Krones AG: The Hidden Champion Behind Every Bottle You've Ever Opened

I. Introduction & Episode Roadmap

Right now, somewhere in the world—maybe in Atlanta, Bavaria, Tokyo, or São Paulo—a Krones machine is filling, labeling, or packaging a bottle. Whether it's Coca-Cola, Heineken, Nestlé Waters, or your local craft brewery, the machinery humming behind that conveyor belt was almost certainly built by a family company from a small Bavarian town most consumers have never heard of.

Revenue in 2024 exceeded the five billion euro mark for the first time and increased by 12.1% year on year, from €4,720.7 million to €5,293.6 million. Consider that for a moment: a company generating over €5.3 billion annually, achieving more than 90% of its total turnover abroad and is represented worldwide through around 90 subsidiaries and shareholdings, yet remains virtually invisible to the average consumer. This is the paradox of the industrial "hidden champion"—a term coined by German management scholar Hermann Simon to describe export-oriented companies that dominate their global niches while remaining unknown outside professional circles.

Krones is the global market leader in its core business of filling and packaging technology. The main Krones shareholders are descendants of Hermann Kronseder, the company's founder. The shares are merged in a pooling agreement which regulates the joint exercise of voting rights of the members and their companies. Holding 51.9%, the Kronseder Family Consortium GbR is the stable majority shareholder of the Krones AG.

The Krones story poses several fascinating questions. How did a 100-square-meter workshop in post-war Germany become the world's dominant force in beverage packaging? What does it take to build a "Mittelstand" hidden champion that serves virtually every major beverage company globally? And perhaps most importantly for investors: why is PET recycling and sustainability the company's next massive opportunity—one that could fundamentally reshape both its competitive positioning and long-term economics?

What makes Krones particularly compelling right now is the company's pivot at a critical juncture. In 2024, Krones spent a total of €179.4 million on acquisitions. The majority of this related to the acquisition of Netstal Maschinen AG. This deal positioned Krones as the only player with a complete "closed-loop" PET solution—from raw material injection molding through filling and packaging to recycling. Combined with its new standalone recycling subsidiary, Krones is betting that the sustainable packaging revolution will be its next leg of growth.

This is a company that has survived world wars, economic crises, the collapse of glass-dominant packaging, the rise of PET plastic, the plastics backlash, and now positions itself as the solution to its own product's environmental challenges. Whether you're an investor evaluating German industrials, a student of family business governance, or simply curious about the invisible infrastructure behind modern consumption, Krones offers a masterclass in durable competitive advantages and generational thinking.

---

↑ Back to Top

II. The Post-War Origins & Hermann Kronseder's Vision (1951-1965)

Picture post-war Bavaria in 1951. Germany lies in ruins—quite literally. Just six years earlier, the nation's industrial capacity had been bombed into rubble; its currency was worthless; its young men were dead, wounded, or returning from prisoner-of-war camps with shattered nerves and uncertain futures. Yet within this devastation, something remarkable was stirring: the Wirtschaftswunder, Germany's economic miracle, was beginning to take shape.

Born the son of a blacksmith in the Upper Palatinate region of Germany, Kronseder trained as a mechanic and qualified as a master machinist and master electrician before founding his own company in 1951 at the age of 27. But the path to that founding moment was anything but straightforward. The son of a blacksmith served an apprenticeship in the late 1930s as an aircraft production mechanic at the Messerschmitt company in Regensburg after which he was drafted into the military and finished up in a prisoner-of-war camp. These grueling times reinforced his determination to learn more and be master of his own fate.

This biographical detail matters immensely for understanding Krones' DNA. Hermann Kronseder wasn't just an entrepreneur—he was a survivor. The crucible of war and captivity forged a particular kind of resilience: an obsession with self-reliance, a deep respect for craftsmanship, and an instinctive understanding that real security comes from creating indispensable value for others.

My father came from a blacksmithing family and so was introduced to the crafts at an early age. He was always tinkering and really enjoyed putting his ideas to paper. Which is exactly what was needed after the war: people who could turn smart ideas into hands-on reality. His exposure to labelling technology actually came indirectly, through my mother. My parents met in 1949. My mother was originally from Aufhausen, where a labelling machinery manufacturer had recently relocated its design department from Berlin, since the city had been destroyed during the war. It was through mutual connections that my father met his first business partner, a fellow who worked for that company and knew a thing or two about building labelling machines.

The romance is almost too perfect: love leading to business opportunity in the reconstruction years. Hermann Kronseder founds a small production facility for labellers in Neutraubling near Regensburg. Within just a few years, he succeeded in using technical innovations to become one of the leading providers of bottle labelling machines.

Built by Hermann Kronseder himself, a qualified master mechanic and electrician, the workshop measures about 100 m² and constitutes the production facility for the semi-automatic labellers. Hermann Kronseder starts to manufacture labellers. All the equipment the founding father needed was a lathe, a boring mill, a drilling machine, and a sanding block. This wasn't capital-intensive startup culture—this was pure human capital, applied technical genius channeled into metal and motion.

Why labeling machines for breweries? Word got around that Kronseder machines were good quality. Back then, Bavaria was already the region with the most breweries per square kilometre in Germany. This was the strategic insight: Bavaria's brewing tradition created a dense network of potential customers within driving distance. In an era before the internet or even reliable telephone networks, geographical density mattered enormously. Kronseder could demonstrate his machines, service them personally, and build reputation through word-of-mouth—all within a day's travel.

A brochure is created for the very first machine. The logo, a "K" with a gearwheel section, and an easy-to-remember company name (an abbreviation of the family name "Kronseder") are designed to catch the customer's eye immediately. 3,000 breweries receive the first brochure from "Krones". A logo, the company name of Krones and the brewery address book form the basis for account acquisition. From the very beginning, Kronseder understood something many engineers miss: marketing matters. Technical excellence means nothing if customers don't know you exist.

The breakthrough came in 1956 with what might be called Krones' "iPhone moment"—a product so superior to existing alternatives that it redefined customer expectations. The Super labels up to 4,500 bottles an hour. This higher output is a result of "walking upright"—for the first time, the bottles are labelled standing up instead of lying down. This puts an end to the laborious insertion and removal of the bottles by hand.

