Sealed Air Corporation (SEE) Earnings Call Transcript & Summary

So Hi, everyone. Thanks for joining today. I'm Josh Spector, chemicals and packaging analyst at UBS. I'm joined by Shneur Gershuni, Americas Head of ESG Research at UBS. We're happy to be hosting steel there, one of the leading global producers of fresh food and protective packaging materials with near $6 billion in annual sales. Today, we're joined by Myra Hughes Foster, Sealed VP of Sustainability Innovation and Strategy and Louise Lagache and Susan Yang from Sealed Air's Investor Relations team. Just in terms of format, I have some questions that I plan to run through, going to focus more on some of the sustainability aspects of Sealed [indiscernible]. And we'll likely have some time for additional questions in the end. If you'd like to have those asked, feel free to e-mail myself or Shneur will work to those in later in the call. Before we get started, I have to read a quick disclaimer. As a research analyst, I'm required to provide certain disclosures relating to the nature of my own relationship with that of UBS with any company on which we express of you on the call today. These disclosures are available at www.ubs.com/disclosures. Alternatively, you could e-mail me or Shneur will set them to you after the call. With that, I want to thank everybody for joining. I want to turn it over to Myra to start to give a quick overview of Sealed Air for those unfamiliar. And hopefully, you could see the slide that's being shown that gave a visual overview as well. So Myra, over to you.

Hello, everyone, and thank you for the opportunity today. So before we begin, I'd like to give just a general overview of C. As a company, we have 17,700 employees around the world. representing 110 manufacturing facilities, 39 packaging design centers as well as a host of equipment and innovation centers. We are proud to say that our solutions package greater than 30 billion solutions around the world. And if you look at the geographic mix of our organization for the last 12 months, 66% coming from the Americas, 21% coming from EMEA and about 13% coming from APAC. The Legacy CRYOVAC Division represents about 67% of our sales by end market. And you can see that industrials and e-commerce solutions make up the balance of that portfolio. [indiscernible] please. Sorry, so an additional slide or. Yes. So here, we talk about our CNET positive circular ecosystem. And this is our commitment to driving circularity by making sure that we design to develop and deploy solutions that ultimately have a positive impact on not only our customers, but their customers in our overall society, and we call this a net positive circular ecosystem. As it relates to sustainability, we believe in offering the best solution at the right price and ensuring that, that solution is sustainable. We're also focused on making sure that we eliminate waste settle in our own operations, but in the operations of our customers. And we believe that leveraging touchless automation is an enabler for allowing us to deliver sustainable solutions that drive impact and value for our customers and their value chains. We also believe in helping our customers to automate their operations and some of our innovations are driving those customer benefits to deliver the overall performance and then ultimately delivering an experience for the end consumer that is tied to our focus on digital, where we have the ability to communicate not only the Onpack information about the packaging solutions, but other important information that consumers find helpful as a benefit to improving the quality of life. We drive all of this circular ecosystem through our collaborations with a number of trade association partners and technology partners. And we believe that collecting that information, driving the results is important because what gets measured gets done. And by leveraging this net positive circuit ecosystem, we can demonstrate that we're able to deliver that value.

Josh, I think you could start the questions.

Okay. All right. I appreciate that overview. I think if you get started, I just wanted to ask. So if you think about some of the talk to you mentioned on the circular ecosystem. I mean, how would you define what your sustainability goals are? And what are you measuring to make sure you can't what you want to achieve?

Good question, Josh. Some of you may recall that back in 2018, we announced our 2025 sustainability and materials pledge. And part of that pledge was focused on 3 key areas. The first being that by 2025, we would design or advance 100% of our solutions to be recyclable or reusable that we would eliminate waste by incorporating an average of 50% recyclable renewable content in our solutions and that we really work to enable circularity by investing and supporting the establishment of the necessary infrastructure to drive that circularity. Additionally, we made a series of what we call operational sustainability goals, and that's where our commitment to net 0 CO2 emissions across our Scope 1 and Scope 2 emissions came into play as well as our ongoing commitment to reduce greenhouse gas emissions intensity, water intensity and energy intensity. We also made a commitment 2 years ago to strive for zero waste to landfill across our manufacturing waste, and that meant no waste going to landfill or external incineration. So as you can see on the slide, you can see the progress that we've made across those material and operational goals. This information is through the end of 2021 because we're in the process of finalizing and auditing the results from 2022, and that information will be released in our global impact report that's scheduled to be published in September of this year. I didn't speak to any particular questions you may have about progress that we've made as it was communicated in our last quarter impact report.

