Berry Plastics Corporation

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Berry Plastics Corporation

P. O. Box 959
Evansville, Indiana 47706
U.S.A.
(812) 424-2904
Fax: (812) 424-0128
Web site: http://www.berryplastics.com

Private Company
Incorporated: 1967 as Imperial Plastics, Inc.
Employees: 1,500
Sales: $151 million (1996)
SICs: 3089 Plastics Products, Not Elsewhere Classified

Berry Plastics Corporation is one of the leading U.S. manufacturers of injection-molded plastic packaging. The company has five core product lines, including aerosol overcaps, open top containers, drink cups, custom molding, and housewares and lawn and garden products. Berry Plastics lays claim to world leadership in the manufacture of aerosol caps for a wide variety of market applications, and the company also provides the most extensive line of thin-walled containers in the industry for food packaging, dairy packaging, toys, chemicals, and medical applications. With a highly diverse customer base of more than 2,500 clients, the company has contracts with such well-known firms as Sherwin-Williams, Borden, McDonald’s, Burger King, Gillette, Proctor & Gamble, Coca-Cola, Wal-Mart, Kmart, Hershey Foods, and a host of other prominent corporations. Working with these companies places Berry Plastics products in everyone’s home across the United States, although many people do not recognize the name. The 1996 purchase of Packer-Ware Corporation, a major firm in the housewares and lawn and garden market, enhanced Berry Plastics’ position and enabled it to garner a larger share of the injection-molded drink cup and container market. Headquartered in Evansville, Indiana, Berry Plastics has manufacturing plants in Nevada, Iowa, North Carolina, and Pennsylvania, and in the mid-1990s was beginning a strategic acquisitions plan to expand more aggressively throughout the United States.

Early History

The company began its history as Imperial Plastics in Evansville, Indiana, in 1967. The 1960s is considered by many industry analysts and business historians as the golden age in plastics. During that time, the packaging industry was undergoing a momentous revolution, namely, the changeover from cardboard, wood, glass, and paper packaging to containers that were made of plastic. More sturdy than cardboard and paper, and much less heavy than glass or wood, plastic containers grew in demand from such divergent industries as toy manufacturers to dairy producers. Many of the plastics companies that began in the 1960s were started by skilled craftsmen who built their own injection molders in their garages to manufacture the first plastic containers.

During its early years, Imperial Plastics provided containers to the burgeoning food and dairy industries. As food-producing firms began to expand and develop from small regional firms into national corporations, they needed more convenient packaging to make the long trips to distant markets. Imperial Plastics provided these companies with the ability to package and transport their produce much more easily, and at a lower cost than previously, thus cementing the relationship between Imperial Plastics and these rapidly growing food and dairy firms.

By the middle of the 1970s, Imperial Plastics had developed into a well-known company with a reputation for reliability and high-quality products in the plastics industry. The company had hired a number of design engineers and marketing specialists in order to meet the specific needs of its customers. It was during this time that Imperial Plastics expanded its product line and began manufacturing a wide array of plastic containers for such items as hair care, pet foods, chemicals, detergents, and toys. The company also began manufacturing industrial pry-off containers during this time, including such items as containers for paint, sealers, wood stains, and bolts and nuts that have become commonplace items in American homes.

Transition and Growth in the 1980s

During the early 1980s, the company continued to expand its product line. As Imperial Plastics grew in reputation, it came to the attention of interested buyers. The 1980s saw a marked increase in corporate takeovers, and Imperial Plastics was not immune to the trends in the marketplace. In 1983, Imperial Plastics was acquired by Jack Berry, Sr., an entrepreneur with a desire not only to increase his own personal wealth but also to increase his influence in a burgeoning industry. Although he was primarily known as a real estate developer and citrus grower in the state of Florida, Berry didn’t hesitate to purchase Imperial Plastics and put his own stamp on the company. The first move he made was to rename the company Berry Plastics Corporation.

Having renamed the company after himself, Berry implemented a thoroughgoing restructuring and expansion program. A second manufacturing facility was opened for business in Henderson, Nevada, in 1987, and a manufacturer of aerosol overcaps, Gilbert Plastics, was purchased in 1988. To consolidate the new acquisition and integrate its product line into Berry Plastics, the Florida entrepreneur relocated Gilbert Plastics from New Brunswick, New Jersey, to Evansville, Indiana, not long after its purchase.

Like many other takeover entrepreneurs in the 1980s, Jack Berry, Sr. was developing Berry Plastics so that it would provide an even greater profit when he decided to sell it. After seven years of ownership, during which time the company significantly increased both its assets and its product line, Berry determined that he was ready to sell his investment. In 1990 the assets of the company were acquired by an equity investment fund managed by First Atlantic Capital, Ltd. First Atlantic Capital, based in New York City, became the majority owner of the firm while, at the same time, management at Berry Plastics had put up their own money and retained a significant share of equity participation in the firm.

Growth and Development during the 1990s

The combination of First Atlantic Capital and internal management at Berry Plastics proved to be a good match. First Atlantic was able to provide the necessary financial strength for the company to accelerate its growth, while Berry’s internal management was able to provide the organizational and administrative expertise to give the company direction. The first result of this partnership was the acquisition of the Mammoth Containers division of Genpack Corporation in 1992. Mammoth Containers was located in Iowa Falls, Iowa, and the facility was incorporated in Berry Plastics’ growing network of manufacturing plants. The purchase of Mammoth Containers added nearly $10 million in revenues to the company’s coffers.

