Demand is continuing to grow for Versalite brand cups made from polypropylene by Berry Plastics Group Inc.
The insulated cups, being positioned as an alternative to expanded polystyrene and even premium paper cups, already are being used by Dunkin' Donuts, Subway and 7-Eleven as well as “several other regional customers,” according to Berry CEO Jon Rich.
“In addition to already commercial customers, the pipeline of others who are now testing or who have expressed interest in tests continues to grow,” he said on a recent conference call to discuss quarterly earnings.
Also boosting interest in the Versalite brand, the CEO said, is New York City's decision to ban EPS in certain forms at food service establishments.
While that move is headed to court, thanks to a recent lawsuit filed by a group that includes EPS container maker Dart Container Corp. as well as the Restaurant Action Alliance NYC, Berry sees potential for Versalite growth due to the city's move against EPS.
“To date, the majority of our customers for Versalite cups switched from expanded polystyrene, commonly known as EPS, in response to regulatory requirements or to meet sustainability objectives despite the slightly higher cost they incurred,” Rich said.
“As we look forward to building higher demand for Versalite in the future, significant opportunities continue to exist by targeting customers who are currently using premium paper cups where a Versalite cup offers greatly improved performance, graphics, and recyclability at a very competitive price,” he said.
While still small in comparison to PET and high density polyethylene, the recycling market for PP is expanding. It's this emerging recycling market for PP that's helping to heighten the sustainability message of the resin.
“Demand and interest in Versalite products continues to grow. And so we're very pleased with the progress that's being made there,” Rich said.
Versalite cups are made at Berry's Madisonville, Ky., plant, where Rich said “the first phase of that building is now full.”
Berry is now trying to determine whether to expand at that site or look elsewhere to add Versalite capacity.
“We're also communicating and having dialogs with our customers about making sure that we put capacity that's in a geographically near location to our customers' distribution centers,” Rich said.
“We're evaluating that as we speak,” he said.
Berry also posted record per diluted share earnings during the company's fiscal year second quarter.
The Evansville, Ind.-based plastic consumer packaging and engineered materials company earned 38 million, or 31 cents per diluted share, on sales of $1.22 billion for the quarter ended March 28. That compares with earnings of $12 million, or 10 cents per diluted share, on sales of $1.21 billion during last year's fiscal year second quarter.
The increase in revenue is attributed to acquired businesses over the past year and partially offset by “soft consumer demand,” the company said.
Berry reported making further progress on its “top priority” of reducing debt to a range of two to four times adjusted earnings before interest, taxes, depreciation and amortization.
The first half of the current fiscal year saw Berry reduce that number from 4.6 to 4.4 times EBITDA. The goal during the full fiscal year is to achieve a 0.5 reduction.