing customers with unmatched expertise, operational excellence and innovative thinking.

Key Dates:

1920:

Heikki Huhtamäki founds a confectionery company in Kokkola, Finland; the company later diversifies into other food products, and develops in-house packaging operations.

1960:

Huhtamäki acquires Mensa, a Finnish paper food container producer as a step toward full-fledged packaging operations; Huhtamäki lists on the Helsinki Stock Exchange.

1962:

The company forms a dedicated packaging business, Pakkaus Oy.

1965:

The company forms Polarpak and begins production of thermoform plastics, which leads to its exit from the metal packaging market.

1972:

The company begins production of blow-molded plastic containers (exits in 1984).

1979:

Internationalization begins with the creation of a German subsidiary.

1982:

The company acquires DRG Cups & Containers in the United Kingdom; Polarcup France is established.

1985:

The company acquires Pallares of Spain, which becomes Polarcup Spain.

1988:

The company acquires Lilypak with operations in Australia and New Zealand.

1989:

The company begins to sell off some holdings to focus on pharmaceuticals, confectionery, and packaging.

1991:

The United Kingdom's Sweetheart International is acquired.

1996:

The company sells pharmaceutical and candy companies to focus on packaging products.

1999:

The company acquires Van Leer Packaging, becoming one of the world's leading packaging groups, and changes its name to Huhtamäki Van Leer.

2000:

The sell-off of nonconsumer goods packaging operations is initiated.

2001:

The company sells off Van Leer's industrial packaging operations and is renamed Huhtumäki.

Company History:

Finland's Huhtamäki Oyj is the world's leading producer of molded fiber-based and rigid packaging products for the consumer foods and foodservices markets, and is one of the world's leading manufacturers of paper cups and plates. Huhtamäki's turn-of-the century transformation--the company's formerly highly diversified operations included the Leaf candy company, among others--was accomplished in large part through the acquisition of a number of noted packaging players, including The Netherlands' Van Leer Royal Packaging Industries and the United States' Sealright, among others. Consumer Goods account for the largest part of the group's revenues, accounting for 67 percent of Huhtamäki's sales of EUR 2.1 billion ($2.5 billion) in 2003. In addition to standard consumer foods packaging products, the company works closely with food industry customers to develop and produce innovative packaging products, such as plastic baby food containers for Danone in 2004. Included in the group's Consumer Goods division are its sales of paper and plastic cups and plates under the Chinet (Americas), Bibo (Europe), and Lily (Oceania) brand names. The Foodservice sector adds the remaining 33 percent to the company's total revenues. Customers include nearly all of the major fast-food customers, as well as other institutional customers such as caterers. A globally operating company with manufacturing and distribution facilities in 36 countries, Huhtamäki remains headquartered in Finland and has been listed on the Helsinki Stock Exchange since 1960. Europe remains the group's largest market, at 56 percent of sales, while the Americas account for 29 percent and Asia, Oceania, and Africa combine for 15 percent of sales. The company is led by Chairman and CEO Timo Peltola.

Cooking Up a Conglomerate in the 1920s

Huhtamäki Oyj traced its origins to the village of Kokkola, in Western Finland, where Vilhelm Huhtamäki operated a bakery and confectioner's shop. Huhtamäki had been somewhat of a world traveler, having worked in the United States, as well as in Norway and Sweden, a trait inherited by his eldest son, Heikki, who became a confectioner's apprentice in St. Petersburg in 1917. Born in 1900, Heikki Huhtamäki became caught up in the Bolshevik Revolution, and eventually crossed the continent through Siberia and to Japan, before ultimately returning to Finland. There, Heikki Huhtamäki published a book about his adventures, then set up his own confectionery business, backed by his industrialist father-in-law, in 1920.

Huhtamäki, as the company came to be called, quickly grew into one of the leading candy companies in Finland. The company's success in the candy market led it to diversify into other areas beginning in the 1930s. At first, Huhtamäki remained close to its original business, expanding into other food categories. By the 1940s, however, the company had evolved into a holding company for an increasingly varied range of companies, including clothing, advertising, and, in later decades, electronics and heavy engineering. Pharmaceuticals, under the Leiras name, was also an important area of operation for the company, which later came to specialize on the production of contraceptives and anticancer agents.

