Bubble wrap inventor pops up as leader in high-tech food packaging
Come on now … you can all admit it to yourselves at least, if not to me. Is there anyone out there that has ever seen a piece of bubble wrap plastic and not started to pop some of the bubbles?
Originally invented in 1957 and marketed first as a wallpaper (I kid you not!) and then as greenhouse insulation, it wasn't until 1961 that its use as a protective wrapping was discovered, with the first customer being IBM who used it while shipping their IBM 1401 computer. While the product was trademarked by US company Sealed Air Corporation in 1960, nowadays this line of business - including those all-important padded envelopes - only accounts for 35pc of its sales as the company is better known for its food safety and security applications.
The food care division of Sealed Air focuses on providing processors, retailers and food service operators a broad range of integrated system solutions that improve the management of contamination risk and facility hygiene during the food and beverage production process. Those solutions also extend product shelf life through packaging technologies, and improve merchandising, ease-of-use, and back-of-house preparation processes.
Given the nature of its products, Sealed Air has considerable global presence and offers an excellent geographic spread of revenue across the emerging markets and Europe, as well as the Americas. There has been a change in the senior management in recent years and with this has come an increased focus on cost reduction and integration, product commercialisation and improved pricing. This sets the stage for a transformative shift in company profitability.
The company sees itself not just as a product seller, but also as a knowledge-based provider backed by thousands of scientists, engineers, equipment, application and industry experts, and state-of-the-art laboratories dedicated to delivering tailored solutions for their customers.
Not surprisingly, the company invests heavily in research and development (R&D) with the aim of improving the functionality of its packaging. This R&D drives many of its new and innovative products. While the packaging may not represent a large proportion of the cost in its customers' end products, it can have beneficial impacts such as extending the shelf life of fresh meats.
The security and safety of food sources is a key consumer concern today and Sealed Air plays an important role in this as the leading provider of innovative "farm to fork" solutions.
As the world strives to be more 'green', Sealed Air products can also assist by reducing food and packaging waste as well as lowering transportation costs through more efficient bulk packaging, and the conservation of resources.
Recently the management has been optimistic on the growth outlook for the company as they see several levers driving the business. Fresh red meat, smoked and processed meats and brewing are markets where growth for packaging is accelerating on a global basis. In North America, cattle production is starting to see a significant rebound after a meaningful decline in herd size and slaughter rates that started in 2007 and only recently bottomed.
Whether it's the growth in packaged foods, food safety, or lowering the environmental impact of our consumption, there are many reasons for investors to take a look at Sealed Air at the moment.
Aidan Donnelly is head of Equities in Davy Private Clients. For disclosures, visit www.davy.ie/AidanDonnelly
Any investment advice in this column is from the author directly and should not be seen as a recommendation from The Sunday Independent
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