Yes. I mean let me just ask you while we're on this slide, and we're looking at the data here. I think as you look at your 2021, 2022 data, you recycle the renewable content, you're designed for reuse kind of a little bit of a step up '22 to '21, but a bigger step up by 2025. So a few years to go there. What are the types of things that really drive that step-up in your view? What are the type of things Sealed Air is working on? And how are those different across your 2 major divisions?

So I'll take the question of recyclability and end of life first. We are certainly investing in innovation that drives our solutions to be considered designed for recyclability. And so part of that leverages our own internal expertise to be able to assess our materials to determine if they could be compatible with a mechanical recycling stream. And so we believe that that's been a very instrumental aspect of our ability to innovate toward guidelines that are evolving on a daily basis around the world. Additionally, we know that because we are a company that is material agnostic from a recycled content perspective, we're focused on recycling renewable content across the food and the protective packaging portfolio. Right now, about 80% to 90% of our recycled or renewable content comes from our protective packaging portfolio. And so we continue to identify sources of recycling renewable content across the protective space but also to work to collaborate with technologies like advanced recycling to be able to generate and leverage the use of recycled content that is acceptable for food applications. So we think our commitment to innovation as well as our partnership with companies like ExxonMobil and others, Plastic Energy, specifically in Europe have been the key elements of being able to deliver against our very bold pledge.

Yes. And I guess if I follow up on one of your comments there about material agnostic part of it. So I mean, I tend to think about packaging on the protective side, you have more flexibility, maybe less so in food. Is that a fair way to think about it? Or are there opportunities for you to be material agnostic on the food side as well?

To that point, Josh, certainly, the availability of substrates to use for food packaging are probably a bit limited compared to what you can do for nonfood application. And that's largely driven by the fact that there are regulations specifically around what kind of materials can be used in direct food content. And so we do believe that there is a little bit more latitude on the protective side of the business to look across fiber and plastic and bioplastics. But we certainly are continuing to look at alternatives to classics, bio-based plastics such as our plant-based rollstock material as well as understanding what and if the role of fiber-based solutions might be on the food side. An example of that is the dark fresh onboard example, where we are leveraging a combination of plastic that can be easily separated from the fiber component, but still given the end consumer, the ability to have a package that a portion of it could be curbside recyclable. So we believe that the innovation approach that we're taking as well as the partnerships are going to help us to identify what those novel technologies are for both the food and the protective packaging part of our portfolio.

Okay. And when you were talking about how you designed the materials, I think you specifically said designed them so they could be mechanically recycled. I guess, is that the case that you think some of the flexible materials will go that route? Or is it more about how they can be sorted in different applications. I'm just curious how this links with if it's -- how advanced recycling plays into that design side of the equation as well?

Yes. So the reason that we're looking at some of the mechanical recycling standards is largely because they are influencing some of the country and state-level legislation that many of our customers and channel partners are expecting us to be able to achieve. So by having a good understanding of what the material properties are for mechanical recycling becomes a point of information for us as we look at designing our solutions. We're also future-proofing our materials but also designing for recycling of the future. As you know, mechanical recycling was really not intended for the kinds of flexible packaging materials that we produce. Rigid Class 6 are really the extent of what you can do when it comes to plastics and mechanical recycling. And so we're investing in both designing for mechanical recycling should that infrastructure come to bear. But we're also designing for the future technologies like advanced recycling because we know that, that's critically important for us to provide the kinds of feedstocks that we need for food and medical applications.

Okay. And if we think broadly, as you showed earlier, I mean, you are global, more North America, but you have exposure in Europe as well. So just curious, I mean Europe is generally at the forefront of a lot of the changes that we've been seeing, particularly around packaging. What is Sealed Air doing different today in Europe? Is there something meaningfully different in terms of how you approach the market or mix versus North America today?