Think about what this meant operationally. Before the Super, every bottle had to be manually placed horizontally into the labeling machine, then retrieved. The Super's innovation—allowing bottles to pass through upright on a conveyor—didn't just increase speed; it fundamentally changed the labor economics of bottling operations. Brewery owners could suddenly envision modern production lines rather than rooms full of workers manually handling bottles.

My father took his first business trip to the United States in 1966. Of course, local companies were making labelling machines at the time, too, but there was one important difference: They were building intermittent-motion machines, with low outputs, while Krones already had continuous-motion rotary labelling machines in its portfolio. This technical superiority—continuous motion versus start-stop mechanisms—would become the foundation of Krones' global expansion. American competitors couldn't match the speed, precision, or reliability of Kronseder's designs.

Hermann Kronseder received a number of honours including the Federal Order of Merit 1st Class and the Diesel Medal in Gold from the German Institute of Inventions. This latter accolade was the one Kronseder treasured the most, having been a passionate inventor with 630 patents to his name. Six hundred and thirty personal patents. This number tells you everything about the man: utterly driven, perpetually curious, constantly iterating. He saw himself as more of an inventor than an entrepreneur. His 630 personal patents bear eloquent witness to this.

For investors, this origin story matters because it established Krones' enduring competitive advantages: technical leadership embedded in organizational culture, close customer relationships, and family ownership that prioritizes long-term excellence over quarterly earnings.

---

↑ Back to Top

III. Building the Product Portfolio: From Labels to Lines (1960s-1980s)

The 1960s presented Hermann Kronseder with a classic entrepreneur's dilemma: how to grow beyond a successful niche without diluting the focus that created success in the first place. His answer would define Krones for decades: vertical integration along the customer's value chain.

In the further development as from the 1960s, the firm's range of machinery was extended to include packers and filling systems. This wasn't random diversification—it was strategic adjacency. If Krones already had relationships with breweries for labeling, why not supply their packing needs too?

The new packers meet with keen interest among Japanese breweries, and Hermann Kronseder becomes familiar with Japanese customs. This detail illuminates something crucial: Krones was going international earlier than most assume. The Japanese market—notoriously difficult for foreign industrial suppliers—opened because Japanese brewers recognized superior German engineering. The successful relationship with the Japanese partners is very soon supplemented by an agreement to produce packers under licence.

By 1961, a decade after founding, there are around 450 people working for Krones. From one man with a lathe to 450 employees in ten years—this trajectory speaks to both market opportunity and execution excellence. The Wirtschaftswunder was in full swing; Germans were drinking more beer than ever; and Krones had established itself as the go-to supplier for modern bottling operations.

The 1970s brought scale but also complexity. The oil crisis of 1973 challenged every manufacturing business, but Krones navigated the period by doubling down on efficiency—both in its own operations and in the value proposition it offered customers. Machines that reduced energy consumption suddenly commanded premium prices.

The structural transformation came in 1980. In order to keep pace with the company's continuous growth, Hermann Kronseder converts what used to be Krones GmbH & Co. KG into a stock corporation. This legal form enhances confidence in the group's capital and management structure for international transactions with major accounts. The conversion to Aktiengesellschaft (AG) wasn't about preparing for a sale or diluting family control—it was about credibility. Major multinationals like Coca-Cola and Heineken preferred dealing with counterparties whose corporate structures were transparent and whose capital was clearly defined.

The 1980s brought the acquisition strategy that would transform Krones from a component supplier into a complete systems provider. In 1982, Krones acquired a holding in Anton Steinecker Maschinenfabrik in Freising, Germany, which specialized in brewhouse technology, marking its entry into the brewery equipment market and allowing it to offer comprehensive solutions for beer production. This move was complemented by the 1984 initial public offering (IPO) on the stock exchange, where shares were issued at 460 DM, providing capital for further development and signaling stability to global partners.

The Steinecker acquisition deserves particular attention. Brewhouse technology—the copper kettles, mash tuns, and fermentation vessels where beer is actually made—represents the upstream process before bottles even enter the picture. By acquiring Steinecker, Krones could now tell breweries: "We'll handle everything from grain to glass." This "full-line" positioning would become Krones' central competitive advantage.

The stock has been listed and available for trading on all German stock exchanges since 29 October 1984. KRONES' share capital of €40.0 million is now divided into 31,593,072 shares. KRONES is included in the MDAX share index, the German stock exchange's midcap index.

Krones keeps all the essential parts in stock, and can thus at need swiftly deliver the desired spares to the beverage plants and breweries concerned. In the 1980s, around 200 staff are on duty round the globe in service support. This service network—the ability to dispatch technicians and spare parts anywhere in the world—became a crucial competitive moat. Beverage production lines running at 50,000 bottles per hour cannot tolerate downtime; every hour of stoppage costs thousands in lost production. Krones' ability to respond quickly justified premium prices for its equipment.

The decade closed with major acquisitions filling gaps in the portfolio: The intralogistics business of Krones is handled by Syskron Holding GmbH since 2014. KIC Krones GmbH (high-tech adhesives for labels and carton packages, plus processing and operating materials), Neutraubling, Germany; KOSME S.R.L. (filling and packaging machines for mid-tier companies), Roverbella, Italy; Cover additional market segments in beverage filling.

For investors, the 1980s established the template Krones would follow: acquire companies with complementary technologies, integrate them into a coherent product portfolio, and maintain the service network that makes the entire system work. This wasn't empire-building for its own sake—it was strategic positioning to become indispensable to customers.

---

↑ Back to Top

IV. The PET Revolution: Krones' First Major Inflection Point (1997-2005)

In the mid-1990s, Krones faced an existential question: What happens to a glass bottle filling company when the world starts preferring plastic?

Polyethylene terephthalate—PET—had been around since the 1940s, but its application to beverage containers accelerated dramatically in the 1980s and 1990s. For beverage companies, the economics were compelling: PET bottles weighed a fraction of glass equivalents, dramatically reducing shipping costs. They didn't break, eliminating both product loss and safety hazards. And they could be molded into distinctive shapes, enabling brand differentiation that rigid glass couldn't match.

