Marietta Corp.: From sauerkraut to serendipity

CORTLAND — Manny Siegle was a farmer in Marietta who grew cabbages. In the 1970s, his dream was to package sauerkraut in plastic packets for sale to consumers. Siegle bought a packaging machine, but soon discovered that the sauerkraut wouldn’t cooperate: strings of the cabbage inhibited the sealing process. Undeterred, he looked for another commercial application and saw potential in sample packaging for the hospitality industry. Siegle’s serendipitous experience spawned the guest-amenities industry in America.

Marietta was incorporated on Oct. 18, 1976, as the Marietta Packaging Co. Siegle’s lone packing machine has grown to 60 filling lines just at the two plants in Cortland. The original business — manufacturing the small, personal-care amenities found in hotels — has now expanded positioning Marietta as a major player in the contract-manufacturing and hotel-amenity market segments. Today, one-third of Marietta’s revenue comes from the original amenities business and two-thirds emanates from contract manufacturing of personal-care and household products.

From its start with six employees, one machine, and no orders, the company has grown to be an industry leader. 

“Marietta employs 1,100 permanent, full-time workers, and currently we have hired another 300 seasonally,” says Donald W. Sturdivant, CEO of Marietta. “In Cortland, we employ about 650 to 700 [permanent employees]. Our revenue is almost $300 million [annually], and the company owns or leases about 2 million square feet of space in five locations. 

In Cortland, we have two buildings with more than 600,000 square feet where we manufacture everything except bar soap. Chicago produces mostly household products; Vernon (20 miles east of Los Angeles) focuses on personal-care items; and Olive Branch, Miss. ships 300 million bars of soap annually, of which 85 percent is for hotel amenities. The Munich, Germany location, which we opened three years ago, serves as a sales-and-service office focusing on global and independent-hospitality clients … Companywide, Marietta ships 1 billion units annually to 24 countries.” 

The official company name is Marietta Holding Corp., which is a “C-corp.,” incorporated in Delaware. 

The Cortland packager is owned by Ares Management, L.P., a publicly traded company (NYSE: ARES) with $74 billion of assets under management and 700 employees located in offices in the U.S., Europe, and Asia. Ares bought Marietta in 2004. According to the Ares website, “We seek compelling investments in leading companies that typically have not maximized their growth potential.” The stock is also owned by G.E. Capital and by the Marietta management team. Ares has the controlling interest.

Competition
Marietta’s growth has come despite fierce competition. “The guest-amenities business in North America is probably $500 million,” notes Sturdivant. “Our chief competitors are Guest Supply [a global provider to 25,000 hotels in 88 countries, owned by Sysco], Gilchrist & Soames, and Hunter [Amenities International]. In the area of contract manufacturing for personal-care and household liquids, which is a much larger market in North America at perhaps $2 billion, we compete with KIK [a custom-products manufacturer with more than 3,000 employees operating from 17 manufacturing facilities in North America], the Knowlton Development Corp., and a number of single-plant companies in North America.”

Despite substantial competition, Sturdivant attributes Marietta’s growth in part to following its marketing strategy. 

“We focus on the large CPG (consumer-packaged goods) companies, which have diverse needs across North America. With multiple locations spread throughout the country, we have a wide geographic capability and a breadth of manufacturing capability. In other words, we’re a one-stop shop … The company also has a competitive advantage with our access to [recognized] brands and a focus on mid-size and upscale hotels. That’s really our sweet spot,” Sturdivant says. “Then too, Marietta competes well because of the scale of our manufacturing and because we have a strong balance sheet. Our customers are increasingly interested in partnering with us on new ventures where both the customer and the manufacturer share a capital investment. They want us to have some skin in the game.”

Also critical to Marietta’s success is its emphasis on R&D. “Our customers are always demanding new products,” posits Marietta’s CEO. “That means innovation in our formulations and innovation in package development. The customers want us to come up with quick solutions. We’re … [geared] for speed, flexibility, and agility, unlike the big companies which prefer the safer route of letting smaller companies try something new and then reformulating the product or buying the company after the public has accepted the product. Marietta has 12 employees with backgrounds in chemical, mechanical, project, and quality engineering who are dedicated to R&D, and the company spends more than $1 million a year in this area.”

The industry is increasingly going green, and Marietta is responsive to the marketplace. “The majority of our hospitality competition makes tubes and bottles off-shore,” observes Sturdivant. “We are constantly working to reduce the amount of product used in the manufacturing process, and to date, the company has eliminated about 20 percent of the resin content in its packaging. Marietta, too, has a lighter carbon footprint than our off-shore competitors, because our shipping distances are shorter. And we are always trying to find environmentally friendly raw materials to use in the manufacturing process. The Cortland facility is currently running seven, extrusion, blow-molding lines with our partner ALPLA.” 

ALPLA is a packaging-systems company headquartered in Austria, which employs 15,300 in 152 plants located in 40 countries. ALPLA generated $4.2 billion in revenue last year. The company sets up and operates special packaging lines located inside the manufacturer’s facility.

Growth
Marietta’s current sales performance is attributable to organic growth. The company has made just three acquisitions in its 37-year history. In 1989, it bought the American Soap Co. in Mississippi; in 1990, it acquired the Hospitality Amenities Group in Canada; and in 2005, it acquired PAC/Cynus, adding significant manufacturing assets in California and Illinois. Sturdivant says that he and his team have come close on three or four deals, but none materialized. He spends between 5 percent and 10 percent of his time looking for acquisitions that fit Marietta’s target profile.

Staying focused on the company’s marketing strategy and R&D efforts is important to Marietta’s growth. So is the Marietta leadership team. In addition to Sturdivant, Perry Morgan is the CFO; Beth Corl is the senior vice president of human resources; Chris Calhoun is the senior vice president of quality and regulatory affairs; David Hempson is the senior vice president of business development; and Ray Ferretti is the vice president for sales and marketing, global accounts.

“The leadership team drives the company,” affirms Sturdivant, “but our success is ultimately based on our employees. We strive to make this a great place to work. It’s not just that we pay competitive wages and benefits; it’s also the friendly work climate. A large number of those who leave the area and return come right back here to work. We spend a lot of time and money training our people not just during their ‘on-boarding,’ but also on subjects such as safety, the environment, and company policies after their initial training. It’s important enough to us that we have trainers on staff and a software program called ‘ComplianceWire’ that tracks each employee’s progress, including mine.”

Sturdivant, 53, joined Marietta as CEO in February 2009. Prior to that, he was the COO at Altivity Packaging Corp., a company with sales of $2.3 billion and more than 8,000 employees, and the COO of Graphic Packaging International, a company with sales of $2.2 billion and 8,000 employees. He earned his bachelor’s degree from the University of Maine and an M.B.A. from the Florida Institute of Technology. Sturdivant was an officer in the U.S. Army, serving in the chemical corps. He resides in Chicago with his wife Nicki. The couple has six children.

Our thanks to the Chinese who 2,000 years ago created sauerkraut, and to Manny Siegle’s packaging machine which couldn’t seal the cabbage product. The outcome was truly serendipitous and fortunate: a new industry and the Marietta Corp., which is poised for further growth.        

Contact Poltenson at npoltenson@cnybj.com