We are surrounded by brand images. Coca-Cola, Nike and Shell are all strong brands backed by corporate names that we are all familiar with. This case study shows how one of the world’s major consumer packaging companies, Rexam, is seeking to build its brand.
To survive and prosper most large businesses have to develop a strong global presence. As a result, many of the world’s major businesses are merging or forming strategic alliances enabling them to cover the globe. This case study outlines how one of the world’s leading consumer packaging companies is following a single brand strategy in order to consolidate its position as a global force.
Following the takeover of American National Can (ANC), Rexam has become the world’s leading beverage can maker. It is also the fifth largest consumer packaging company in the world making a wide range of products from lipstick cases to margarine tubs.
Rexam’s ambition is to be one of the strongest names and a leader in consumer packaging world wide. In this type of business size does matter. Rexam’s customers are joining forces and getting bigger and stronger. Suppliers are acting in the same way. As Rexam’s customers become increasingly global, they want their suppliers to support them in their new markets. It is more effective to build on an existing relationship with a tried and trusted supplier than to start afresh each time.
Reasons for change
Rexam is a relatively new business having emerged from a number of existing companies trading under different names. These produced a variety of products ranging from diesel engines to make-up cases. This breadth was typical of many large companies in the late 1980s in an era when business thought that there were benefits to be gained from diversification.
Today, in the global market place, there is more emphasis on concentrating on a much narrower range of best lines (products) and driving up competitive advantage in these lines. Now that Rexam has come together as one easily definable entity it must increasingly think, act and look like one company.
The ongoing emphasis, therefore, is on strengthening the Rexam name and culture. This is based upon a worldwide identity and a common understanding of the company’s values and beliefs.
All businesses need a vision - a clear direction which drives their activities. Today, the Chief Executive of Rexam has defined the company’s vision as being to 'transform Rexam into the world’s leading consumer packaging group in its chosen sectors'.
An organisation’s strategy is the means by which it achieves its vision. It is a long term plan for the organisation which involves an outline of the products and markets it will compete in. The takeover of the American National Can Group Inc (ANC) is just one example of the way in which Rexam is putting its strategy into practice. At the time of the takeover ANC was the world’s second largest beverage can maker.
Demand for consumer packaging is relatively stable. People need to eat and drink in both good times and bad. As a result demand does not experience the cyclical growth of many other products. Consumer packaging has experienced steady increases in demand over the long term. It provides a good example of a successful old economy product.
It has been logical for Rexam to develop a global presence. Rexam’s customers have grown in size, for example spreading from being European to global businesses. It has therefore made sense to grow with them. A global purchaser of packaging will find it easier to deal with the same supplier worldwide. Standards, specifications and commercial contracts can be coherent but supply can still take place in the local markets.
Rexam is particularly well placed in the global packaging market because of its unique product range. Rexam operates in four market segments in the packaging industry. These are:
- Beauty packaging e.g. pump mechanisms and lipstick cases for cosmetic companies
- Healthcare packaging e.g. sterile wrapping for medical goods
- Beverage packaging e.g. metal, glass and plastic containers for the beer and soft drinks industry
- Food packaging e.g. ice-cream cartons.
There are clear synergy benefits from operating in these major market segments. Marketing to a number of key customers who will want to purchase all of these types of packaging is a typical example of this synergy.
In order to build up a strong global presence in these key packaging areas, Rexam has been following a policy of divesting its non-core packaging businesses. The cash received from these sales has been re-invested in new core businesses. Importantly, Rexam has also placed emphasis on buying into value added packaging businesses rather than focusing on bulk products.
Building the single-brand strategy
In understanding Rexam’s strategy it is important to realise that a relatively small number of global clients make up the majority of their product sales. Approximately 50- 60 major customers account for over 80% of sales. Clients include Avon, Chanel, L’Oreal, Heineken, Unilever, Procter & Gamble, Holsten, Coca-Cola, Carlsberg, Allegiance and Pepsi.
The emphasis today is on the building of a strong international Rexam premium brand. There is particular need to communicate this internally and externally. Since the start of 2000, a detailed communications exercise has been undertaken to create a single-brand strategy.
Many existing brand and company names have been replaced by the strong and unifying Rexam name. Thus, a purchaser of packaging with operating units throughout the world can deal with a single packaging supplier – Rexam.
Transforming Rexam from within
In order to ensure the smooth transition to the single-brand strategy Rexam has had to transform its own organisation from within. The starting point was to create and implement a common global Rexam identity in what was a disparate group of companies across the world. By rallying under a common identity the Rexam group would not only look like one company but start to act like one.
A number of managers representing the various Sectors within Rexam were given the responsibility of ensuring that the process ran smoothly. These so-called 'champions' were charged with making sure that there was an understanding of the single-brand strategy and of the benefits it would bring to the Group. The emphasis was on getting people to want to be part of a company and a brand called Rexam.
The single brand strategy was given extra impetus following the acquisition of ANC in July 2000. As part of the integration process it was soon decided to rename all the ANC plants in Europe and the USA by the end of that year. Realising the importance of good communications, Rexam created a comprehensive name change programme involving champions from each ANC plant. The programme was created in a range of languages so that every employee within ANC and the rest of the Rexam Group was aware of what, when and how the changes would take place. Thus, whether the change was implemented in a plant in the United States, France, China or Brazil everyone would be able to understand the process and could feel part of it.
Managing the change involved creating a clear timetable for introducing the name change. As a result, the process was able to be completed within a few months of the acquisition. The physical name change at each of the operating plants took place over a weekend, covering everything from products, business cards and company logos to notice boards and letterheads. By ensuring that everyone knew why and when it was happening, a feeling of inclusion was created and the response to the name change was overwhelmingly positive.
The next task in building the Rexam brand is to add substance to the common graphic framework to create a common global corporate culture. A common graphic profile and a common way of behaving will create a strong Rexam brand. However, the emphasis is not on imposing a new culture from outside but rather on building from within, using the best aspects of existing organisational cultures. This would then create a new integrated culture based on the Rexam brand. The focus is on involving all employees in the process of change using the slogan 'we can make it' as part of the training and development programme for employees.
The merger with ANC provided the opportunity for Rexam to rise to the challenge of creating an integrated company with an integrated single brand strategy. Rexam has sought to create a vibrant brand which everyone within the company can relate to and which is perceived positively by people outside the company.
This has involved a constant communication of Rexam’s vision and values in a series of exercises involving videos and presentations. Rexam has used a cascade process to spread the message from Chief Executive down through the management team to supervisors and to grassroots employees.
'In today’s world of change and uncertainty, building and sustaining a brand, a distinctive identity that differentiates a relevant, credible and, not least, enduring promise of value, is perhaps one of the most powerful sources of competitive advantage,' states Per Erlandsson, Rexam’s Director of Corporate Communications.
'Successful brands help attract and keep customers and employees. They provide a strong platform to launch products and improve relationships with customers and suppliers. They also help boost investor confidence.'