By the late 1980s, Huhtamäki oversaw a widely diversified array of some 20 separate businesses, each operating under its own name. Candy and Confectionery remained a major part of the group's businesses, particularly with the acquisition of the United States' Leaf Candy Company, as well as two other U.S. candy makers, in 1983. Into the early 1990s, confectionery continued to account for as much as 60 percent of Huhtamäki's sales. Through Leaf, Huhtamäki had succeeded in building a position for itself among the global top ten confectionery companies, with particular strength in the non-chocolate and chewing gum categories.

The arrival of Timo Peltola as CEO in 1989 signaled the start of a new era for Huhtamäki. Peltola set out to refocus the company as a global leader in a narrower array of industries. The company began selling off its holdings, and by the early 1990s had refocused itself around a triple core of confectionery under Leaf, pharmaceuticals under Leiras, and packaging under the group's Polarpak division.

Huhtamäki's entry into the packaging market began as an offshoot of its confectionery and foods business, as the company built up packaging operations in order to support its growing array of food and nonfood products. Into the early 1960s, however, Huhtamäki's packaging division, which produced both paper and metal-based packaging for the company's products, remained dedicated to serving the company's in-house needs.

The transformation of that in-house function into a full-fledged business began with the acquisition of the Mensa canning plant, which specialized in producing paper food containers, based in Hämeenlinna, in Finland, in 1960. Two years later, Huhtamäki separated its metal packaging and paper packaging operations into a new company, Pakkaus Oy. Huhtamäki soon after chose to phase out its metal packaging business, however. Instead, the company decided to focus on the younger thermoformed plastics market, selling off its metal packaging business and creating the Polarpak business in 1965. Polarpak also took over the company's paper-based packaging operations, which traded under the brand name Bibo, among others. By the 1970s, Polarpak had emerged as the leading producer of paper cups in Europe. The production of cups and containers for the ice cream industry became another company specialty.

The company also became active in other industrial packaging-related areas. Such was the case of its Pyrkijä subsidiary, which brought the company into the production of large, blow-molded plastic containers in 1972. The company exited that market in 1984, however.

The internationalization of Huhtamäki's packaging business began in the early 1980s, starting with the creation of a German sales subsidiary, Polar Cup GmbH, in 1979 but especially with the purchase of the United Kingdom's DRG Cups & Containers in 1982. In that year, also, Huhtamäki moved into France, buying up a local distributor to the foodservice industry in order to create Polar Cup France.

Huhtamäki made an initial attempt to crack the U.S. market in the early 1980s as well, with an offer to acquire Maryland Cup Corporation, then the leading paper cup maker in the country. That bid failed, however; instead, the company turned to the Asian market, setting up a joint venture, Polarcup Singapore, in 1983. Back in Europe, Huhtamäki continued its geographical spread with the purchase of Spain's Pallarès Group in 1985. That company was then renamed as Polarcup Spain. In that year, the company made a brief foray into the market for aluminum aerosol cans, through Printal, but exited that operation in 1988. In 1986, Huhtamäki regrouped its consumer-oriented packaging businesses under a single name, Polarcup.

Global Niche Leadership in the New Century

Huhtumaki continued to expand its packaging holdings into the late 1980s, buying up Germany's Bellaplast in 1987, then turning to Australia and New Zealand with the purchase of Lilypak in 1988. The Lily brand name then became one of the company's core brands. In 1991, the company added new operations in The Netherlands and the United Kingdom through the purchase of Sweetheart International. Two years later, Huhtamäki added the rigid plastics operations of France's Carnaud Metalbox, giving it new production facilities in the United Kingdom, Portugal, Italy, and France.

By 1994, packaging had emerged as the second largest--although least known--part of Huhtamäki's business, accounting for nearly one-third of its revenues. In 1996, Huhtamäki took the decision to restructure the company entirely around its packaging operations, a move that placed Huhtamäki in direct operational control of its business since the 1930s. In that year, the company sold off its Leiras pharmaceutical business to Germany's Schering AG. That sale was quickly followed by the breakup of the Leaf candy business into two halves, consisting of Leaf's North American operations on one side, and its European and Asian business on the other. The former was then sold to Hershey in the United States, while The Netherlands' CSM acquired the latter.