For Krones, built on decades of glass bottle expertise, PET presented both threat and opportunity. The company could have dismissed plastic as a passing fad, doubling down on its traditional strengths. Many German industrial companies made exactly this mistake when confronted with technological transitions. Instead, Krones chose transformation.

In 1997, the company launched the Contiform stretch blow-molding machine, enabling efficient production of PET bottles and opening a new business field focused on lightweight, recyclable containers for beverages. The Contiform represented a massive technical bet. Stretch blow-molding involves heating a PET "preform" (essentially a test-tube-shaped piece of plastic) and then rapidly inflating it into a bottle shape within a mold. The process requires precise temperature control, perfect timing, and extraordinary mechanical reliability at speeds exceeding 2,000 bottles per minute.

The strategic logic was elegant: if Krones could manufacture the bottles themselves, it could offer customers a truly integrated solution. No longer would beverage companies need to purchase bottles from one supplier and filling equipment from another—Krones could handle the entire process.

This innovation was followed in 1998 by the introduction of the first aseptic PET filling lines, allowing sterile filling of sensitive products like juices without preservatives, thus expanding Krones' capabilities in non-carbonated beverages. Aseptic filling addressed a specific technical challenge: how do you package juice, dairy drinks, or other sensitive beverages in plastic without the product spoiling before it reaches consumers?

The traditional solution—either preservatives or refrigerated distribution—limited where such beverages could be sold. Aseptic technology, which sterilizes both the container and the product before filling in a sterile environment, enabled ambient-temperature distribution. Suddenly, a juice manufacturer in Bavaria could sell shelf-stable products in tropical markets thousands of miles away.

2005: Expansion of the firm's aseptic filling technology to include dry sterilisation using H2O2; Krones had already been offering sterilisation with peracetic acid, and is thus the only company to offer both of these technologies. This dual-sterilization capability sounds like a minor technical detail, but it represented meaningful competitive advantage. Different beverages and different packaging materials respond better to different sterilization methods. Krones' ability to offer either approach meant it could win contracts that single-technology competitors couldn't serve.

Perhaps most prescient was Krones' early move into recycling. Building on these advancements, Krones continued to refine its PET technologies through the early 2000s, including the development of compact stretch blow-molding systems and bottle-to-bottle recycling concepts in 2002, which enabled the production of food-grade PET from recycled materials.

In 2002, recycled PET was a niche concern. Environmentalism existed, but the intense regulatory and consumer pressure around plastics wouldn't materialize for another fifteen years. Yet Krones saw the direction of travel. If the company was going to sell billions of PET bottles into the world, it had better develop the technology to bring those bottles back into the value chain.

These efforts propelled financial growth, with sales revenue reaching €1.911 billion. From 1951 to 2005—fifty-four years—Krones grew from zero to nearly €2 billion in revenue. The PET pivot was central to this trajectory, transforming what could have been a declining glass equipment business into a growing technology platform for the entire packaging industry.

For investors, this period demonstrates Krones' capacity for managed transformation. The company didn't abandon its core competencies—it extended them. The same precision engineering that made exceptional glass labeling machines made exceptional PET blow-molding machines. The same service network that supported breweries supported soft drink manufacturers. Technical excellence transferred across materials; customer relationships deepened as product range expanded.

---

↑ Back to Top

V. Inflection Point #2: The 2009 Crisis & Transformation (2008-2015)

The global financial crisis of 2008-2009 hit capital equipment manufacturers with particular ferocity. When economic uncertainty spiked, the first expenditures corporations cut were long-term investments. A new bottling line might generate excellent returns over its twenty-year lifespan, but when banks were failing and demand was collapsing, beverage companies postponed equipment purchases indefinitely.

For Krones, the impact was immediate and severe. Order intake collapsed as customers across all end markets simultaneously hit pause. The company that had grown almost continuously since 1951 suddenly faced its most challenging environment since the reconstruction years.

Yet crisis clarified strategy. Management used the downturn to double down on efficiency initiatives that had been discussed but not prioritized during growth years. Cost structures were scrutinized; production processes optimized; supplier relationships renegotiated. Krones emerged from 2009 leaner and more operationally excellent than before.

2010: FlexWave heating system for preforms based on microwave technology for energy saving manufacturing of PET bottles. 2011: LitePac: PET bottle formations are provided with strapping tape and a carrying handle only, so that waste from packaging can be reduced by 75% in relation to former shrink film packaging.

These innovations weren't coincidental—they reflected systematic investment in R&D even during downturn years. The FlexWave system addressed customers' energy costs (increasingly important as petroleum prices rose). LitePac addressed environmental concerns by dramatically reducing secondary packaging material. Both innovations created competitive differentiation that supported pricing power when markets recovered.

Geographic expansion accelerated post-crisis. Machines and systems are manufactured at the German production facilities (Neutraubling, Nittenau, Flensburg, Freising and Rosenheim). From 2019 on a fabrication site in Debrecen, Hungary, completes production facilities. The Hungarian facility represented Krones' first manufacturing outside Germany—a significant cultural shift for a company deeply rooted in Bavarian identity.

The China expansion deserves particular attention. The Middle Kingdom's beverage market grew explosively through this period as rising incomes enabled hundreds of millions of consumers to afford bottled water and soft drinks. Krones recognized that serving this market required local presence—not just sales offices but real manufacturing and engineering capability.

The intralogistics business of Krones is handled by Syskron Holding GmbH since 2014. The Syskron spin-off reflected strategic clarity about organizational focus. Intralogistics—warehouse automation, conveyor systems, material handling—was adjacent to Krones' core business but required different technical competencies and faced different competitive dynamics. Creating a separate subsidiary allowed that business to develop its own identity while still benefiting from the broader Krones ecosystem.

The generational transition also advanced during this period. Hermann Kronseder had stepped back from active management in 1996, with his son Volker taking the CEO role. His son Volker Kronseder took over as chairman, a position he still holds today, overseeing a company with a turnover of more than €2bn. The family continues to hold about a 54 per cent share in Krones although Hermann transferred the majority holding to his sons back in the 1980s.