Well, you're certainly absolutely right. From a legislative perspective, Europe has been on this journey for probably a decade or more. And when it comes to things like extended producer responsibility fees and plastic taxes, they certainly are at the forefront of that. So as a global company, we are looking at delivering innovations to help our customers to lower potential extended producer responsibility fees that are associated with whether or not the material is designed for recyclability or whether or not the material has recycled content. So we certainly believe that it's a bit of an indicator of what's to come in other parts of the world by what's happening and what transpires in Europe. And so we have teams, both from an R&D perspective as well as from an advocacy perspective related to sustainability. So we're actively engaged in those dialogues to influence policies as it relates to extended producer responsibility fees as well as legislation or mandates as it relates to recycled content. We certainly do believe that some elements of the EPR and the recycled content legislation is likely to move beyond Europe. And so by having a focused approach on addressing those needs of our customers in that part of the world, we feel that we are well positioned to address those changes as they move beyond EMEA.

Okay. I think Shneur, you wanted to jump in, I think you had a couple of questions.

Yes, sure. Thank you again for your conversation today. I was wondering if I can sort of take it up back to the 30,000-foot level a little bit. When I sort of think about your products, I was looking at [ Crobag ], I don't know if I've asked that correctly, can you walk us through, is it -- are the products basically recyclable ready so that you're saying that it can be recycled? Or is the goal to have it use completely or mostly recycled material. Trying to understand -- to help us out understand for some of our listeners here are not in the packaging space and more in the ESG space.

Yes. So great question. So the 2 are 2 distinct paths from an innovation perspective. When we talk about recycle-ready, typically, what allows something to be considered recyclable is that there is a means to collect it, to sort it and then to process it into new materials and have a viable end market. For flexible plastics, which is the predominant portion of our portfolio, there's really no infrastructure globally to really process those materials, collecting, sorting them or turning them into something new. The store drop-off stream, which some of you may be familiar with is an avenue for allowing particularly those packaging materials that have not been in direct contact with food or that could be considered clean or dry. That's kind of the first attempt at getting to some level of scale of actually collecting flexible plastics and then sorting them and reprocessing them into something new. So many of the plastics today that are defined as recycle-ready are really on the nonfood side of the business because they're actually going into composites and park benches and things of that nature. For food packaging, we're really future-proofing the material. We're really saying that we're designing the material. So when the infrastructure exists to be able to collect and process food contaminated plastics, our materials will be compatible with those recycling streams that would be able to go into an end market to drive value. So that's what we mean by recycle-ready. The solutions are not something you can put in a curbside band today, and they are not solutions that you can put into store drop-off today because they've been into direct food content, but the goal is to make them ready for when the technology is available. When it comes to -- go ahead.

And the material itself is, as you said, recycle ready, but you didn't use recycled material to create. So it's a virgin product…

Well, that's -- there's 2 different things. So you can have a solution that's recycled ready and contain recycled content, but you can also have a solution that's recycled ready that does not contain recycled content. So recycled content is really about what the material is made of Recyclability is about compatibility of the solution with an existing recycling stream. So there are 2 different things. One is about content and composition. Obviously, that can influence whether or not it's compatible with a particular stream of materials, but you don't have to have recycled content to be considered recycle-ready. I hope that answers the question. One is about composition.

I was more focused on your products themselves back are they recyclable ready?

There is a significant portion of our portfolio. In fact, about 50% of the solutions that we sold in 2021 across food and Protective are what we define as recycle-ready. So that means that those materials could be compatible with a recycling stream if the infrastructure existed. When it comes to recycled content, about 19% of what we sold in 2021 was derived from recycled or renewable content. The vast majority of that recycled or renewable content actually went into our protective solutions, largely fiber, but that's mainly because the supply of materials that are suitable for food packaging are quite limited. So rigid trays some of our [ Simirigid-forming ] webs and our plant-based roll stocks are the primary areas within the CRYOVAC business where we've been able to leverage recycle renewable content. Our work with ExxonMobil and Plastic Energy as examples, we're able to demonstrate that we could convert our materials into recycled content from advanced recycling that could be acceptable in food packaging under the CRYOVAC brand.

