Bemis sees ‘Afresh’ trend as next big thing for flexible packaging
Bemis president and CEO Bill Austen told shareholders during the firm's Q2 2016 financial results that part of the firm’s asset recapitalization program is to be focused on the fresh and organic products market.
Austen made the comment in response to Philip Ng, MD of investment firm Jefferies & Company, who said packaged food volumes for the US have been ‘muted for some time’, with growth coming from the fresh and organic market, and particularly from smaller businesses.
Ng asked what Bemis was doing to target this market given recent high growth enjoyed by private label producers and co-packers in fresh and organic products.
“Asset recapitalization allows us to attack that piece of the market, the afresh trend if you will," replied Austen. "Because it's usually shorter runs, quicker changeovers are required, better service to customers, and these newer assets clearly help us do that, which the older legacy facilities just couldn't handle.”
The firm is looking to close four legacy plants in Latin America.
Austen said Bemis is "taking out less efficient, smaller, older legacy facilities" it acquired with Emplal and consolidating and moving that volume to newer facilities for a more efficient operation.
The company has also launched products developed through its Innovation Center, such as a flexible stand-up pouch for salad dressings that are single-served, and on-the-go convenience-type of products.
Flexible pouches for condiments
According to Austen, a number of CPGs (Consumer Packaged Goods companies) are moving from bottles and rigid plastic materials to flexible pouches for condiments such as mayonnaise, mustard or salad dressings.
During the Q2 financial results conference, Jason Freuchtel, equity research senior analyst at SunTrust Robinson Humphrey, asked if Bemis had seen any incremental business wins recently as a result of the Innovation Center and if it serves customers in the US and global packaging segments.
“It's a global center,” said Austen. “We've had customers from every region of the world come and collaborate with us in that facility. Since the facility has been open, we've had over 200 collaboration sessions with customers in either using our labs, looking at our equipment, doing some things differently, or having 'ideation' sessions.
Among products developed at the center has been packaging for foods tapping the protein trend, including snacks based on cheese, processed meat, nuts and dried fruits.
“The center is at the heart of what we do, which is focusing on the customer, bringing the customer in, helping them innovate their products, so they can get their brand off-the-shelf faster than their competitors.”
Austen added the company has some interesting projects coming up and that some investments could be coming onto the market later this year, mainly in Eastern Europe.
“In the US, we are looking at things that could have a lot of synergies with them," he said, adding that there is "not a lot" going on in Latin America. "Our teams in Latin America have their hands full with restructuring and the integration of Emplal so it would not be in our best interest to add anything there for the next year or so."