Coral Products – Britain’s only maker of CD cases and one of only two in Europe that produces red tag security DVD boxes – plans to acquire Interpak for £4.1 million in a strategic move to take the company into higher-margin food packaging, lowering the firm’s reliance on the media sector. Coral will utilise spare capacity at its manufacturing facilities in Merseyside.

“While the core media business is in decline, Coral certainly hasn’t seen the cliff-face drop in demand for CDs and DVDs predicted by some experts. It seems the older generation at least still likes to buy box sets and albums, rather than downloading music and films from the net,” says CEO Joe Grimmond. “We have a pretty solid core business in media packaging business, which is not going to grow, and will slowly degrade, but not as rapidly as once feared.”

It remains that Coral’s exposure to an industry in terminal decline with the advent of downloads and streaming is reflected in the finances of the company, which has been loss-making for the several years.

With the addition of Interpack, the transformation is immediate. It becomes profitable and may even pay a dividend this financial year, according to forecasts issued by the company’s broker Xcap. Even during the recession, the food packaging market has remained robust and continues to show signs of “good growth,” according to Xcap.

Interpack is purely a reseller of the plastic food containers, ice cream tubs and buckets, and reached maximum manufacturing capacity in Sweden and the Netherlands. The cost to Coral of retooling, creating a clean room and gaining the necessary food industry accreditation is minimal at around “a couple of hundred thousand pounds”, according to CEO Joe Grimmond.

Story filed 29.09.11