Got it. Okay. So at this point, right now, 19% of what you sell today uses recycled content, what's the journey or the path, at least on the food side, let's say, by 2025 or 2030? And what are the technologies that you're investing in to get us there? Or is it too early to think that we can see on the food side, actual recycled content?

Yes. So really for food contact packaging, quite honestly, advanced recycling technologies, what's going to be critically imperative for that to come to fruition. And we know from dialogue and partnerships that we have with our supply chain suppliers. We know that they are investing in being able to offer recycled content that's derived from advanced recycling. So we are continuing to work very closely with them to be able to understand the breadth of their offering and where across our portfolio. We can use that advanced recycled content. And we believe that, that's going to be an instrumental part of being able to achieve our goals around recycled or renewable content. We also continue to invest in new technologies, whether it's fiber or bio-based plastics to also understand how those inputs can be included as recycle renewable content across both the food and the protective portfolio. But advanced recycling is going to be critically important to not just Sealed Air, but many companies in this space to be able to hit their long-term recycled content objectives.

Makes total sense. Thank you for that. Over to you, Josh.

Yes. I mean, I'll maybe continue down somewhat of a similar path is just when you think about you guys are setting objectives for what you want to have be recycled content, how much of that can you drive? So I mean, I guess, obviously, adding more paper to the portfolio helps you with that. But on the heritage, more plastics side of the business, can you influence how much material you can get to achieve that? Or is there any technology breakthrough that would be needed to allow you to achieve that from another route rather than wait for advanced recycling capacity to come online?

Yes. So we are investigating in parallel to our focus on advanced recycling. We are looking at mechanical recycling. There are a number of mechanically derived polymers that can be fit for use in some of our nonfood applications. There are a few that apparently have approval for food contact applications. But for the vast majority of the mechanically recycled polymers that we found, we do investigate leveraging that in some of our nonfood applications. We're also focused on looking at ways as part of our commitment to eliminate our packaging waste or our manufacturing wages from going to landfill is how can we reclaim waste is generated in our operations and turn that into vital intake for some of, again, our nonfood applications. And so some examples of that include some of our fill air solutions on the protective packaging side as well as our high recycled content Bubble Wrap solution, which is also partly derived from waste that was generated in our operations, and that was converted into what we call post-industrial recycled content.

Okay. Just -- if I think about kind of the different parts of your portfolio, I mean what would you say differentiate you from other peers? What are you guys working on that you would say is different and novel in terms of some of these applications?

Well, the first thing I'd say is that if you look across the peer space that we tend to operate in, we probably have some of the most aggressive goals compared to any other company out there, particularly with our focus on driving to 80% recycled or renewable content. I think that where we are unique is, again, because we are material agnostic and we've got plastic and fiber in our portfolio, I think that allows us to make some progress on achieving those goals where some of our peers may be just solely in the plastics space. So I think that's one advantage. I think the other thing, too, is that we're investing in circularity. We're not just interested in going out there and buying recycled content just for the sake of saying, okay, we've got recycled content on our solutions. We really think that the real value is really enabling those circular value chains. And so working very closely with our customers who often have 0 waste to landfill goals as well and being able to demonstrate real circularity. So not just we're going to go out and buy some recycled content certificates, but really going in and making the investment to look across the value chain and to help our customers to collect their waste and to have that waste converted into viable via that in turn can be used as recycled content. I think that's one of the things that certainly makes Sealed Air unique in that space. The last thing that I'll comment is some of our own internal capabilities. I mentioned earlier that we have the ability to conduct recyclability assessments of our materials. We think we are probably quite unique in having that capability internal within the organization. And we believe that, that capability allows us to improve the speed of development because it allows us to use real-time internal expertise to understand where we are on our sustainability road map.

Okay. And I wanted to follow up that way. So when you talk about helping your customers reduce waste, I mean, you talked before about customer consumer drop off that store, what are the type of things that you're doing when you're seeing more success? And I don't know if maybe there's an example where you've seen less success. So how are you ultimately helping customers do that?