Hermann Kronseder, 85, died in his home near Regensburg, Germany, on July 9 [2010]. The founding father of Krones AG was frequently, almost up to the very end, to be found at the group's headquarters in Neutraubling. The founder's passing marked the end of an era, but the succession had been prepared decades earlier. Krones avoided the succession crises that doom many family businesses because Hermann Kronseder had prioritized continuity over ego.

For investors, the 2009-2015 period demonstrated resilience. The company didn't just survive the crisis—it used it as catalyst for improvements that strengthened long-term competitive position. The Hungarian factory, the China expansion, the intralogistics reorganization, and the continued R&D investment all positioned Krones for the growth that would follow.

---

↑ Back to Top

VI. Inflection Point #3: The Plastics Debate & Sustainability Pivot (2018-2020)

In 2018, something remarkable happened to PET plastic. Virtually overnight, the material that had enabled decades of convenience and efficiency became a villain in the public imagination. Images of plastic-choked oceans went viral. David Attenborough's nature documentaries highlighted marine wildlife suffering from plastic pollution. European Union regulators accelerated packaging directives. Multinational beverage companies—Krones' largest customers—faced intense pressure to demonstrate environmental responsibility.

For Krones, this presented an existential irony: the company had spent twenty years building itself into the world's leading supplier of PET packaging equipment, and now PET itself was under attack.

PET bottles account for one in every two rigid plastic packs sold globally, much of this in soft drinks, and are forecast to represent 60% of rigid plastic packaging growth from 2024 to 2028. The market wasn't actually shrinking—PET remained the fastest-growing packaging material—but the public narrative had shifted dramatically against it.

Krones' response was sophisticated and multi-pronged. First, the company mounted an intellectual defense of PET's environmental credentials. PET plastic, Krones argued, actually had a wrongly bad reputation. The material is significantly lighter than glass alternatives, meaning PET bottles have correspondingly smaller carbon footprints in long-distance transportation. When the full lifecycle is considered—from manufacturing through transport to recycling—PET often outperforms alternatives that appear "greener" at first glance.

This wasn't mere spin—it reflected genuine data. A glass bottle might seem more "natural" to consumers, but manufacturing glass requires far more energy (sand must be heated to extreme temperatures), and transporting heavy glass containers generates substantially more emissions than shipping lightweight plastic.

More importantly, Krones pivoted its business strategy to make sustainability a competitive advantage rather than a liability. Ever since 2009, Krones has been deploying its MetaPure technology to close the life-cycle of a beverage bottle, offering MetaPure W-PET for washing and MetaPure S for decontamination. The recycling technology that Krones had developed since 2002—initially as a niche offering—suddenly became central to the company's value proposition.

The strategic insight was that Krones' customers needed solutions, not just equipment. Coca-Cola had committed to using 50% recycled content in its bottles by 2030. Nestlé Waters pledged to achieve 100% recyclability. These weren't optional marketing promises—they were binding corporate commitments that required technological capability to achieve. Krones positioned itself as the partner who could make those commitments real.

In 2024, the group adopted the strategic goal of reducing its greenhouse gas emissions along the entire value chain to net zero. This wasn't just about selling recycling equipment to customers—Krones committed to decarbonizing its own operations as well. The company set interim targets through 2030: an 80% reduction in operational greenhouse gas emissions (Scope 1 and Scope 2) and a 30% reduction in upstream and downstream value chain emissions (Scope 3) relative to 2019.

For investors, the 2018-2020 period revealed Krones' adaptive capacity. Rather than defending a dying position, management recognized the strategic opportunity embedded within the sustainability challenge. Companies that can help customers solve regulatory and reputational challenges around packaging will command premium prices and enjoy growing demand—exactly the positioning Krones pursued.

---

↑ Back to Top

VII. Inflection Point #4: The Netstal Acquisition & Closed-Loop PET Strategy (2024)

The strategic chess game Krones had been playing for years reached its culmination in early 2024 with the acquisition of Netstal Maschinen AG. This wasn't just another capability bolt-on—it was the capstone that completed an entirely new competitive architecture.

Krones will buy Netstal for 170 million euros ($183 million), according to a share purchase agreement. Krones will finance the transaction with existing liquid funds, but also may use partial debt financing.

The transaction backstory itself reads like corporate drama. The seller is Germany's financially struggling KraussMaffei Technologies GmbH, which lost at least 2.55 billion RMB ($359.3 million) and as much as to 3 billion RMB ($422.7 million) in 2023, according to a "pre-loss announcement" issued Jan. 31. Publicly traded on Shanghai's stock exchange, KraussMaffei has been majority owned by China National Chemical Corp. since 2016. KraussMaffei's pre-loss statement, released two days after the Netstal deal was announced, does not directly address the reasons for selling to Krones, but it paints a picture of deepening financial pressures on the company.

Krones essentially rescued Netstal from a distressed parent—paying a fair price for valuable technology that might otherwise have been sold to a competitor or allowed to deteriorate. In the 2023 fiscal year, Netstal generated with a workforce of more than 500 employees revenue of more than EUR 200 million. The profitability of the company is currently below the Krones Group level but is expected to close this gap over the coming years.

Why did Netstal matter so much? As a leading supplier of injection moulding machines for the beverage market (PET preforms and closures), Netstal is a perfect strategic fit for Krones. For one thing, the acquisition will enable the company to provide additional innovative products, technologies and services. In addition, following the acquisition of Netstal, Krones now has all technologies required for circular PET solutions—from injection moulding of preforms to PET bottle production and from filling and packaging to used bottle recycling.

Let's unpack the circular PET value chain. First, PET resin (often partially recycled) gets injection-molded into "preforms"—small, thick-walled test-tube shapes. These preforms get shipped to bottlers (much more efficiently than shipping full-size bottles). At the bottling plant, stretch blow-molding machines heat the preforms and inflate them into bottles. The bottles move immediately to filling lines, then labeling, then packaging, then palletizing for shipment. Eventually, consumers drink the contents and (hopefully) deposit the bottles for recycling. The recycling facility processes used bottles back into food-grade PET resin, which returns to the beginning of the cycle.

