Liqui-Box Corporation History

Address:

6950 Worthington-Galena Road
Worthington, Ohio 43085
U.S.A.

Telephone: (614) 888-9280
Fax: (614) 888-0982

Public Company
Incorporated: 1920 as Corrugated Container Co.
Employees: 818
Sales: $147.8 million (1994)
Stock Exchanges: NASDAQ
SICs: 3565 Packaging Machinery; 3089 Plastics Products, Not Elsewhere Classified

Company Perspectives:

The availability, formability and recyclability of the raw materials common to our products--and the cost savings afforded customers by our products over other packaging materials--have led to continued acceptance of our products in established markets. These same elements are permitting us to pursue new, attractive opportunities as we increasingly view established markets from a global perspective.

Company History:

Liqui-Box Corporation pioneered the use of bag-in-box packaging in the United States in the 1960s and continued to lead that market into the mid-1990s. The company's specialty packaging and the filling and dispensing systems that compliment it are used in the processed food and beverage, pharmaceutical, and specialty chemical industries. Liqui-Box's strong rate of return and steady growth won it recognition as one of Forbes magazine's "Best Small Companies in America" throughout the 1980s and into the 1990s. Liqui-Box had the U.S. aseptic packaging market to itself for most of its history, but by the mid-1990s, its domestic competitors included Combibloc Inc., Thermoforming USA, and Asepak Corp., all of Ohio. In many respects, however, the firm's biggest rivals are the manufacturers of metal, paperboard, and glass containers. Members of the Davis family, including Samuel B., his sister Jane D. Ferger, and mother Jeanette A. Davis, continued to control at least 25 percent of the company's equity through the early 1990s.

Origins and Early History

Liqui-Box traces its origins to Corrugated Container Company, incorporated in 1920 in Columbus, Ohio. The firm's first generation in business appears to have been rather uneventful; by 1945, when it was acquired by Sam S. Davis, the company had only 25 employees and $250,000 in annual sales. The new owner invested heavily in production and warehouse space, opening a box assembly plant in West Virginia in 1953 and more than tripling the headquarters operation from 1945 to 1962. By 1960, annual sales had grown to $6.8 million, with net income of about $213,000. The business became so vital to its community that the city of Columbus named the street it occupied "Corrugated Way" during the 1960s.

Pioneers in Aseptic Packaging during the 1960s

Corrugated boxes would not be the company's longstanding claim to fame, however. In 1960, Corrugated Container pioneered the production and use of aseptic packaging in the United States. Originally developed in post-World War II Europe, aseptic packaging marries the product (usually a liquid) with the packing process in a totally sterile environment. The package's best-known incarnation in the United States is the drink box, but by the early 1990s consumers could find aseptically packaged wine, tomato products, and soy milk on their supermarket shelves. Aseptic packages enjoy several advantages over their more traditional glass, metal and rigid plastic counterparts. When packaged aseptically, foods, beverages, and other perishables have a longer shelf life and don't need to be refrigerated until the package's seal is broken. The packages usually weigh less, generating savings on shipping costs, and constitute less solid waste. The concept has been widely known and employed in Japan and Europe for decades but was prohibited in the United States for many years.

Spearheaded by Robert S. Hamilton and Bob Curie, Corrugated Container developed the bag-in-box liquid packaging system around the aseptic idea. Liqui-Box Corporation was created in 1961 as a subsidiary of Corrugated Container. Although company executives were convinced that their new product was superior to many of the liquid packaging systems then available, they were faced with two primary obstacles. First, as the founders of the industry in the United States, they were obliged to design and manufacture the equipment needed to manufacture and fill the plastic bags as well as the closures that would make the packages practical. Second, the company needed to win converts to their newfangled packages. Although Liqui-Box has obviously enjoyed a measure of success in both these areas, the company has continued to develop new products and cultivate new markets throughout its history.

Largely out of necessity, Liqui-Box quickly became vertically integrated, manufacturing and selling the machines that filled, sealed, put a closure or tap in each bag, and simultaneously enclosed the bag in a box. By 1973, the company had even added a plastic extruding subsidiary that made the plastic film for shrink-wrapping and trash-can liners as well as the bags in bag-in-box.

Liqui-Box initially marketed its bag-in-box package to dairies as a replacement for the typical metal five-gallon milk can. According to a case study on Liqui-Box published in a 1990 marketing textbook, "dairies were so enthused with the bag-in-box that within six years of introduction, 95 percent of dairies had converted to the bag-in-box packaging concept for institutional size packaging of fluid milk."

In 1968, Liqui-Box developed a ten-quart, rigid polyethylene bottle originally intended for home delivery of milk. The blow-molded package featured the "Handi-tap closure," a proprietary toggle valve that made the package easy to use. When home delivery of milk declined, Liqui-Box marketed its package to the bottled water industry. By the early 1990s, Liqui-Box's Handi-tap dominated the bottled water category. A company video proudly proclaimed that the closure used on the container was "never successfully duplicated."

