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Packaging company NNZ: Not a family business but a business that happens to be family-owned

Category:
Family business challenges

Date:
20 January 2017

Groningen-based packaging company NNZ has been successful for almost a century in the development and distribution of packaging for the agricultural and manufacturing industries. The company’s current CEO, Len Boot, is the third generation to run the company, and the First representative of the fourth  generation is currently waiting in the wings. How does NNZ manage to reinvent itself time and again – and what role does the family play in this process? ‘We don’t regard ourselves as a family business, but rather as a business that happens to be family-owned.’

Sure, Len Boot was willing to talk about NNZ as a family business, but only accompanied by his account manager Roos van Vugt, who is also his niece and the first fourthgeneration family member to be employed within the organisation. Established by Boot’s grandfather back in  1922, NNZ evolved from a glorified sewing shop which manufactured burlap sacks into a respected player in the packaging industry with a total of 22 sites across 18 countries and € 150 million in revenue.

“One bad summer or a failed harvest somewhere will have a dramatic effect on your own revenue. That’s why we have decided to spread the risks more internationally.”

Even today, NNZ remains one of the market leaders in the manufacture of burlap sacks in the Netherlands, as burlap continues to be viewed as a high-quality material in the packaging industry: durable, absorbent and highly breathable. However, the company’s product portfolio has expanded significantly over the decades; with the exception of meat packaging (which falls into a separate category on account of the stringent hygiene requirements), NNZ can supply virtually any type of packaging. Boot: ‘I would venture to say that you’ll find at least one NNZmanufactured packaging item in every household in the Netherlands.’

Although the company operated its own production facility for polyethylene plastic packaging for some time during the 1960s, it made the strategic decision at some point to exclusively develop and distribute packaging products. Boot, commenting on this decision: ‘When my brother and I joined our father’s business in the early 1990s, the members of our family asked ourselves the question: what do we really want to be? Aren’t we keeping our options too open? The problem is that, if you want to manufacture your products yourself, you need to keep investing in new equipment. Around the same time, we were seeing growing competition from Southern Europe and Asia, so it became more difficult to earn back these major investments. We eventually made the decision together to focus completely on developing innovative packaging materials. For the record, we have no regrets at all when it comes to our experiment with polyethylene, because it was thanks to this decision that we, as a traditional agricultural packaging supplier, gained access to industrial markets.’

“One area that I do want to be involved in is the recruitment process for key positions, since that has a direct impact on the organisation’s DNA.”

International expansion

In addition to the decision to focus on product development, the third generation of Boots made another decision, namely to expand internationally. Boot: ‘That’s another risk once you’ve made a name for yourself in the agricultural industry. One bad summer or a failed harvest somewhere will have a dramatic effect on your own revenue. That’s why we have decided to spread the risks more internationally. This has resulted in NNZ in its current incarnation, with a total of 22 sites across 18 countries.’ Each of these sites consists of an office plus warehouse space, and is essentially responsible for its own sales, warehousing and distribution, Boot explains. ‘We work on the basis of the “focus on local” principle, which means we always hire local people, since they understand the market there.

Only the support departments – product development, finance, IT and marketing – are based at the head office.’ It is thanks to this high level of independence that NNZ has not been hindered by traditional buy-and-build integration issues. ‘Nine out of ten companies we acquire are small family businesses operating in the industry where there is either no one to take over the company or a lack of the financial resources needed for further growth. Sometimes these businesses approach us, and sometimes we initiate contact. And I have to say things have always gone smoothly so far: there is a framework in place, but within that framework we attempt to manage the sites as independently as possible. One area that I do want to be involved in is the recruitment process for key positions, since that has a direct  impact on the organisation’s DNA. In that sense I would say that “structure follows culture.”’

When asked how NNZ manages to reinvent itself time and again, Boot glances over at his niece. Laughing, she answers that: ‘I think that sort of happens naturally, provided you make customer demand the central focus. I don’t try to sell people standard solutions from our own product range; I find out what the customer needs and then come up with a solution that best suits those needs – even if we end up having to develop something from scratch. In using this approach, we are forced to innovate on a continuous basis, and I can tell you there’s no better way to keep a company youthful and vital.’