Before Netstal, Krones could supply everything except the first step—preform injection molding. This meant customers purchasing Krones equipment still needed to source preforms (and the closures that cap bottles) from other suppliers. Post-Netstal, Krones can offer the entire circle. Through the acquisition of Netstal Maschinen AG, a leading provider of injection moulding machines for the beverage market (PET preforms and closures), we now offer all technologies required for closed-loop PET solutions—a strategically significant unique selling point.

This positioning has profound competitive implications. A beverage company building a new factory can now single-source virtually every piece of production equipment from Krones. The simplification in procurement, the unified service relationship, the integrated digital controls, the consolidated spare parts inventory—all create tangible value for customers that competitors offering piecemeal solutions cannot match.

With its injection moulding technology for medical applications and thin-wall packaging, Netstal also supports Krones' strategy of diversifying into the medical/pharmaceutical market and into the food and body care sectors. The diversification angle matters too. Medical packaging—think plastic vials for vaccines, containers for pills—represents a massive market served by Netstal's precision injection molding technology. By acquiring Netstal, Krones gains optionality into healthcare end markets entirely separate from beverages.

Simultaneously, Krones elevated recycling to standalone subsidiary status. On 1 July 2024, Krones Recycling GmbH, under the management of Dr Michael Gotsche, commenced business operations with headquarters in Flensburg. A wide range of plastics such as PET, PE, PP and PS are already being processed on Krones Recycling's lines worldwide. The newly founded company takes over all activities relating to plastics recycling, but continues to utilise Krones' global production, sales and service network.

The spin-off is part of Krones' broader sustainability strategy, with a goal of having at least 30% of the plastics processed on Krones lines returned to the cycle as a recycled resource. This isn't a modest ambition—Krones sells equipment processing hundreds of billions of bottles annually. Returning 30% of that volume to the recycling stream would represent massive throughput for Krones Recycling's machinery.

The recycled PET bottles market is predicted to grow from USD 2.43 billion in 2024 to USD 6.16 billion by 2034, driven by a CAGR of 9.74%. The recycling market's projected growth rate—nearly 10% annually for the next decade—exceeds the base PET packaging market growth. By spinning off Krones Recycling as a focused subsidiary, Krones positions this business to capture share in the highest-growth segment of its addressable market.

The acquisition pace didn't slow after Netstal. This acquisition is a further step in the implementation of the Krones strategy to build-up local engineering and sourcing capabilities. By acquiring Trans-Market, Krones enhances its process technology capabilities in the US and expands its geographical footprint in North America. Besides Tampa, Florida, Trans-Market operates two locations in Texas. Together with the capabilities of Trans-Market Krones can offer its customers in the liquid food segment in North America the complete product portfolio ranging from process technology solutions, filling and packing equipment to logistical solutions, and thereby cover the entire plant of its customers.

Most recently, in September 2025, On September 16, 2025, Krones acquired 100 percent of the shares in Dutch machine manufacturer Can Systems Worldwide (CSW). Based in Deventer, the Netherlands, the company specializes in special machines for handling can lids and supplies customers in the beverage, beer, and food industries worldwide. The aim is to specifically expand expertise in the field of can filling. CSW employs around 35 people. Last year, its sale was around €20 million.

With the acquisition of 60% of the shares in GHS Separationstechnik GmbH and the full takeover of the Dutch company Can Systems Worldwide (CSW), Krones is expanding its portfolio in both process technology and filling and packaging equipment.

The pattern is clear: Krones uses its balance sheet strength—Krones had a comfortable €439.9 million in net cash (cash and cash equivalents less bank debt) at the end of 2024—to systematically acquire technologies and market positions that complement its existing portfolio.

---

↑ Back to Top

VIII. Modern Era: 2024-2025 Performance & 2028 Targets

The 2024 fiscal year delivered record results across virtually every metric, validating the strategic investments of preceding years.

Revenue in 2024 exceeded the five billion euro mark for the first time and increased by 12.1% year on year, from €4,720.7 million to €5,293.6 million. Krones thus achieved its growth forecast of 9% to 13%.

Despite persistently high costs, Krones has significantly improved profitability. EBITDA improved by 17.5% in 2024 to €537.1 million. The EBITDA margin increased from 9.7% in the previous year to 10.1%. Notably, revenue grew 12% while EBITDA grew nearly 18%—demonstrating operating leverage as fixed costs spread over a larger revenue base.

The cash flow turnaround was equally impressive. Despite M&A activities with purchase price payments of €179.4 million (previous year: €114.5 million)—mainly for the acquisition of Netstal Maschinen AG—Krones 2024 improved free cash flow by €214.5 million to €113.2 million (previous year: −€101.3 million). Free cash flow before acquisitions increased even more significantly, by €279.3 million to €292.5 million (previous year: €13.2 million).

This deserves emphasis: despite spending €179 million on acquisitions, Krones still generated positive free cash flow. And excluding M&A spending, underlying free cash flow improved from €13 million to €293 million—a remarkable working capital improvement.

Krones improved ROCE (return on capital employed) to 18.2% in 2024 (previous year: 16.3%). Return on capital employed measures how effectively the company converts invested capital into profits—arguably the single most important metric for industrial businesses. Krones' 200-basis-point ROCE improvement reflects both margin expansion and disciplined capital allocation.

The 2025 year began strongly. Krones increased revenue in the first three months of 2025 by 13.1% year on year to €1,410.0 million. Even without the effect of the acquisition of Netstal Maschinen AG, revenue growth from January to March was within the 7% to 9% guidance range for the full year 2025.

Krones increased ROCE from 19.0% to 20.5% in the first three months of 2025. Already surpassing the 20% ROCE threshold that management had targeted for 2028—three years ahead of schedule.

The strong demand means that Krones' order backlog further increased from January to March 2025 relative to the year-end 2024 (€4,289.5 million). As of 31 March 2025, the company had an order backlog totalling €4,315.4 million. The very large order backlog ensures production capacity utilisation through to the beginning of the second quarter of 2026.

This visibility matters enormously. Industrial equipment companies often face boom-bust cycles as customers time purchases to economic conditions. Krones' €4.3 billion backlog—representing nearly a year of revenue—provides unusual stability and predictability. Management can plan production, manage supply chains, and invest in capacity expansion with confidence about near-term demand.

