) has united with Bunzl Distribution and Paper Pak Industries to
introduce the UltraFreshSystem for packaging fresh-cut produce.
UltraFreshSystem is a custom-designed, thermoformed Sonoco tray
with an "UltraZapXtendaPak" food safety pad from Paper Pak
Industries. The safety pad helps in absorbing any excess moisture
forming inside the package, in addition to discharging carbon
dioxide that forbids micro organisms to grow inside the packaging.
Moreover, the tray has an insert that channels liquids away from
The tray coupled with the absorbent pad extends shelf life of
fresh-cut products by helping in slowing down their respiration
rate. Thus, the products look fresh and firm until the use-by date.
UltraFreshSystem is cost effective and eco-friendly. It will
benefit the processors with better margins by reducing the
The collaboration benefits Sonoco in augmenting its product
portfolio and reaching out to its extended customer base with
improved services in the consumer packaging segment. The segment
generates highest revenues, representing 40% of the company's total
revenues during first-quarter 2012.
Moreover, Sonoco will benefit from the reauthorization of Farm
Bill 2012 that will help supporting nutrition policy among other
policies by funding significantly in the fresh fruit and vegetable
program. The bill will expire in September 2012. The Senate
Agriculture committee recently passed the Agriculture Reform, Food
and Jobs Act of 2012, marking the beginning of the company's
efforts to reauthorize the Farm Bill.
Sonoco's objective is to be the global leader in
customer-preferred low-cost packaging solutions within the targeted
customer market segments. Due to the cost-competitive nature of its
businesses, Sonoco regularly evaluates its cost structure,
including its manufacturing capacity and also to respond to
fundamental changes in its markets.
During 2011, Sonoco announced closures of a flexible packaging
facility and a thermoformed plastic packaging facility in Canada, a
tube and core unit in France, along with a fulfillment service
center and a point-of-purchase display manufacturing facility in
the U.S. In addition, the company divested two small businesses, a
plastics operation in Brazil and a tubes and cores operation in the
U.S, and realigned its fixed cost
However, volatile raw material prices and uncertainty among its
customers are concerns for Sonoco, given the slow recovery in the
U.S. and ongoing European crisis. Moreover, it faces tough
competition from companies like
Bemis Company, Inc.
Currently, Sonoco retains a short-term Zacks #3 Rank (Hold). We
have a long-term Neutral recommendation on the stock.
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SONOCO PRODUCTS (SON): Free Stock Analysis
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