Well, our typical approach to driving sustainability is directly engaging with our customers to understand what their sustainability goals are. As you might expect, many of them have goals around designing for recyclability, either by 2025 or 2030 or some other time horizon. And so what we systematically tend to do is to look at the portfolio of solutions that we're providing to that particular customer or market segment and understand what we need to do from an innovation standpoint to shift from a material that saying may not be currently recycle ready to a solution that will be considered recycled ready and available for recycling when the infrastructure exists. For a number of years, we've been working with our customers to look at how do we rightsize the packaging or how do we make the materials thinner from a source reduction standpoint. So those are all avenues that we've pursued with our customers for quite some time to understand how to help them to lower the use of unnecessary packaging that they may have in their operation and then leveraging automation to also help to drive sustainability. So if you look at our IPAC solutions and rightsizing of secondary packaging for our customers, that in and of itself is another way of delivering sustainability to our customers by helping them to identify across the operation and across their packaging portfolio where there are opportunities to move to our more sustainable solution.

Okay. And I guess, I mean, coming back to when we talk about different substrates and particularly paper, I guess, versus some of the larger paper producers, what's the advantage that you see yourself as having as you try to grow into those markets versus some of the incumbent paper producers, maybe integrating more downstream, I guess, where is really the value creation? And how do you say you serve customers better in some of the records versus others?

Well, I'm not sure be aware that Sealed Air actually owns 2 paper mills. A lot of people don't realize that about us. And so we've had a presence in the fiber industry for many, many decades. And so we certainly have an advantage in that we have a source of material that many of our competitors have to either buy from an external source. So we think that having our own paper mills is certainly an advantage that we have. And again, I think the fact that we've got R&D resources, we have our packaging labs that, again, are part of our offer to our customers. So not only can we take materials that are derived from our own paper mills and leverage our manufacturing expertise to be able to produce many rations or many formats of fiber-based packaging. By having the package design labs as part of our portfolio, we're able to really look at the performance of those materials so that we deliver the optimal solution to the customer and not just focus on oh, it contains fiber. We want to make sure that, that solution even if it does contain fiber, it still fit for use because we want to make sure that we're not creating a situation where damage increases as a result of any decision that we make. And so we leverage that expertise to help our customers make informed decisions about what the best packaging portfolio or packaging format might be for their given application. So again, I think the internal expertise we have across classic and fiber is something that gives us an advantage over others in the space.

Okay. And I guess, I don't know if there's a way to conceptualize your R&D or maybe your innovation pipeline. Has it shifted now versus 5 years ago or so? I mean, is it more paper skewed or, I guess, plastic skewed from that regard? I mean maybe it's easier to talk about it in food versus protective. What are the customers really asking for? And how is that different?

It certainly depends on the customer. It depends on if they're in food or protective or even where they might be around the world, we believe in driving our innovation from customer insight. And so by leveraging the insights that we're getting from our customers in the markets and being material agnostic in our approach, our focus is to deliver a sustainable solution that meets all of the -- is for use criteria that the customer may have. So if a customer has a long shelf life solution, we are leveraging the years of expertise that we've had, particularly if you look at our fresh red meat or protein side of the business, I'd say that we've been a participant in that space for many, many decades. And so we understand the critical attributes that have to be balanced between sustainability and protecting the product to extend the shelf life and to manage it through the supply chain. So by having that expertise from an innovation standpoint, we help our customers to perhaps not fall into the trap of being so overly focused on recyclability from an end-of-life perspective, that they lose the understanding of what the critical importance of packaging really is to preserve, to protect and promote the product. And so we think that whether it's a fiber-based solution that a customer may be asking for or just a more sustainable solution than what they previously had in the packaging or been using from a plastic perspective. We leverage the in-house expertise that we have as well as the partnerships that we have around the world to focus on meeting the needs of the customers and leveraging the lenses of automation, digital and to be able to do that.

