WALKER — After several years of stagnating sales in its core business, one West Michigan company is diversifying into the packaging industry with a new expansion project.
Originally formed as a commercial printer and specialty label maker, Foremost Graphics Group LLC entered the packaging sector two years ago when it acquired a product line from Cedar Springs-based Display Pack Inc.
Since then, Foremost Graphics has developed its growth strategy around the folding-carton packaging industry, which encompasses paper-based packages used primarily for consumer items, everything from boxes for lip balms or carriers for six-packs of beer.
While the Walker-based company continues to search for a building, it expects to invest more than $5 million in the project, which will exclusively house its growing packaging business segment.
Executives at Foremost Graphics believe the company’s bet on the packaging industry will pay off in the future, particularly as more brands use multiple packages to sell the same product, said President Paul Kelly. That will require suppliers like Foremost Graphics to remain nimble.
“New proliferation (of products) in the packaging space is amazing if you look at where we were 10 years ago versus the number of products that are on the shelf now,” Kelly said. “That happens through everybody wanting to have their products look unique and different.”
For example, a package of M&Ms in the grocery line could have a character from a children’s movie enticing children to notice and urge their parents to purchase the items. Meanwhile, the same package of M&Ms could look far more conservative in the candy aisle.
Kelly said consumers got a sample of that new style of packaging strategy when Coca Cola unveiled cans with different first names on the labels.
“You’re starting to see marketing managers and the brand owners look at ways to differentiate their product and get them to pick their product over all the other products that are on that shelf,” Kelly said.
Those dynamics mean that packaging manufacturers such as Foremost Graphics will need to be more flexible going forward, accepting contracts for smaller volume runs of multiple designs.
Through its new expansion project, Foremost Graphics hopes to address that need and carve out its place as a flexible manufacturer of folding-carton packaging. As part of the project, the company plans to add a new packaging machine that will double its capacity and allow for faster changeovers, Kelly said.
“One of the things that has made us a special company over the years is that we’ve engineered a lot of solutions for customers, both in the commercial and the packaging space,” Kelly said. “Because we’re relatively small, we’re able to work with them to create unique solutions and do it relatively quickly, whereas sometimes a bigger boat is harder to turn. We can be pretty nimble in that space and that has boded well and has been very successful for us over the years.”
The folding-carton market is expected to reach $47 billion by 2020, up from approximately $38.5 billion in 2016, according to a report published by Sandler Research.
Industry experts predict the folding-carton market will grow in the coming years, driven by increased demand for food packaging, which is expected to encompass 27 percent of the market by 2020, according to the report.
For its part, Foremost Graphics generated annual sales of approximately $22 million in 2016 and forecasts revenues to remain flat through 2017 as it transitions its packaging business into the new facility. Once the move is complete, Kelly expects annual sales to grow between 5 percent and 10 percent per year as the company’s packaging business expands.
The company employs 95 people.
“The packaging market is a growing market in the U.S., whereas commercial printing is really more stagnant or shrinking when it comes to the impact of the internet,” said Jeff Christians, director of sales and marketing at Foremost Graphics. “All that impacts the marketing budget.”
Made In Michigan: Walker-based Foremost Graphics Group LLC plans to invest more than $5 million in an expansion project that company executives believe will boost sales of packaging for consumer goods. Foremost Graphics generated approximately $22 million in annual sales in 2016. It expects sales to remain flat through 2017 as it focuses on completing the expansion. Foremost Graphics employs 95 workers throughout its operations.