Wednesday, July 08, 2020

BG Packaging plans expansion at home and abroad amid competition

May 20. 2019
Vorawat Buranakarn , managing director of BG Packaging Co Ltd (BGP)
Vorawat Buranakarn , managing director of BG Packaging Co Ltd (BGP)
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BG PACKAGING (BGP) has set a three-year expansion plan both in Thailand and abroad, including through mergers and acquisitions, managing director Vorawat Buranakarn told The Nation in an exclusive interview.

“The key ambition for our three-year business plan is to focus on covering upstream and downstream for both the paper and plastic businesses through joint ventures for kraft paper and plastic film, as well as downstream for food paper and plastic pouches,” said Vorawat.

He said BG Packaging Co Ltd (BGP) has plans for mergers and acquisitions in the near future. Potential businesses include kraft paper, corrugated box capacity expansion, plastic film for flexible packing and labels, and pouch expansion for flexible packing.

Vorawat said the key challenge faced by packaging business operators was new competitors entering the market due to the low investment required. The company’s strategies for the next three years would be to overcome this challenge and to ensure sustainable growth to become a one-stop service and to offer the full package of caps, bottles, labels and boxes at one time.

BGP manufactures and sells a variety of packaging products, including crown caps, plastic closures, PET bottles, crate containers and corrugated cartons.

He said another risk factor of concern to the company was the possible increase in the prices of raw material, both plastic and paper, due to the higher price of oil. BGP aims to tackle the cost problem through development of a “strategic partnership”.

“We will purchase raw materials continuously from particular suppliers in higher quantities. This will help us to reduce raw material prices in the third and fourth quarter of this year. In addition, we will be able to control the prices of plastic raw materials to be at an appropriate level to control the manufacturing cost. For paper raw materials, we need to see the direction of paper exports in many markets, especially recycled paper from China, as it will impact market prices of paper in Thailand,” said Vorawat.

He said BGP also is interested in expanding production of crate containers and corrugated cartons, which are currently supplied to beverage manufacturers. The company is looking to expand its packaging customers to those producing other goods such as foods and sauces, electronic products and parcels. That expansion is expected by next year.

“We expect to achieve Bt1.8 billion in total revenue this year, of which Bt800 million will be from paper boxes, Bt350 million from plastic bottles, Bt300 million from caps and Bt350 million from labels,” said Vorawat.

Then over the next three years, the company’s expansion plans target potential Asean markets, focusing on plastic caps, PET bottles and labels in CLMV countries (Cambodia, Laos, Myanmar and Vietnam).

“We have seen continuous growth of the domestic packaging markets both in Laos and the Philippines. In Laos, the demand for packaging products has increased significantly due to fewer packaging manufacturers, especially for plastic labels. In the Philippines, BGP has strong competitiveness, especially in pricing. By ensuring good quality and reasonable pricing, we believe our packaging business will grow in these markets,” said Vorawat.

The key driving factors for business growth are the high growth of the paper business in the food and e-commerce segments, as well as flexibility of the packaging business driven by high growth in the food and household segments.


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