Yes. Myra about from the innovation pipeline perspective. I can also add a little color from what we see from a revenue perspective. Over the past 10 years, our -- I've seen a double-digit growth CAGR from our inflated bubble wrap on demand, paper systems and auto boxing solutions. Those are we have both the plastic and fiber options there. These are the areas that have definitely see more growth than the rest of the portfolio. The one thing we increasingly know is the customer's preference is with solution that has an equipment play, especially this not only satisfied the packaging needs but also solve customers, labor challenges, productivity challenges, et cetera, there. So as we are looking at our portfolios, we're looking more at what's a solution model there that can do both the materials and equipment, helping the customers to solve an overall challenge they have.

No, I appreciate that. That's actually -- I was going to ask next about automation and digital, obviously, big focus points for the company. I guess how does that overall play into sustainability or like any of the dynamics that we're talking about. Obviously, there's labor savings and there's cost and dollars associated with that. Does that change any of the sustainability conversations when you think about those aspects of it?

Yes. It certainly is playing into the sustainability field. For feel there sustainably is basically in everything we do. When we talk about automation, we start automation from our own company, automating our operations there. For example, in our food packaging plant, we do the automation and we focus on eliminating boxes. So those are the areas that in our own plans, we're reducing the carbon usage there and helping us on a sustainability goal. We're also leveraging our expertise in the design of our automation product, helping customers do the same thing, achieving the same target there. Myra mentioned the IPAC solution, which only also call the autoboxing solution. That's an equipment product line that is doing the rightsizing boxes. It's basically an alternative to the void fill options, void field solutions that's out there. So it's another way of achieving the sustainability goal for the customers there. And we're expanding our fiber-based assets, offering different type of substrate to the automation offerings there. We're developing paper versions of outback solutions where we launched our paper miller – [ BUBBLE Miller ] last year. So all these having equipment and materials playing together. We're integrating automation into the sustainability going there. And we also talked about digital in the past, digital printing, very simply is going to replace all the labels. You can get rid of the waste of all these labels there. And in addition, digital planting is using water-based ink instead of a solution based. That's another step toward the sustainability goal there.

Okay. And I guess as we think about -- actually, I'll follow up quickly on that point. Just with the -- when we think about the auto box system, and particularly, you mentioned that might remove some of the void fill materials. I guess, are you often serving the customer on the void fill side and the rightsizing of the boxes? Are those different customers? And I guess, ultimately, this comes down to, is that a net positive, neutral or negative that you might lose some of the void fill, but gain some of the rightsizing of the boxes? How does that impact your growth?

Yes. We certainly play on both sides. What we've seen is both sides have seen a pretty significant growth, and it's partly is because the overall e-commerce growth there. So it's hard to know if it's a one-on-one placement. But overall, we definitely see very significant growth on both sides. So I would say that it's the overall market growing there as well. The auto boxing, we also have been investing in our capacity. Last 2 years, we see a tremendous demand of growth there. And in addition to some of those components challenges we've seen, we also have capacity issues. We're investing heavily in our field to be able to meet the customer demand and solving the challenges for them.

Okay. That's helpful. So I guess, stepping back when you think about some new products, and you talked earlier Myra the food side with maybe being able to use some mechanical recycle product at some point? What's the development cycle on some of these products. So if we're starting to do that work, maybe customers really committed to this 1 or 2 years ago. When does that actually come out the back end as a finished product that might have some of these technologies or different mix built into that?

Specific to the food side, if you look at the CRYOVAC recycle-ready barrier bags, that was an innovation that we brought to market within a year of understanding what the delivery will need it to be as far as a solution for our customers that were looking for something they could consider recycle-ready. So obviously, we have an innovation development process and a stage-gate process that allows us to provide some rigor and structure around clearly defining the solution to -- or the problem to be solved, understanding the market dynamics and then accurately leveraging our resources across those parts of the portfolio that are going to drive the biggest results. And so by leveraging that level of discipline, we're able to have a very thoughtful and systematic approach to innovation. But depending on the product application of the market, we can be fairly quick to market with those solutions once we divide the critical criteria for success.