The medium-term targets announced at the July 2024 Capital Markets Day set ambitious goals for 2028. Consolidated revenue is set to increase to €7 billion by 2028 (2023: €4.7 billion). The medium-term target for the EBITDA margin is between 11% and 13% (2023: 9.7%). Krones is aiming for ROCE of more than 20% by 2028 (2023: 16.3%).

The €7 billion revenue target implies roughly 8% compound annual growth from the 2024 base—achievable through a combination of market growth, share gains, and acquisitions. The 11-13% EBITDA margin target (up from 10.1% in 2024) suggests continued operating leverage and efficiency improvements. And ROCE exceeding 20% (already achieved in Q1 2025) reflects capital discipline alongside profit growth.

Global demand for packaged beverages continues to increase, fuelled by a rising global population, an expanding middle class and urbanisation. Up to 2028, global beverage consumption is forecast to grow by an average of around 3% per year. As demand for packaged beverages increases, so does the need for innovative filling and packaging technology and for process technology and intralogistics solutions. Sustainability is another megatrend that benefits Krones.

The dividend policy reflects shareholder-friendly capital allocation within these growth ambitions. For the successful 2024 financial year, the Executive Board and Supervisory Board will propose a dividend of €2.60 per share at the Annual General Meeting on 27 May 2025. This represents an increase of €0.40 per share or 18.2% compared to the previous year (€2.20 per share). For the business year of 2024, Krones paid a dividend of €2.60 per share on 2 June 2025.

Krones' long-term dividend policy is to distribute 25% to 30% of consolidated net income to shareholders, although in recent years it has aimed for the upper end of this range. The €2.60 dividend corresponds to 29.6% of consolidated net income.

---

↑ Back to Top

IX. The Business Model Deep Dive

Understanding Krones' economics requires examining three interconnected components: the equipment business, the lifecycle services business, and the emerging recycling business.

Equipment Business: Using innovative machines and lines from Krones' core Filling and Packaging Technology segment, customers can fill, label, package and transport their products in PET bottles, glass bottles and cans. Following the acquisition of Netstal Maschinen AG, the segment also offers innovative solutions for the production of PET preforms. Fully automated material flow, warehousing and order picking systems from the Intralogistics segment make for efficient internal material supply and problem-free shipping of packaged products.

Equipment sales represent the majority of revenue and exhibit classic capital goods characteristics: lumpy order patterns, long sales cycles, and project-based execution. A major bottling line sale might take 18-24 months from initial customer contact through commissioning. Order values range from hundreds of thousands of euros for individual machines to tens of millions for complete factory installations.

Lifecycle Services: Our dense global network of service companies is a key investment criterion for customers. Krones can provide them with products, service personnel, spare parts and digital services quickly and in top quality. That saves customers time and money.

An important building block in this regard consists of our individually configurable and coordinated service packages known as Modular Service Agreements (MSAs). With over 1,000 MSAs now in place, Krones supports plant operators in measurably improving production efficiency and achieving clearly defined targets. Customers benefit with fixed, predictable costs. A contact person at Krones analyses and interprets the data collected by the digital tools and shows the line operator possible measures for improving the line's performance. At the beginning of 2025, the first "Lifecycle Alliance" line will go into operation, with Krones assuming full responsibility for service and the line's performance—on the basis of digital services.

This service model creates several strategic advantages. Recurring revenue from spare parts and maintenance contracts smooths the cyclicality of equipment sales. Close service relationships generate intelligence about customer needs, informing product development. And "Lifecycle Alliance" contracts—where Krones guarantees line performance—transform the customer relationship from transactional supplier to strategic partner.

At the end of 2024, Krones employed 20,379 employees all over the world, 11,312 of them in Germany and 9,067 abroad.

Innovation and R&D: Krones emphasizes innovation, holding over 7,030 patents. From Hermann Kronseder's original 630 personal patents, the portfolio has grown to over 7,000—demonstrating continued commitment to technical leadership across generations.

The company invests 4-5% of revenue annually in research and development—a substantial commitment that maintains technological advantages and creates barriers to competition. This spending funds everything from incremental improvements to existing machines to fundamental research on new sterilization methods, lightweight materials, and digital technologies.

Customer Base: Krones serves virtually every significant beverage producer globally. The customer list reads like a who's-who of food and beverage: Coca-Cola, PepsiCo, Nestlé, AB InBev, Heineken, Danone, and hundreds of regional producers. This diversification provides resilience—no single customer represents concentration risk—while the global nature of major customers creates expansion opportunities as they build new facilities in emerging markets.

Segment Economics: The Filling and Packaging Technology segment generates the majority of revenue and profits. Process Technology (brewhouse equipment, water treatment, dairy processing) contributes meaningful revenue with different competitive dynamics. Intralogistics rounds out the portfolio with warehouse automation and material handling systems.

---

↑ Back to Top

X. Ownership Structure & Governance: The Mittelstand Advantage

Krones' ownership structure represents the quintessential German Mittelstand model—family control providing long-term orientation, professional management delivering operational excellence, and public listing ensuring transparency and governance discipline.

The main Krones shareholders are descendants of Hermann Kronseder, the company's founder. The shares are merged in a pooling agreement which regulates the joint exercise of voting rights of the members and their companies. Holding 51.9%, the Kronseder Family Consortium GbR is the stable majority shareholder of the Krones AG.

The company's largest shareholder is Volker Kronseder, with ownership of 37%. Meanwhile, the second and third largest shareholders, hold 15% and 3.0%, of the shares outstanding, respectively. The family's majority control through pooled voting rights ensures strategic continuity while individual family members maintain their economic interests.

The generational transition has been handled with characteristic German thoroughness. Volker Kronseder, Chairman of the Executive Board, and Norman Kronseder, Member of the Supervisory Board, are making arrangements to ensure the future orderly transfer of their Krones shares to their children. To this end, they have signed agreements that comply with current tax and legal requirements. Volker Kronseder has placed shares in a foundation for this purpose. Thus, Volker and Norman Kronseder have taken proactive steps to continue the company's tradition as a successful family enterprise. The existing pooling agreement, under which the voting rights of all members of the Kronseder family and their enterprises are exercised as a voting trust, remains unaffected by the transfer agreements described above.

