Today our countdown moves to Need Number 2 – “Customer Tenure or more specifically Contract length”

I rank this item as the second most important Supplier need a packaging customer should be aware of, because size matters enormously to manufacturers, especially when it comes to investment payback.

To explain why, consider this case study:

Recently OI sold 5 glass plant facilities to Visy for $733m. Annuals revenues for this business are circa $750m with an EBITDA of 16% and profit of $30m or just 4%. This means Visy are looking at a 24 year wait to recover their purchase investment.

The guarantee of long-term demand through lengthy supply agreements provides a vital assurance that the initial and future investment in the acquisition will not be in vain.

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