EUR 850.00 For Business Accounts Only

Morningstar | Shipment Volumes for Sealed Air's Key Product Lines Will Remain Strong in the Long Run

Sealed Air produces a wide variety of flexible resin packaging, protective shipping materials, and integrated packaging systems. Food care (65% of sales) and product care (35%) segments make resin-based packaging that protects products as they make their way to end users. This encompasses a wide variety of meat products in food care, and both industrial and e-commerce shipments in product care. Both segments benefit from a razor-and-blade model. Customers with Sealed Air equipment on-site would find it costly and time-consuming to switch from Sealed Air consumables. As a result, Sealed Air enjoys more pricing power on consumables than its more traditional peers.A cyclical upswing in the beef cycle should be a tailwind to Sealed Air’s food care segment. Rebuilt North American and European herds should give way to higher slaughter rates in the coming years, boosting the amount of resin packaging sold by Sealed Air. In addition, a relatively weak Brazilian real should bolster meat exports to developed markets. Product care is positioned well to benefit from the global transition toward e-commerce. We expect inflatable protective packaging use to grow with increasing e-commerce volumes. Sealed Air's market dominance in integrated packaging systems makes it challenging to capture share of consumables from them. In addition, customer pack data fuels better cube optimization and damage reduction, allowing Sealed Air to offer various levels of no-damage guarantees. Within Product Care, we expect resin-based offerings such as flexible mailers to increasingly gain share over relatively expensive cardboard box solutions, particularly as the company integrates biodegradable resins that could prove cheaper and remain eco-friendly like boxes.