They invented the bubble wrap way back in the sixties. Today it constitutes just two per cent of the total sales worth $7.7 billion for Sealed Air Corporation. CEO Jerome Peribere describes his company as one which doesn't sell protective packaging but sells longer shelf life.
Until the late 1990s, Sealed Air was exclusively a protective packaging company. Today its products are sold to 175 companies, including all the big brands.
In 1998, it acquired the Cyrovac packaging division of WR Grace, the leading protein food packaging company, to become the leader in protein packaging, meaning meat, fish or cheese. In 2011, the company acquired a cleaning company called Divercey. Today, the company's market is diversified into three sectors - hygiene, food, and industrial and e-commerce packaging.
During Peribere's recent visit to India, he spoke to Business Today's Ajita Shashidhar about his company's focus. Edited excerpts:
Q. How does the acquisition of a cleaning company fit into your business model?
A. To make sure they pack safe products, we are intervening in food plants to ensure they respect the highest level of hygiene. We are also reaching out to meat producers, dairy product manufacturers and beverage companies. In India, our large customers are Coke and Pepsi . There is Allanasons (the largest beef exporters) and we are working with them to improve the shelf life of the beef they export. We are trying to improve the shelf life of meat from 90 to 120 days and fresh paneer from 30 days to 90 days. We try to extend the shelf life, retain the original feel and goodness of the food, as we understand food and we understand packaging. We bring the two together to create packaging which prevents all kind of food spoilage.
Q. Your company specialises in increasing the shelf life of food products. Can you give me an example of how you do it?
A. Last year, I was in New Zealand. We are the supplier to old lamb meat producers who export specifically fresh meat. So, when you want to sell meat to Europe, say the UK, the journey is about 70 days. The CEO of the company told me that they need to extend the shelf life of the packaging. Two years ago, Australia was exporting around 60,000 tonnes of meat to China. In 2014, it was 260,000 tonnes, so all of those products either go fresh or frozen. We supply to all the producers Cargill, Tysons, Allanasons. We are not selling packaging, we are selling shelf life. We are invoicing packaging and hygiene and we are the leading company in ensuring that quality and food waste is reduced to the maximum.
In the US alone, $9 billion worth of poultry meat is consumed every year. It is huge. If you wrap poultry in a stretch film, the shelf life of that product would be around three days. The urban population, especially the younger generation, after having shopped are not sure if they are going to have their dinner at home. The new generation is asking for higher and longer shelf life of products because there is more and more consciousness that they are wasting a lot of food. If we extend the shelf life of products, we could dramatically reduce the food waste we are generating and the cost is nil. The additional slight cost of high quality packaging is incremental compared to the wastage of products.
In India there are half a billion people who are poor. We need to improve the cleanliness of the streets, hotels and homes, and ensure that we don't spoil food. We invoice products but we sell a technology which ensures that the products arrive safe and in good condition at your home.
Q: How has the Indian arm of Sealed Air been performing?
A. We have been doing extremely well. In 2014, India was one of the highest growth countries for Sealed Air, specifically in the Divercey Care and Food Care division. The reason why we are doing well is because we have customers who understand that the challenge is really about damage control, food waste reduction and higher level of cleanliness. We have around 450 people in this country. We have a lab for laundry which was serving the Indian business. Now we are transforming it into a global lab. We have two manufacturing plants.
Q. Have you made any innovations for the Indian market?
A. We have. In laundry, we have introduced a new programme at an Indian hotel. They have been able to save 10 per cent of their costs when actually the cost of chemicals has gone up by 40 per cent. This is because they are saving on energy and water. The life of linen has also increased by 25 per cent.
We have devised new processes which can compete at the lowest end of costs. We have a new product launched for low-end restaurants who want a single product for everything. The same product can do two-three jobs. It is a hand wash, a floor cleaner and a dishwasher. This is the kind of innovation we work and develop depending upon the customer needs. We call it Suma 3-in-1 and it competes with the cheapest of cheapest soap in use. One litre of Suma 3-in-1 gives you 2,000 litres of cleaning solution.
Q. Does packaging cheese or paneer need a different technology in India?
A. It does because of the pack sizes. We still don't buy large pack sizes; the cold chain is also different. For example, we never had a solution for paneer. There are two countries that deal with paneer, India and Turkey. We used our understanding of cheese and studied the food chemistry of paneer and we gave them a solution.
We looked at what spoils the paneer. It has some level of bacterial content because it is not fully pasteurised. The bacterial content needs some oxygen to breathe, so if I give a barrier there, don't allow oxygen to transmit, my things should improve. Similarly dhaniya or coriander breathes, if it is breathing then I have to allow gases to go in and out, so we create a film which allows that. If you see the over-wrap that comes with all the cheese slices, it is supplied by Sealed Air.
Q. E-commerce packaging is an important source of revenue for the company. Can you throw some light on that segment ?
A. E-commerce is growing by double digits. The issue in most of the developing countries, which is really acute, is damage. Also emerging countries are cost-conscious. The problem is packaging has a negative cost, for instance, when you take a fulfilment plant of an e-commerce company, and take all the money spent on protective packaging inside the box and calculate on one side and next to that measure all the damage, the cost of the damaged goods is much higher than the cost of protective packaging.
I had discussions with a leading e-commerce company's CEO in India. He acknowledged that he has a big issue with regard to damage. We are working with Amazon and e-Bay, with the third-party logistics companies, and all of them are telling us to fix the damage issue, as the cost of taking back the product and replacing it is extraordinarily high. So, it is not about product costs, it is about total cost to serve. We have 195 labs where we have packaging experts, people dedicated to testing the robustness of the packaging that we propose. Packaging is a science which deals with shock, with product packaging absorption, cushioning and damage, it deals with vibration. Once you have fixed that, you are safe.
So, we are working hard and e-commerce is a segment which is extraordinarily growing for us. If you order your iPhone 6 through an e-commerce site then it would be delivered in a Sealed Air packaging. It has a very good cushioning and is extremely aesthetic. E-commerce is a division of our protective packaging division and contributes around 20 per cent of our protective packaging sales.