Okay. And if I just kind of think about that example you gave, so the CRYOVAC recycle-ready barrier bag, I mean that's going to a bit more of a concentrated customer base, I think, are they collecting and recycling that? Or does that still need that infrastructure to be put in place?

Correct. So recycle ready again means that it's designed for when the infrastructure exists. And so that solution is actually covering a broad spectrum of our portfolio because it supports the fresh protein side of our business. So if you think about the play of fresh proteins in -- particularly in Europe, that contributes to a significant part of our overall portfolio. But again, the recycle-ready designation is that when the infrastructure is available that, that material could be compatible with a polyethylene recycling stream. I think France and maybe 1 or 2 other countries are the only ones who are really actively looking at collecting flexible plastics at curbside. And so I fully expect that down the road, there'll be a lot of innovation moving to demonstrate that those materials are not just recycle ready, but they can eventually be recycled.

Yes. Do you see any momentum in doing that so you mentioned France in terms of what they're doing. I kind of think about it. I mean, if a lot of this is going to restaurants or other distributors kind of like collection of used cooking oil, right? Like eventually, there's a service that gets built up and it's done and it's collected and recycled that way. Are we anywhere near that in other areas? Or is it country state driven? Is there any private driver to really get there faster in any of these industries?

I think certainly, legislation has probably been the momentum behind many of the moves to drive to actually demonstrating recyclability like what you see in France. But I do think that across the U.S. and other countries, you've seen demonstrations of companies making announcements about a circularity example. So even in the U.K. 2 years ago, we worked with the retailer TESSCO to look at waste in their value stream and store drop-off collection and converting that into recycled content. Our collaboration in the U.S. with Ahold Delhaize, the [ Vetailer ] is also another example of demonstrating that without the force of legislation, we are working to be able to show that there are viable ways of collecting that material and recovering it and converting it into recycled content. So we continue to look across a number of channels opportunities, whether it's food service, whether it's the industrial space or automotive, we believe that there are technical avenues to be able to demonstrate that circularity. And so again, by designing our materials to be compatible, we're able to really focus in on how do we help our customers to achieve that circularity by 2025 or 2030, depending on what their particular objectives might be.

Okay. I was curious on the Liquibox business that Sealed Air acquired. And you guys had a pretty big growing fluids business already. How does that play to sustainability? I think for a lot of investors, I mean the example that you're showing on the slide, basically the wine in a box how does that become -- is that viewed more sustainable as the customers has Sealed Air view it that way? I mean, how are you viewing that versus last or the growth of can or other kind of substrates those liquid type formats.

Yes. The examples on the chart on the slide, you'll see is one of those automated form fill and seal system that's been actually currently commissioned by one of our large line customers. It's just a site the white in the box market is a very big market for wine itself is we estimate to be $100 million here. And analogistic plan a little bit of how the system works first. If you see on this slide on the left side, we're showing a critical process step of the system, including bag forming, fitment attaching, wine filling and back sealing there. On the fitment attachment process on the bottom left, our engineers have developed a very novel high-speed method of attaching the fitment while bag is being formed, essentially eliminating leakage and oxygen contact by avoiding punching a hole to the bank. And moving across the slide, you'll see an automated box making operation. The filled bags are placed in the digitally printed and fabricated blocks in a touchless process on the top right corner, we show our end product in a restaurant environment. Essentially a wine boxes are available for single serving use. -- means a single core of the line from the bag enables extending the shelf life from hours to act weeks. This is going to reduce food waste, the wine waste and spoilage, which can represent over 30% of restaurants and wine waste, wine cost as well. So if you're looking at those little bubbles on the bottom, we see the benefits of this application here. I mentioned the 30% waste reduction. There's also for this is helping replacing the rigid container, replacing a bottle and pork, essentially helping achieve this initial reducing covered footprint there. I think Myra probably is a better experience or knowledge to explain how exactly this is helping on the environmental side the knee here. We talk about the shelf-life extension as well. And also for the customer side with this cutting-edge system and they're able to get pretty fast customer payback. On our side, it has the highest solution multiple flyer in our portfolios. I believe we say we also have a slide talking about overall -- sorry, this is more the Liquibox, not the wine the box story, but it's more of a look of box packaging solution, how is it designed for circular ecosystem and Myra, I think you wanted to touch a little bit on this slide on overall how of the box is helping us.

