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September, 2008

and the Future of Tobacco Packaging

By Evan Deshevsky

A conversation with Phil Smith of CM Packaging.

The Dutch-based CM Packaging has been behind some of the most recent innovative packaging trends. They’re the go-to company for tobacco companies looking to make a visual point-of-purchase impact for everything from cigarillos to snus. With years of experience in metal packaging, the company expanded their scope with the takeover of D&F Plastics in 2007, giving the company the means to a world of new possibilities with packaging incorporating both plastics and tins. We sat down with CM Commercial Director, Phil Smith, at this year’s EuroTab exhibition in Warsaw to talk about the future of the tobacco packaging market.

TI: Tell us a little about the new plant you’re building.

Smith: We’re a building a new factory now which will be ready in the spring of 2009. Not far from our old factory in the middle of Holland, the new factory will be state-of-the-art specification where we can make a separation between food and non-food products. The total area will be approximately 15,000 square meters. We will not only separate food and non-food but also plastics and metal manufactured in the factory. Apart from moving our existing lines over - we have fully automatic production in our existing factory - we’re also investing in new lines for welded cans, which will put us in a position to supply shaped cans for syrup, coffee, and confectionary products.

TI: Do the shaped cans have a tobacco application?

Smith: Certainly. They’re short enough to pack, let’s say, 50 cigarettes - and you can seam easy-opening ends on so you have an air-integrity seal. Apart from the round cans, we’ve now got two automatic cigarillo-tin lines and we’re investing in a third one as well as more flexible lines to produce different shapes and sizes because the trend is, within the cigar market, to smaller cigars - and we’re going to be producing, in the first instance, tins for five cigars on the new line. There will also be further investment in the plastics production side of the factory. We took over a plastics factory at the back end of 2007 and we now have 16 injection molding machines in the old factory. That number will increase to 18 to cope with the extra demand that we’ve got coming in at the moment.

CM commercial director Phil Smith (left) alongside sales rep Olaf van Kuik at this year's EUROTAB Exhibition in Warsaw.

TI: What new innovations do you have with plastics?

Smith: Well, we took over the plastics factory so we could combine plastics and metal. For example, we produce tins with dual possibilities. We have excellent print quality on tin plate because we offset-print the metal sheets just like you print on paper. Most designs are made up of four colors but often you need two house colors, so four plus two covers most eventualities. This produces brilliant decoration on tin plate, plus the functionality of plastic to facilitate easy opening by customers, display features - that sort of thing. The beauty of two materials.

TI: When a new customer comes to you, how does the process work?

Smith: It varies. Sometimes customers have their own ideas, either from their advertising agencies or in-house design departments, so you’re very much asked to do something where the idea is fixed. And sometimes it works the other way around. We’re very much a proactive company, so we try to show customers concepts of how we think their product can be packed in a different way. And we know that they will probably change it a little bit, but it’s just a question of giving people ideas. We like to cover all ends of the market.

TI: How much of your business is for companies who need packaging for a continuing line versus a special offering?

Smith: We offer a complete service. The customer basically just has to put his product in the packaging supplied. If customers are not in the position to fill a certain type of one-off tin or one-off pack in their own lines, we can arrange something for them in our own factory or at partner factories in Holland.

TI: Does CM do the printing for packages as well, or do you outsource?

Smith: We have our own printers. Not in-house - we have printers in Holland, Switzerland, and Germany who have worked together with us for years, and who have their own studios and print. It’s a different science and one you need to master completely to be successful in this business.

TI: What percentage of your business is tobacco-related?

Smith: Tobacco is probably 25% and tea and coffee are another 15%. Drinks, for example, syrup in cans, make up another 15%. Many other products make up the rest of the mix. We’re very much into niche markets. We’re into making packs which are special to customers, even though the quantities are considerable - millions and millions of packs - they are still regarded as niche products.

TI: What percentage of your tobacco business is cigarettes vs. cigarillos vs. cigars?

Smith: Our main tobacco business is cigarillos, and it’s probably about 15–20% of our overall turnover.

TI: What trends do you see for tobacco packaging?

Smith: I think the big trend in cigars is to smaller cigars and smaller packages for small cigars because cigarillos are taking over from cigarettes in a big way. You can’t smoke indoors very much. You can go outside to smoke, so it’s just getting a nicotine rush as quickly as possible - things are getting away from the old idea of enjoying a cigar. You enjoy a cigarillo, but it’s done in a hurry. The newest development in the tobacco market, one which is really growing very fast, of course, is snus. If it ever becomes available in the EU market, it will be enormous. We are already supplying new packs for this market.

TI: Have you heard anything so far about snus becoming legal?

Smith: Not yet. But I know there is a lot of lobbying ongoing at European Parliament level.

TI: So if you were a betting man?

Smith: I would say within five years you will see it on the European market. For more information, go to www.cmpackaging.nl.

Tobacco International - September, 2008

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