The packaging industry was a study in contrasts during 2001.
In rigid packaging, new PET bottles continued to emerge. But, notwithstanding the plastic beer-bottle-throwing incidents in December at two professional football stadiums, the market share of those new PET bottles remains small.
Many processors consolidated operations, and waves of large acquisitions in years past were not regularly repeated in 2001. Still, many smaller deals continued to be made.
``Big deals are not happening now,'' said Peter Hughes, managing director of equity firm CLB Partners LLC of Dix Hills, N.Y. ``Middle-market deals still can happen but they take a lot of creative work.''
Hughes should know. His firm was retained in December by Paradise Inc., a Plant City, Fla.-based firm that makes plastic containers for its own line of candied fruits and for outside products. CLB is seeking a thermoforming company for Paradise to buy.
At least four or five large rigid-packaging firms are for sale right now, said consultant Timothy Burns of Cranial Capital Inc. in Williamsville, N.Y. But rigid packagers face thin profit margins and slow sales growth - generally in the 7-9 percent range - which is not sparking buyer activity, he said.
``The biggest and seemingly only beneficiary of PET packaging is the bottler and maybe the end user,'' Burns said. ``The supply chain for PET is unsettled and in a bit of a precarious position financially.''
For makers of flexible packaging, the year was much better. Many of those publicly held companies, especially those making protective film and sheet for food products, outperformed the stock market and continued to record healthy sales and profit growth.
A poster child was Minneapolis-based Bemis Co. Inc. Its stock price rose from about $28 a share in January 2001 to $48 per share in early December.
``Generally, if the economy is healthier, stockholders get more excited over dot-com or technology stocks,'' said Huston Keith, principal of consulting firm Keymark Associates Inc. of Marietta, Ga. ``You don't get the big growth swings in consumer packaging, but it stays fairly consistent year after year.''
The U.S. flexible packaging industry remained flat in 2001 at about $103.6 billion, said Bill Weizer, vice president of plastics and chemicals for Cleveland-based Freedonia Group Inc. Plastics packaging shipments are expected to rise 5.4 percent yearly to $42 billion by 2005, according to a November study by Freedonia.
That growth is not expected to outperform a similar rise for other materials, including paper and glass, Weizer said.
Flexible packaging's stock growth is a bit less certain, especially if the economy brightens, Burns said.
``The packaging industry will have truly cracked the nut when it's not viewed as a temporary depository for nervous investors' money,'' Burns said. ``A lot of [stock] growth has been because of nervous reaction.''