Mr. Volker Kronseder has been the Chairman of the company since 2016. Prior to this, he served as the Chief Executive Officer of the company from 1996 to 2016; Member of the Executive Board of the company from 1989 to 1996; Deputy member of the Executive Board of the company from 1988 to 1989; and Authorised signatory of the company from 1983 to 1988. Volker Kronseder's progression through the company—from authorized signatory to Deputy Board member to Board member to CEO to Chairman—illustrates classic family business succession.

The current CEO, Christoph Klenk, represents professional management operating under family ownership. Christoph Klenk was studying Mechanical Engineering and joined Krones AG in 1994. After the positions of a Head of Sales Region for Asia Pacific and Head of Marketing Department, he was member of the Executive Board in charge of Research and Development as well as Engineering and Divisions from 2003 to 2011. From January 2012 to 31 December 2015, he was member of the Executive Board responsible for Finance, Controlling and Information Management. Since January 2016, Christoph Klenk has been Chairman of the Executive Board of Krones AG.

Klenk's trajectory—joining as an engineer, serving in sales, leading R&D, managing finance, then assuming the CEO role—reflects the German preference for leaders who understand the business deeply rather than professional managers parachuted in from outside.

The governance of Krones AG follows a two-tier board system typical of German corporations, comprising an Executive Board responsible for day-to-day management and a Supervisory Board that oversees and advises it. The Executive Board is led by Chairman and CEO Christoph Klenk, who has held the position since January 2016, with additional members handling key areas such as finance, operations, and sustainability. The Supervisory Board consists of 16 members, evenly split between eight shareholder representatives and eight employee representatives, including Chairman Volker Kronseder, to balance stakeholder interests and ensure co-determination as per German labor laws.

The German co-determination model—with employee representatives on the Supervisory Board—creates a governance dynamic unfamiliar to Anglo-Saxon investors. Critics argue it slows decision-making and creates conflicts of interest. Proponents counter that employee representation encourages long-term thinking and labor peace. For Krones specifically, the model appears to work: labor relations are stable, and employee tenure tends to be long by industry standards.

A 2023 corporate governance episode briefly disrupted Krones' index membership. In September, Krones hit the headlines when it was expelled from the MDax due to non-compliance with behavioral rules. The company did not comply with a corporate governance rule, which states, among other things, that the chairman of the audit committee should be independent of the company and the board. Since May 2023, this position at Krones has been held by former Chief Financial Officer Norbert Broger. As a consequence the company appointed a new chairman for the audit committee.

Deutsche Börse AG conducted its periodic review of the DAX, MDAX, SDAX and TecDAX indices on the basis of the Fast Exit and Fast Entry rules. As a result of the review, Krones AG shares are to be promoted from the SDAX to the MDAX index with effect from 18 December 2023, thus returning to the 50-share mid-cap index after only three months. The swift correction—appointing an independent audit committee chair and returning to the MDAX within three months—demonstrated governance responsiveness despite the initial misstep.

---

↑ Back to Top

XI. Competitive Landscape Analysis

Krones is the global market leader in its core business of filling and packaging technology. In addition to the two big European competitors KHS (a subsidiary of the Salzgitter Group) and the French Tetra Laval subsidiary Sidel, there are a number of smaller competitors.

KHS (Salzgitter Group): KHS has been one of Krones's top competitors. KHS is a Private company that was founded in 1993 in Dortmund, Other. Like Krones, KHS also competes in the Industrial Machinery & Equipment industry. Compared to Krones, KHS has 15,377 fewer employees. Krones generates 411% the revenue of KHS.

KHS, owned by steel conglomerate Salzgitter, competes across Krones' filling and packaging portfolio but with roughly one-quarter the scale. The size differential matters operationally: Krones can spread R&D costs over a larger revenue base, maintain a more extensive service network, and offer broader product lines. KHS survives by focusing on specific applications and leveraging Salzgitter's balance sheet.

Sidel (Tetra Laval): Krones generates 289% of Sidel's revenue. Sidel operates as part of Tetra Laval, the private holding company that also owns Tetra Pak (liquid food cartons) and DeLaval (dairy farming equipment). Sidel brings Tetra Laval's financial resources but competes at smaller scale than Krones. The Tetra Laval relationship creates potential customer conflicts—would a Coca-Cola bottler using Tetra Pak cartons for juice want Sidel filling their PET bottles?

Krones competes with Chinese providers primarily in their home market. In the two smaller segments, Process Technology and Intralogistics, the company is in competition worldwide with major suppliers such as GEA and Kion and with smaller regional companies.

Chinese Competition: The rise of Chinese equipment manufacturers represents the most significant long-term competitive uncertainty. Chinese companies have captured meaningful market share in their domestic market, often competing on price against premium European suppliers. Whether they can export this success globally—developing the technical capabilities, service networks, and brand credibility to serve multinational customers—remains uncertain.

Krones' response includes establishing Chinese manufacturing and engineering capabilities, allowing it to compete on total cost while maintaining technical differentiation. The company also benefits from multinational customers' preference for suppliers with proven global service networks.

Porter's Five Forces Assessment:

Threat of New Entrants (LOW): Beverage packaging equipment requires decades of engineering expertise, massive installed base for service reference, and global infrastructure. The capital requirements alone—both financial and human—create substantial barriers.

Supplier Power (MODERATE): Krones sources components from thousands of suppliers, limiting individual supplier leverage. However, certain specialized components (sensors, drives, specialized steels) come from limited sources.

Buyer Power (MODERATE): Large multinationals like Coca-Cola command negotiating leverage, but their preference for long-term supplier relationships and total cost of ownership rather than pure price competition limits pressure on margins.

Threat of Substitutes (LOW to MODERATE): Alternative packaging formats (cartons, pouches, cans) compete with bottles for certain applications, but bottles dominate most beverage categories. Within bottles, material substitution (glass to PET) creates opportunity rather than threat for Krones.

Competitive Rivalry (MODERATE): The oligopolistic structure—three major players controlling most of the global market—creates disciplined competition. Rivalry focuses on innovation and service rather than destructive price wars.