Within a decade of the Liqui-Box launch, Corrugated Container's sales multiplied more than fourfold, from $6.8 million in 1960 to over $33.5 million by 1972. Profits more than sextupled, from $213,000 to $1.4 million during the same period. The company's corrugated business continued to expand during this period, with the addition of a joint-venture paper mill in 1967 and the acquisition of box manufacturers in Kentucky and Michigan in the late 1960s and early 1970s. A name change, to Corco, Inc. in 1968, reflected the company's diversification. The corrugated operations were moved to a new, larger facility in nearby Delaware, Ohio, in 1974. Liqui-Box was spun-off as a separate company in 1977, when Corco merged with longtime affiliate Willamette Industries. Samuel S. Davis remained with Liqui-Box.

Expansion in the 1970s and 1980s

Representing the second generation of the Davis family to bring change to Corco, Sam B. Davis joined the company as vice-president for corporate growth in the mid-1970s. In 1975, he adapted General Electric's Lexan brand polycarbonate plastic for use in the bottled water industry. The substance's light weight, resistance to breakage, and lack of taste transfer made it an ideal replacement for the heavy, five- and 10-gallon glass bottles traditionally used for office-style water coolers. Dubbed "unglass" by Liqui-Box's marketers, the clear plastic container eventually earned the company a leading position in the corporate and residential markets for replacement bottles for water coolers.

Over the course of the 1970s and 1980s, Liqui-Box expanded the potential applications for its bag-in-box packaging from its base in dairy products. The company had the most success marketing its unique packaging to bulk producers and institutional food servers. By the late 1980s, they had adapted the technology to package concentrated mixes and flavorings, condiments, wine, chemicals, and liquid detergents. Liqui-Box's development of dispensing systems around the bag-in-box helped make the transition from traditional packages easier for potential customers. For example, the company created portioning devices that connected easily with its condiment packages. This commitment to research and development won converts in the fast food industry, where strict cost controls and efficiency are paramount.

Although the company wasn't particularly successful at marketing its packaging for retail consumption, beverages in pouches were better-received at the single-serving level. Such institutional meal servers as schools and hospitals began adopting the package in 1971, when some beverage producers began offering milk and juice in eight-ounce pouches to schools. The packaging offered up-front savings as well as real economies in the areas of waste reduction (at 80 percent less than the familiar paperboard containers) and storage space.

Liqui-Box's sales more than doubled, from $29.1 million in 1977 to $63.9 million by 1985, and its net income quadrupled from $1.1 million to $4.6 million during the same period. The company was listed on Forbes's roster of the "200 Best Small Companies in America" five times from 1980 to 1990, and made the "Honor Roll" of companies with a return on equity of more than 17.2 percent from 1985 to 1990.

Liqui-Box's 1989 acquisition of B-Bar-B Corp. of New Albany, Indiana, helped push annual revenues over $100 million that year. The new affiliate brought valuable sales and marketing skills to compliment Liqui-Box's well-established expertise in research, development and manufacturing. Executive Vice-President Peter Linn told the Columbus Dispatch that the merger would make Liqui-Box the world's largest producer among bag-in-box manufacturers in terms of units and dollars.

Acquisitions in the 1990s

Acquisitions fueled geographic and product diversification in the early 1990s. In 1991, Liqui-Box purchased Inpaco for $312,000, adding specialty capabilities in wholesale food and pharmaceutical packaging. Two years later, Liqui-Box paid $14.85 million to acquire liquid packaging plants in California and England from Sonoco Products Co., consolidating its European production capacity at Sonoco's headquarters in Romiley, England. By 1994, international sales--both direct and via licensees and distributors--contributed between 10 and 15 percent of Liqui-Box's total annual sales. The company made a logical--and admittedly "defensive"--diversification into bottled water production in 1991, launching its own "Alaskan Falls" brand that year.

Annual sales grew by over 38 percent, from $113.1 million in 1990 to $156.4 million in 1995, and net income grew by over 22 percent, from $9.9 million to $12.1 million, during the same period.

Although American consumers remained suspicious of unrefrigerated (aseptically packaged) milk, Liqui-Box began to penetrate the retail packaging segment in the early 1990s. Via warehouse stores the company began to offer milk and juice in the 2.5 gallon Handi-tap container traditionally used for bottled water.

In 1993, Liqui-Box inked a 10-year contract with Perrier Corporation of America to manufacture 2.5-gallon and larger containers for the company. While CEO Samuel B. Davis touted the long-term commitment, sales to Perrier totaled over 15 percent of Liqui-Box's total annual revenues in 1994 and 1995.

Liqui-Box appeared to be firmly ensconced in several growing markets in the mid-1990s. Consumption of bottled water, through both office-style water coolers and retail outlets, enjoyed double-digit annual growth in the early 1990s, and that trend was expected to continue through the remainder of the decade. Liqui-Box's persistent efforts to penetrate the retail market through supermarket and warehouse packages should also pay off, as consumers become more accustomed to aseptic packages. In the long term, the company's commitment to research and development combined with its sharp marketing and promotions capabilities seemed likely to keep it at the forefront of this emerging segment of the packaging industry.

Principal Subsidiaries: Alaskan Falls Bottling Company; LB Communications, Inc.; LB Development Corp.; LB Investments, Inc.; LB Acquisition Corp.; LB Europe Limited (England); Inpaco Corporation; Commander Systems, Inc.; Liqui-Box International, Inc.; Liqui-Box Europe, SA (England); Liqui-Box of Canada, Ltd.; Corporate Design, Inc.

Liqui-Box Corporation History

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