Alexander Baumgartner image interview

Polysack Flexible Packaging- a green-tech company and manufacturer of flexible film products- has appointed Alex Baumgartner, former CEO of Constantia Flexibles, as their new Chairman of the Board. Baumgartner has spent over 25 years working in the industry in areas such as folding cartons, corrugated, rigid and flexible packaging. Melina Spanoudi spoke to him about the changes and developments in the flexible packaging market, and his vision for taking Polysack into the future.

To start off, could you tell our readers a bit about your perspective on the state of the global flexible packaging market today?

First of all, let me maybe start with why we even need packaging, because many, many times we keep forgetting about it, because we take it for granted. The first function of packaging is protecting the goods that are filled in the packaging. So, without packaging, we would not be able to live the modern life we’re living now, where you go shopping in the grocery store, put the product into the fridge or into your cabinet, and use it whenever you feel like it. That the product stays crisp and fresh for a very long period - from the farmer to the distribution centre, to the grocery store, to your fridge - is mainly due to packaging. So, this is one element. The second element, which is very, very key, is information. We have a lot of people today who have allergies, who maybe for religious reasons, or for whatever beliefs, they do eat certain things and do not eat other things. So, packaging helps them as a guidance, because you see the ingredients, it gives you information, it tells you the best-before date, so simple things like that. It helps guide you - the individual - through life. And here, flexible packaging obviously has a role, because it’s very lightweight compared to any other packaging, it has great barrier properties because of plastic, since plastic has barriers, which are definitely superior to paper or any fibre-based product, for example, or other, and it can be transparent so you see through, you don’t only see the printing outside, but you also see the product itself, and you can still print it. So, [it is] cool also for a marketing person to upgrade the aesthetics by printing it. So, that’s kind of its role. And, I think, generally speaking, it is lightweight, and also once the packaging has fulfilled its role and it’s thrown away, it stays lightweight.

So, I strongly believe that flexible packaging has a bright future, generally speaking, because of its functionalities, and the weight perspective. The new element, which has come into play recently - even prior to the pandemic- is that we have an ambition. The brand owners, the consumers, the younger generation, and we, the older generation, the leaders of companies in organizations, have a responsibility that we don’t want to trash and landfill products as much as we did in the past, but we want to create products which can be reused, and which can be used again and again, and therefore reduce the waste overall. And, here, flexible packaging plays [a role] - others as well: fibre is very easy to reuse, just like paper cardboard, and it’s easy, it’s a known technology since many, many years, and [has been] working well; it is new in the plastic space. And this is where Polysack has added something to the equation developing a recyclable film monomaterial, which is one material and therefore recyclable. It has good properties-has good barrier properties-[and] is easy to convert through printing machines. Polysack has built something unique in this space, which differentiates it in terms of premium and the quality of its product compared to others.

I would like to hear about your vision looking to the future of the global flexible packaging market, and where you want to take Polysack in next few years.

Today, there is already a huge market out there, and it’s a double-digit billion-dollar market, which today is mainly served by multi-layer, multi-resin solutions. All these multi-layer, multi-resin solutions, to get the barrier properties and the specification needed are, by definition, non-recyclable. So, these are the products, the solutions, the packaging, which will be replaced over time. Now, we have three layers of decision-making, if you want: you have the authorities - the legislation - you have the retailers, and you have the brand owners. Over 10 years ago the legislators- in Europe, California, even to some extent in India- they started pushing recycling content, pushing the recyclability of packaging in their regulation, but they have slowed down a little bit. The pandemic has shifted around the priorities of all our governments - that’s just a fact. Among the other layers, the brand owners and the retailers have given themselves the target [that] in five, eight, ten years, they want on their shelves and in their brands to have up to 100% of their products [be] recyclable. And here is where the whole industry will need to shift, and it will shift. It’s probably an open secret that most of these targets the brand owners have set themselves will probably [be] missed. Rather than getting to 80% by 2025, it will be 2027, but at the end of the day, that does not make a difference; it’s the direction which is relevant, and the direction is set.

Everybody, every brand owner, every retailer today is working on alternative packaging solutions which are recyclable, and here Polysack can play a role. Polysack is a niche player in this respect, but we see ourselves as a premium offering in that space. There are other players out there who offer mono-PE solutions with bigger capacities, bigger output, but lower performance. So, as in many markets in the world, there is space for those who are maybe on the more average or lower performance side; I’m sure the market will be big enough, and there’s room enough for those people as well. We, as a small, dynamic, very R&D and innovation-oriented company, see our positioning more in the niche market, but we are also serving the global market. We are an Israeli company today, but we already sell 80-plus percent of our revenue into Europe, and we also see at some point the U.S. being our target market. It’s not for tomorrow morning, but this is in our vision. Our vision is that we want to become the leading player of the premium, mono-PE packaging. The technology, the solutions, the products that have been developed in Israel so far, and are in the pipeline to be launched in the next 12-24 months (we have a couple of cool features for barrier products, which will be launched soon), will be aimed at the European market, then in the midterm at the US market.