Hamilton Helmer's 7 Powers Analysis:

Scale Economies: Krones' size advantage allows spreading R&D and service network costs over larger revenue, creating structural cost advantages versus smaller competitors.

Network Effects: Limited direct network effects, though the installed base creates service relationship stickiness.

Counter-positioning: Krones' full-line strategy creates counter-positioning versus competitors focused on specific equipment categories—incumbents cannot easily match Krones' breadth without cannibalizing their existing businesses.

Switching Costs: Substantial switching costs exist: training investments, spare parts inventories, service relationships, and integration with existing lines all discourage customer defection.

Branding: Strong B2B brand equity—"nobody ever got fired for buying Krones" mentality among beverage industry professionals.

Cornered Resource: The accumulated engineering expertise and patent portfolio represent proprietary advantages difficult to replicate.

Process Power: German precision manufacturing culture and decades of iterative improvement create process advantages competitors cannot simply purchase.

---

↑ Back to Top

XII. Bull & Bear Case Analysis

↑ Back to Top

Bull Case

Megatrends provide structural tailwinds. We operate in a long-term growth market that benefits from megatrends such as the growing world population. This gives us an advantage from the start. Rising global population, expanding middle class in emerging markets, and increasing urbanization drive beverage consumption growth for decades ahead.

Closed-loop PET positioning creates unique value proposition. No competitor can offer the complete circle from preform injection through filling to recycling. As regulatory pressure for recycled content intensifies, Krones' integrated solution becomes increasingly valuable.

Recycling becomes a high-growth business segment. The recycled PET market growing at nearly 10% annually significantly exceeds base market growth. Krones Recycling as standalone subsidiary positions the company to capture disproportionate share of this growth.

Family ownership enables long-term thinking. While competitors serve quarterly earnings pressure, Krones' family control supports multi-decade investments in R&D, manufacturing capability, and market development.

Margin expansion potential remains substantial. Management's 2028 target of 11-13% EBITDA margin (versus 10.1% in 2024) suggests continued operating leverage and efficiency gains. If achieved alongside €7 billion revenue, EBITDA could approach €900 million.

Balance sheet strength enables opportunistic M&A. With €440 million net cash and strong cash generation, Krones can continue acquiring technology and market positions from financially weaker competitors.

↑ Back to Top

Bear Case

Cyclicality risk in capital goods. Despite food and beverage's relative resilience, severe economic downturns cause equipment purchase deferrals. The 2009 experience demonstrated order intake vulnerability during crises.

Geographic concentration in Europe. Manufacturing remains predominantly German, exposing Krones to European energy costs, labor market rigidity, and potential trade disruptions. The Hungarian facility begins diversification, but execution remains early-stage.

China risk cuts both ways. Chinese beverage market offers growth opportunity, but Chinese equipment manufacturers increasingly compete effectively—first in their home market, potentially globally.

Plastics regulation could accelerate beyond PET recycling. While Krones positions itself as solution provider, aggressive regulatory scenarios (single-use plastic bans, mandatory reusable systems) could fundamentally disrupt PET packaging economics.

Succession uncertainty beyond current generation. The Kronseder family has demonstrated excellent succession planning, but multi-generational transitions inevitably create risk. The family's commitment to continued ownership and control cannot be guaranteed indefinitely.

Premium valuation leaves limited margin of safety. Quality commands premium prices; Krones trades at healthy multiples versus broader industrial averages. If execution disappoints or multiples compress, downside risk exists.

---

↑ Back to Top

XIII. Key Performance Indicators to Monitor

For fundamental investors tracking Krones' ongoing performance, three KPIs deserve particular attention:

1. Order Backlog Trend: The order backlog provides visibility into future revenue and production planning. At the end of 2024, the company had an order backlog totalling €4,289.5 million. This means that the order backlog increased by 4.1% compared to the previous year (€4,122.3 million). A growing or stable backlog indicates continued customer demand; declining backlog signals potential revenue headwinds.

2. EBITDA Margin Progression: Management targets 11-13% EBITDA margin by 2028, up from 10.1% in 2024. Tracking quarterly margin trends reveals whether efficiency initiatives are delivering results and whether pricing power remains intact.

3. Recycling Revenue Growth: As the highest-growth segment and strategic differentiator, Krones Recycling's revenue growth rate indicates whether the sustainability pivot is translating into commercial success. Outperformance relative to base business growth validates the strategic thesis.

---

↑ Back to Top

XIV. Conclusion: The Hidden Champion Revealed

Krones AG represents a particular species of industrial excellence—the hidden champion that dominates its niche while remaining invisible to consumers. From Hermann Kronseder's 100-square-meter workshop in 1951 to today's €5.3 billion global technology group, the company has navigated extraordinary transformations: reconstruction-era scarcity, the shift from glass to plastic, globalization's competitive pressures, financial crises, and now the sustainability revolution.

The strategic positioning achieved in 2024—through Netstal and Krones Recycling—represents potentially the most important inflection point since the 1997 PET pivot. As the only provider of complete closed-loop PET solutions, Krones occupies a unique competitive position precisely when regulatory and consumer pressure demands such solutions.

Would a young, 27-year-old Hermann Kronseder have dreamed back in 1951 that his newly established factory for building labelling machines would one day grow into a multinational corporation with around 20,000 employees? Probably not. Because despite his vision and innovative spirit, despite his commitment to perfection and his steadfast pursuit of ambitious goals, he remained authentic and kept his feet firmly on the ground. Ultimately, it was likely this very combination of character traits that enabled Krones to become what it is today: the leading one-stop-shop for the beverage and food industry.

For investors, Krones offers exposure to global consumption growth, sustainability transformation, and German industrial excellence—wrapped in family-controlled governance that prioritizes long-term value creation over quarterly performance. The company's 2028 targets—€7 billion revenue, 11-13% EBITDA margins, 20%+ ROCE—provide clear benchmarks against which to measure execution.

The fundamental question isn't whether the world will need more beverage packaging equipment—population growth and rising prosperity ensure it will. The question is whether Krones can maintain its competitive advantages while navigating sustainability transformation, geographic expansion, and eventual leadership transitions. Seventy-four years of history suggest the company is built to adapt. What happens next will determine whether that heritage translates into future value creation.