- February 7, 2014
Company. PPi Technologies Group Industry. Manufacturing, food and beverage Key. Firm seeks sales growth in pouch contract manufacturing.
For Charles Murray, the future of packaging comes in a pouch.
Murray should know: His firm, Sarasota-based PPi Technologies Group, is behind pouches that hold everything from Hershey's Kisses to spring water and craft beer to laundry detergent — not to mention Spam, chocolate milk and tequila shots. PPi, with a global client list, operates one division that sells machines for other food and beverage firms to put stuff in pouches. The firm also makes its own products in pouches, focusing on alcohol and spirits, under its Redi-2-DrinQ line and ShotPak brand.
“If it's in a bottle,” Murray likes to say, “we can put it in a pouch.”
Founded in 1997, the manufacturer, with 48 employees, has done well on its pouch mission. It had about $47.5 million in sales in 2014, a 25% increase over $38 million in 2013, and is up more than 135% since logging $20 million in sales in 2011. But Murray says the next five years have so much potential that sales could double, and even go past that.
Murray's confidence in PPi becoming a $100 million company by 2020 is even more remarkable considering the firm is in the early stages of a major strategy shift. About 90% of its revenues currently come from selling stand-up pouch and zipper machinery worldwide to clients that include Nestle and Keebler. PPi has manufacturing joint ventures with firms in Germany, Japan, Switzerland and South Korea, and about 1,500 of the company's machines are currently in the marketplace. The intricate and high-tech equipment costs from $50,000 to $1 million.
But Murray thinks the machinery business has a ceiling, and PPi is right under it. So he recently launched a third division, Redi-2-PaQ. Also called Penta 5, this latest unit is designed around becoming a contract packaging manufacturing operation for five distinct lines: spirits, wine, water, industrial, including food and nutrition, and pharma, which Murray says includes health care products, such as anti-bacterial formulas. “The foundation of our business won't change,” Murray says, “but Penta 5 will be the crown.”
Chasing the crown is an expensive undertaking.
For one, PPi Technologies moved into a new headquarters last year — a facility that takes the firm from 20,000 square feet to 100,000 square feet. The project includes $4 million for the building; at least $1.5 million for renovations, build-out and other changes geared toward Redi-2-PaQ; and $2 million in machines and equipment. When fully operational, the plant will be able to produce 1 billion pouches a year.
“We are one of a kind,” says Murray. “This is unique in the industry. Some have one of the five lines we have, some even have two. But no one has all five.”
Now PPi, which stands for Pouch Pac Innovations, has to find clients that will hire it to manufacture items in pouches. It has a global sales force of at least a dozen people, who target clients everywhere from India and Brazil to 14 countries in Africa. The firm, says Murray, also hears from five or six people a week who seek PPi's assistance on some type of pouch-packaging project.
Company to watch
Good timing might boost PPi's shift: The pouch is one of the fastest-growing segments in the packaging industry. In the United States, for example, demand for stand-up pouches is forecast to increase 3.6% a year through 2017 to $8.2 billion, data from market research firm Freedonia Group show. In addition, pouches now account for an 18% market share, or around $30 billion, of the $145 billion packaging market.
Joyce Routson, editor of industry newsletter Packaging Strategies, says new uses for pouches will drive the demand. That includes pet food, baby food, snacks and ready-to-eat meals, most of which are PPi targets. Another strong sign for the industry, according to a PCI Films Consulting report, is private equity money has returned in the last few years.
The sell proposition, say industry supporters, is simple: Pouches weigh less and take up less room than cans or bottles. That leads to efficient and environmentally friendly shipping because more stuff fits into pallets and containers. The use of pouches also eliminates the need for plastic cups to hold drinks.
The world outside packaging has noticed what Murray and PPi are doing. Statewide economic development program GrowFL named PPi one of 50 Florida Companies to Watch last year. Also, Murray was an Ernst & Young Entrepreneur of the Year in distribution and manufacturing in 2013, and Business Leader magazine named him an executive of the year in 2012.
“He's incredibly passionate and very forward-thinking,” says Sarasota tech entrepreneur Michelle Moulin, who shares a patent with Murray in Near Field Communications, an advanced version of QR codes for packaging. “I think he's a phenomenal leader.”
A native of South Africa who first moved to the United States in 1979 to attend Michigan State University, Murray and some business partners got into flexible packaging in the early 1990s. Murray and his son, Stuart Murray, now president at PPi, believed the alcohol and beverage industries were especially ripe for a pouch transfusion. Nearly every beverage company uses aluminum or glass packaging.
But getting into the entrenched beverage industry with a pouch, even with the benefits, was difficult. So in 1997 the Murrays set out to prove the virtues of pouches with the official launch of PPi. The first step, which took several years of research and development, was to create a pouch that didn't alter the taste or texture of the liquid.
Murray didn't necessarily want to get into the beverage business, but he says “we had to do it to educate the industry.”
The result of that teachable moment is ShotPak and Redi-2-DrinQ, made under patented technology. ShotPak is distributed in 12 states, and Walgreens is currently testing the pouches and another line, STR8UP spirits, in its Florida stores. Publix, Walmart and Costco are also considering carrying Redi-2-DrinQ, say PPi officials.
Murray recognizes there are skeptics who think pouches, be it tequila shots or water, will never be more than hyper-niche. But again he hopes timing, in shifting consumers' habits, is on his side. “The 40 million American kids who grew up on Capri Sun are becoming adults,” says Murray. “And they aren't afraid of a pouch.”
That fearlessness pushed Murray to expand and shift PPi's strategy. On a recent tour of the cavernous facility, Murray shows a visitor where the firm will handle the projected work. He also worries that if things go like he plans, the size might not be enough. “I'm horrified,” says Murray. “We've only been here a year and it's already starting to fill up.”
Like many business owners, Charles Murray, with PPi Technologies Group, is frustrated by federal health care reform.
Murray, for instance, says he will not let his payroll surpass 50 full-time employees, given companies with 50 or more people must provide health insurance for every employee. But Murray turned the frustration into an advantage. “It makes you work smarter,” he says.
For Sarasota-based PPi, in the pouch manufacturing and machinery industry, that means outsourcing. Accounting, legal and human resources tasks have moved from in-house to outside firms, and PPi also pays local carpenters to make cabinets and wood pallets.
Murray is especially pleased with the HR services provided by his bank, BB&T. Bankers there helped Murray finance a $7.5 million expansion project, but it's the HR work Murray says has saved him and other PPi executives considerable time, money and headaches. “I like a bank that understands your business,” Murray says. “Having a bank that just gives you money won't help you grow.”
PPi Technologies Group is in an industry, manufacturing, not often associated with funky-cool places to work.
And while employees don't play Frisbee and walk around in flip-flops, the atmosphere at the 48-employee firm is relatively unique for manufacturing. “This makes coming to work not such a big burden,” says Charles Murray, CEO of Sarasota-based PPi. “I want you to come and work hard, but it's not all work.”
Perks at PPi include:
Employees get $50 and a party on their birthday;
Bonuses are available for employees who meet certain pre-determined health goals. Quitting smoking is good for $500. Losing weight and keeping it off is also good for $500. Running a 5K is worth $20.
A play area on the second-floor loft of the firm's new 100,000-square-foot facility includes pool tables, an air hockey table and a big-screen TV.
Employees get an iPhone 4 or iPhone 5. A big reason for that, says Murray, is so he can track employees down in the firm's new supersized facility.
A nine-hole mini golf course was built behind the company's new plant. PPi employees use the course, which cost about $30,000, during breaks and after work.