Crown cork: Rebirth of a dead king

From Crown cap invention to John Connelly- Steve Jobs of 1950s

Birth of Crown cap

The Crown cork & Seal company was founded by William Painter in 1892 when he patented his invention which is ubiquitous even today- the crown cap. The cap could keep the carbonated drinks for longer ensuring they don’t lose their fizz. He designed a cork machine sealer which he sold to other companies which enabled them to seal more than 100 bottles a minute. The crown cap patent expired in 1920s and so did the competitive advantage of Crown cork & seal company. The company could not withstand the competition and was eventually sold to a competitor firm ran by Charles Marnus.

Struggling company and John Connelly’s arrival

Riding on economies of scale, the company was back on track and in 1930s was selling more than half of world’s crown bottle caps. But the company committed one unforgivable mistake- it expanded too fast too soon. It ventured into multiple businesses- right from plastics to bird cages. As a result, the operating margins fell drastically and the company was again left beeding.

John Connelly, a small scale supplier to Crown corks saw the company in limbo and acquired its shares for dirt cheap price. He joined the company as the president of its almost bankrupt company. The first few steps that Connell took- reduce the operational cost, laser focused portfolio and improve quality. He streamlined the product portfolio by limiting it to manufacturing things that the company was good at. The employee headcount was reduced wherever possible. These are few of the same steps that Steve Jobs took in his attempt to revive Apple in 1990s. But the Steve Jobs of 1950s took one step opposed to what we associate Steve Jobs of 90s with- Innovation. John Connelly closed the R&D department which was the centre of innovation. He focused on metal cans and bottle caps for two industries- beer and carbonated drinks. The main focus after World War 2 was on carbonated drinks because few of the Beer companies such as Anheuser- Busch had established captive in-house bottle cap manufacturing.

Changing Trends in 1990s

1. The share of glass bottles was reducing Y-o-Y and metal cans were becoming more prevalent. The glass cans could ensure the fizz in carbonated drinks for 4 months in comparison to 16 months when stored in a metal can. From 1960s-1980s most of the metal cans were made of steel but in 1990s there was a major shift towards Aluminium cans.
2. Primarily two types of cans were popular: 3 piece cans and 2 piece cans. 3 piece cans had a sealing in the across its body and were less costly while 2 piece cans were seamless with no sealing on its body. The trend shifted from 3 piece to 2 piece cans- where 80% of the cans manufactured in late 1990 were 2 piece cans.
3. The industry was going through a mass consolidation with a number of big players getting wiped from the packaging business. The competitive rivalry can be estimated by the fact that the top two market leaders of 1990s, American National Can company(25%) and Continental company(18%) do not even exist today.

Crown Corks today:

The company today holds 20% market share of the worldwide metal can market share. Most of its manufacturing plants are located in US, Europe or South East Asia. The company also has four manufacturing plants in India. It is currently fourth largest metal can manufacturing company in the world others at the top being: Ball corporation, Silgan and Ardagh.