Mammoth was just the first of the company’s acquisitions, however. After Mammoth Containers and its Iowa Falls facility had been integrated into the company’s manufacturing operations, management’s next step was to purchase Sterling Products, Inc., a Winchester, Virginia-based manufacturer of plastic promotional drinking cups. Over the years, Sterling Products had built a reputation for itself as one of the most innovative companies in the plastics industry, and, with the addition of its manufacturing facility in Winchester, management at Berry Plastics was well positioned to take advantage of this growing sector of the market. At approximately the same time, the company acquired all the assets and product line of Tri-Plas, Inc., one of the high-profile and leading manufacturers of polypropylene containers for the food industry. With headquarters and a large manufacturing plant in Charlotte, North Carolina, and an additional manufacturing facility situated in York, Pennsylvania, Berry Plastics was expanding its operations at a very fast pace. In a move to consolidate its manufacturing plants, management decided to close the Winchester location and merge its production line with the newer facility in Charlotte.

By this time Berry Plastics had established a highly sophisticated, state-of-the-art product development department which offered customers comprehensive project management to meet their specific requirements for containers. Design engineers and marketing specialists worked closely with customers from the project’s inception through product design to the initial production of the product. Initial concepts, design modifications, and tool drawings were prepared on a computer-aided design (CAD) system. An in-house model shop, using a thermoforming machine, produced prototypes for customers to examine. One of the reasons Berry Plastics began to garner such a good reputation for itself within the plastics industry was its ability to simulate the molding process by operating unit-cavity prototype molds in a relatively small press designed specifically to produce samples of new products at the customer’s request. Once the customer approved the product, management then built the production mold utilizing the most modern technology available.

Company Perspectives:

Berry Plastics Corporation prides itself on being a leader among injection molding companies. This leadership position will be maintained in the future because of the skills, dedication and creativity of Berry’s employees and the modern equipment utilized in every area of the company. Berry is dedicated to offering quality products and service to a wide range of customers and to working hard to ensure its, and its customers’, future growth and success.

In 1996 and 1997, Berry Plastics made three important acquisitions. The first acquisition involved the purchase of PackerWare Corporation located in Lawrence, Kansas, in late December of 1996. PackerWare was well known in the plastics industry for its manufacture of plastic containers, drinking cups, housewares and lawn and garden products. Bought at a bargain price of just over $26 million, the company’s net sales for fiscal 1996 amounted to approximately $44 million, almost a third of Berry Plastics’ total sales for the same year. Management at Berry Plastics regarded the acquisition as enabling the company to improve its position in the injection-molded drinking cup and plastic container markets. The completion of the transaction also allowed Berry Plastics to enter a highly lucrative and growing market, the housewares and lawn and garden products market. PackerWare had garnered a large amount of its revenues during the 1990s from major retail chains operating in this market, including such companies as Custom Building Products and Wal-Mart. At the time of the purchase, PackerWare was developing a number of new products for applications that would be advantageous to Berry Plastics. Since PackerWare was a fully mature company, management at Berry Plastics decided to operate their purchase as a wholly owned subsidiary and maintain its location in Lawrence, Kansas, where production and labor costs were low.

During the same year, Berry Plastics acquired all the assets of Container Industries, Inc., a niche manufacturer of injection-molded industrial and pry-off plastic containers for building products and other industrial products and markets. Situated in Pacoima, California, Container Industries reported net sales of $3.5 million for 1996 and, although quite small, Berry Plastics regarded the acquisition as a major development in its quest to become a leader in the pry-off container market. While the company was committed to maintaining a warehouse and distribution facility in Pacoima in order to provide its California customers with good service, the manufacturing facilities and molding equipment were relocated to Henderson, Nevada.

One of the company’s most significant purchases occurred in May of 1997 when Virginia Design Packaging Corporation was acquired. Located in Suffolk, Virginia, with net sales of $15 million for fiscal 1996, Virginia Design Packaging was a growing firm within the injection-molded containers market. Most of its products were used by the food packaging industry, and its purchase immediately enhanced Berry Plastics’ position in the market. As a consequence of these three acquisitions, the company’s net sales jumped to approximately $158 million for fiscal 1996.

In 1996, the company’s manufacturing facility in Iowa Falls, Iowa, was awarded an ISO 9002 certification. The ISO certification is an internationally recognized quality accreditation awarded by National Quality Assurance, USA, of Boxborough, Massachusetts. National Quality Assurance is an internationally recognized registrar for the International Organization for Standardization (ISO). The ISO certification is extremely important within the plastics industry, since it represents one of the most prestigious manufacturing awards for quality control and production consistency. The company’s Iowa Falls plant was the third facility to receive the ISO certification. Previously both the plant in Henderson, Nevada, and the plant in Evansville, Indiana, were awarded the certification.

Currently, Berry Plastics has one of the most comprehensive product lines of any company in the plastics industry. The company manufactures dairy containers ranging in size from six ounces to 85 ounces, a complete line of polypropylene containers that allow reheating in microwave units, high density polyethylene thinwall containers where lightweight, durable containers are needed, child-resistant containers that are tested by the U.S. Child Safety Commission, industrial and pry-off containers for such products as paint or glue that require a heavier wall thickness, aerosol overcaps, drinking cups for the fountain and fast food restaurant market, and custom-molded products designed specifically to meet the needs of customers throughout the United States.

Even after integrating Sterling Products, Tri-Plas, Container Industries, PackerWare Corporation and their product lines into the operations at Berry Plastics, management at the firm continues to search for promising acquisitions. As the founders of plastics companies that began business in the heyday of the 1960s either pass away or retire and sell their firms, opportunities for mergers and acquisitions will remain high within the industry. Berry Plastics does not anticipate much difficulty in finding companies to help expand its market share.