With a war chest approaching EUR 1 billion, Huhtamäki now set out to remake itself as a global packaging leader. The company began an extended acquisition campaign that more than tripled its revenues and made it a clear-cut leader in several niche categories. The company's first acquisitions came in 1997, with the purchases of Pacific World Packaging, active in Australia and Hong Kong; Monservizio Bibo, based in Italy; and Turkey's Gûven Plastik.

The following year, Huhtamäki at last made its packaging entry into the United States, buying up that country's Sealright Inc. for $202 million. The purchase added Sealright's dominance for the North American ice cream packaging market to Huhtamäki's own leading positions in Europe and Asia, making it the world's top ice cream packaging company. That year, also, the company acquired Tetra Corporation, another U.S. company. The company next turned to Brazil, buying up that country's Brasholanda.

In the meantime, Huhtamäki made a leap into the big leagues with the 1999 purchase of Royal Packaging Industries Van Leer. Based in The Netherlands, Van Leer had been founded as a steel drum maker in 1919 before going on to become one of the world's leading consumer and industrial packaging producers. The addition of Van Leer, which cost Huhtamäki nearly EUR 1 billion, gave Huhtamäki control of the U.S.-based Chinet brand, and placed it as one of the top two leading producers of molded fiber packaging in the world.

The company took on a new name in 1999 as Huhtamäki Van Leer--by 2001, however, the company simplified its name again to Huhtamäki Oyj. Meanwhile, Huhtamäki made a series of bolt-on acquisitions to solidify its hold in the local, regional, and global markets. In the United States, the company bought Packaging Resources Inc. and the Malvern Flexibles operations of Graphic Packaging in 2000, while in South Africa that year the company acquired Mono Containers. The company began its sell-off of Van Leer's nonconsumer business that year, a process completed in 2001 with the sale of its industrial packaging business to the United States' Grief. Following the group's name change, it also decided to bring all of its operations under the single Huhtamäki banner.

Huhtamäki ended its acquisition drive that year, and instead began concentrating on integrating its operations and in developing new packaging types and technologies. That effort paid off with the début of a new self-venting film for ready meal packaging products at the end of 2003. The company also launched a new plastics-based baby food container, introduced first to the French market through Danone's Bledina baby foods brand. The company had not given up on external growth, however. In 2004, the company opened a new flexible packaging plant in Vietnam, which began producing packaging products for the domestic market there. Huhtamäki had successfully transformed itself from its confectionery to a place among the packaging industry's global leaders.

Principal Subsidiaries: Huhtamäki (Norway) Holdings A/S; Huhtamäki (NZ) Holdings Ltd; Huhtamäki (Vietnam) Ltd; Huhtamäki Americas, Inc.; Huhtamäki Anglo Holding; Huhtamäki Argentina S.A.; Huhtamäki Australia Limited; Huhtamäki do Brasil Ltda.; Huhtamäki Egypt Ltd; Huhtamäki Finance B.V.; Huhtamäki Holdings France SNC; Huhtamäki Holdings Pty Ltd (Australia); Huhtamäki Hungary Kft; Huhtamäki Istanbul Ambalaj Sanayi A.S. (Turkey); Huhtamäki Portugal SGPS, Lda; Huhtamäki S.p.A (Italy); Huhtamäki Singapore Pte. Ltd; Huhtamäki South Africa (Pty) Ltd.; Huhtamäki Sweden Holding AB; Laminor S.A. (Brazil); Pacific World Packaging (International) Ltd. (Hong Kong); Partner Polarcup Oy.

Principal Competitors: Nippon Unipac Holding; Tetra Laval Group; Tetra Pak Schweiz AG; M-real Corporation; Fort James Corporation; Nampak Ltd.; Daiwa Can Co.; American Greetings Corporation.

Further Reading:

• Brown-Humes, Christopher, "Huhtamäki Sells Off Industrial Division," Financial Times, October 31, 2000, p. 34.
• George, Nicholas, "Finnish Group to Focus on Growth," Financial Times, May 24, 2000, p. 33.
• "Huhtamäki Gets All Steamed Up," Packaging Today International, December 2003, p. 13.
• "Huhtamäki Opens Flexible Packaging Facility in Vietnam," Plastics in Packaging UK, May 10, 2004.
• "Huhtamäki's US Operations to Adopt Single Name," Packaging Magazine, June 7, 2001.

Source: International Directory of Company Histories, Vol.64. St. James Press, 2004.

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