What have been some of the key changes and development in the past few years that have led to this moment, where you see an acceleration of transformation in the industry? And, also, if we can look to the future a little bit, what changes do we still need to see to be able to make this change and transition even smoother and more efficient?

The key change that has happened is a strong push from the brand owners and the retailers; that’s probably what moves the needle the most, because suddenly, every meeting you have with the big brands is about: how can I make this sustainable? How can I make this recyclable? How can I add recycling content? Five years ago, you may have had these meetings, but they were specific meetings. Now, if you sit down with a procurement person, and any brand owner, it is a topic at every meeting. And that’s definitely a big change compared to the past. That’s the reality, which provided credibility, and helped the industry to invest resources, time, money, people into the topic, because we knew there was an opportunity. People are ready to change specifications to fulfil this target. Whereas before there might have been a little bit of greenwashing, today brand owners [are] challenging entire packaging solutions, and changing their DNA. Five years ago, this was not happening. Brand owners are addressing specifications in brands, which date back 50 years or so, that have never been changed. All of a sudden, they’re on the table, [and brand owners] say, ‘Tell me what we need to change in order to make it recyclable, in order to add recycling content, or all the above’. So, this is definitely a big change. And the industry has adapted, which is great because it’s an opportunity for the industry to gain market share; every player now sees an opportunity and says, ‘If I provide a solution, it might help me to get access to a market which I did not have access to yesterday, or gain market share in the market I’m already supplying’.

What are changes still need to happen? The loop needs to be closed. We have the brand owners using more recycling content and recyclable packaging, we have the retailers demanding it, but we also need the collecting and the sorting system to be set up to address what has been developed and changed in the supply chain in the recent past or will be in the near future. Only if this happens [will] the cycle be complete, and the resins, the product, the plastics, the packaging can be reused, and the cycle can be repeated. There are obviously countries, regions, and areas in the world where they are already more advanced. In the US, the obvious example is always California but also New York. So, the big urban areas. In Europe, it’s Germany, Switzerland, Austria – they have always been the frontrunners in this respect. What needs to happen in the future is now that the industry has provided the solution, the packaging needs to be also collected, recycled, grinded again, washed, treated, and then put back into the system. This is not happening to the extent the industry would love to see.

In terms of the next few months, what do you think like the immediate next steps will be in building the infrastructure for meaningful change in the industry to occur?

It’s a very good question, because the industry is working on different fronts. I told you before that we continue to develop products with increased barrier properties, with increased performance-which we’re launching in the next couple of months- that will be even better compared to the product we have already in the market. Over the next 11 months, we will see new products in the market, not only from us: I’m sure our competition’s not sleeping, either; they will put products into the market. Definitely, the other side I would love- and what we need to see happening- is what I just mentioned: collecting system improvements. We need to upgrade in the next 12 to 24 months in the most populated Western worlds. I don’t need it in the countryside in France or in the UK but let’s start with Birmingham, London, Manchester, Amsterdam, Paris - these big cities where you have a big amount of waste to collect and plastic waste to sort. That will be a big, big, big step. And there’s a lot you can do in 11 months.

Why has the industry been quite slow to embrace this transformation that we’re now seeing happen so rapidly? Are there specific reasons, and can you go a little bit into them?

Probably one of the reasons is, first of all, you only put the resources where you see the returns. As long as there’s not a big push as an industry leader, as a shareholder, you say, ‘What’s the point in investing money? Because everybody keeps talking about it, but nobody buys it from me.’

It’s a little bit different at Polysack, as since it was founded - the company is over 45 years old - the only thing it has ever done is PE film. The R&D and all the technical community we employ in the company in Israel have done nothing else other than producing PE film for many years.

Other, bigger competitors of ours had big lines of multi-layer, multi-resin, seven-layers and more. If you are a shareholder or a CEO of a company, and you just invested in four new lines worth several million euros or pounds, and now somebody shows up and says, ‘You know what, you need to shut them all down, because you need new lines, because we need to produce mono-material,’ you will say, ‘Wait a minute, I just spent a fortune, I cannot just throw away the past,’ and you will try to fade in the new technology. This is what happens in the industry in such a transformation.

For Polysack, it’s easier. First of all, we’re smaller, and second, all we have ever done is PE, so for us it’s not a change of mindset, it’s not a change of we need to do things differently. We’re just doing what we have always done for the past 45 years, but upgrading the performance, step by step by step.

The DNA of 99% of all the other companies is different, and they need to change the mindset. It’s easier said than done, ‘Oh, we need to change, we need to be open, yes, yes, yes’. Five minutes later you’ll keep doing what you did for the last 10 years. That’s a human reaction, that’s a human thing, and you only change if the pressure is big enough, or if the opportunity makes big enough economic sense. The latter reason is starting to be more and more apparent. Comparing Polysack with the rest of the world, this is why we have a little bit of an advantage because we did not need to change our DNA. It is our DNA.