The big interview: Smurfit Kappa's Saverio Mayer on plastics and ecommerce

Saverio Mayer’s business ethos is all about loyalty. Something that comes as no surprise considering the Italian executive has worked at global packaging giant Smurfit Kappa for the past three decades, promoted to CEO of its European arm two years ago. And with Europe accounting for 85% of the company’s total business it leaves Mayer so busy we can only find time to chat over the phone. “You cannot do this job if you want to sleep,” he tells me, only half-joking.

But it’s clear that despite a hectic schedule and 30 years under his belt, Mayer’s passion for the FTSE 100 company, which racked up €8.6bn in global revenue last year and is now in its ninth year of consecutive EBITDA growth, has not been eroded. He proudly reminds me that it’s “the packaging leader in Europe” and is keen to talk about how it’s helping brands cope with the escalating growth of e-commerce, which has helped to drive its own revenue skyward.

“E-commerce is growing at a very high rate. And whereas before consumers were happy to order a product online and wait days for it to arrive, now they want it the same afternoon or the following day at the latest. This is having a huge impact on the way fmcg brands package, store and transport their goods.

“Traditionally, they would produce products, deliver them to an intermediate warehouse and then on to retailers. Now, companies are confronted by different channels to distribute their products. It’s become more complex for large companies, and each channel requires different packaging.”

While online shopping might be a challenge, it’s also an opportunity for Smurfit Kappa, he believes. “We are finding ways to optimise the shipment of goods to approach this issue in a more structured way. We have developed a unique tool called eSmart, which analyses a business in 12 key areas to then improve the efficiency of each.”

These dozen areas fall under three main categories - the process of e-commerce, the supply chain and the consumer experience - analysing everything from a brand’s sales portfolio to planning for peak periods. One of the largest recipe box providers in the UK, Hello Fresh, is seeing annual savings of up to £50k after using the tool, Mayer says.

The eSmart system also looks at what he calls the “unpleasant unboxing experience” - in other words, rummaging through a cardboard box 10 times the size of the item ordered with twice the amount of necessary packaging.

“This is waste. This is what we are trying to avoid. We have a responsibility to respond to environmental challenges and it is our duty to lead this trend. This is why we launched the Better Planet Packaging initiative in September, to focus on how we can reduce the impact of packaging and single-use plastic.”

Plastic

It’s hard to talk about packaging without the subject of plastic arising. “The UK was one of the first countries to push the plastics debate recently, and now talk of the ocean and sustainability is an everyday occurrence.”

And Mayer says it’s Smurfit Kappa’s responsibility, as a producer of 10.8 billion square metres of corrugated packaging each year, to “lead the innovation”. That means “supporting customers to develop solutions, to help build tools for them to analyse solutions and drive these to market. This is a huge opportunity for us.”

The paper-based packaging company does still produce plastic packaging, which Mayer says “has uses that cannot be replaced”, but there has been a significant shift by clients towards plastic alternatives. “Retailers have announced their strategies for reducing the use of single-use plastic and large brands have followed suit. The reduction targets have been declared and now they need to deliver on their promises, and we have to as well.

Fruit

But how does Mayer see brands switching to these solutions? “There will be an evolution. The first phase will see companies going for the low-hanging fruit, the products that evidently can be converted to paper packaging, such as fruit. Then the focus will be on being proactive in developing new solutions. It could be a big part of our growth.”

What about Brexit? Even there Mayer’s optimism doesn’t falter, despite the company putting plans for a £50m British plant on hold. “The UK represents around 8% of our revenue. It has always been an important market for us and it will remain important.

“There is uncertainty. But we have invested £200m in the UK over the last five years, and we have seen market growth because of the capability of exporting with the devaluation of the currency in the UK.”

In other words, regardless of the outcome of the UK leaving the EU, it seems the only path Mayer can envisage for Smurfit Kappa is one of growth and opportunities. Loyal to a fault.