Yes. Just to add to that, part of that carbon footprint looks at lightweighting to material as well as how viable material is for recycling. And so the solutions, the base film that Susan alluded to that the fitment was attached to is actually a recycle-ready solution. So as I talked about before, being designed to be compatible with polyethylene recycling, that's another benefit. So when you think about lightweighting of the material compared to bottled and work, no issues of breakage compared to what you might see in a typical glass operation. There's a considerable carbon footprint benefit by going to a flexible packaging versus a rigid solution like a bottle. And so we've been able to demonstrate and to learn more about what Liquibox has been able to deliver when it comes to sustainability benefits as a result of source reduction, lightweight and just overall environmental impact of producing flexible plastics compared to producing bottles.

Is the fitment recyclable?

The fitment in this case, I think, can be designed to be polyethylene compatible. It depends on the type of fitment that's used. But I do believe that across the portfolio that there are a number of fitments that have been shown to be compatible with polyethylene.

Okay. So as we talk about kind of more circular solutions recycle-ready, other polymers or other materials I mean, generally, a lot of that is almost synonymous with more expensive or higher cost. I'd just be curious from customer conversations, if there's anything notable in terms of any pushback. So if you're trying to design and develop a new solution, is pricing the biggest pushback? Or has something else come up more so for customers or really it comes down to willingness to pay and how that cycles down through the supply chain.

Yes, pricing essentially is an element in any product offering that we have there. So it's really not unique to a new fiber-based solution or sustainable solutions, essentially is always one element of any kind of offering that's there. What we know everybody knew is the sustainability packaging is really a long-term trend. The pressures from government or nongovernment organizations or consumers are out there and those pressures will not end. What we do notice that is when there are major economic downturn, for example, when COVID first hit, the pressure seems to be on hold a little bit and the issue is reported on a back burner. But as soon as the economic crisis or situations over the topic essentially is back on. We have our own sustainability goals out there. Our customers actually under the same pressure as we do. What we do notice is for those who have a similar sustainability goals as us and who are more committed, they are more willing to pay for the options there. For discussions with customers, the #1 thing actually comes into play is the performance metric. Is it actually solving the issues or the packaging needs that they're looking for? And is it helping them to improve their own operations? And then it comes down to when all those metrics are met, what is the pricing that's out there. And like I said, pricing is an element of any product offering, any discussions on new innovation stuff there. And Sealed Air is committed to provide the best product at the right price, make them sustainable. We want to, and we're committed to make sustainably affordable to our customers.

Are you using bioplastics in any meaningful way? I guess when I think about the food side of the business, obviously, to your point, protected that package -- protecting the food and reducing spoiled reducing waste is kind of the bigger goal there. So it's probably bioplastics or some alternatives there that might be the way to solve some of this. Is that a meaningful share today? Or are there any bioplastics that you found more, I guess, agreeable with what you make today?

We do consider Bio Classics as part of our innovation portfolio. And an example of that would be our plant-based roll stop that has a starch component that replaces what was traditionally a virgin oil-based input. And so that is something that is part of our solutions portfolio. In years past, we've also looked at a bio-based material for our protective packaging solutions. But we continue to have access to that material, but have not had as much traction with bio-based packaging on the protective side. There seems to be quite a bit of interest on it for the food packaging side. But we are constantly looking at new innovations as they evolve and are introduced to the market, and bioplastics are certainly within the scope of what we are evaluating. As an example, like I said, the plant-based [indiscernible] stock, which contains starch.

Okay. That's helpful. So I mean I think we've probably covered a lot. I think we're about up on time. Let me just - I don't know if Shneur, if you have anything else from your end. But if not, we can probably wrap it there. Shneur anything to ask.

No, I'm all good. I was definitely interested in the Liquibox stuff potential and the ability to put a nozzle on, but I think we can defer that to another point in time.

Well, sounds good. I mean with that, I think we'll leave it there in terms of this call. So Myra, Susan and Luis, I want to thank you guys for taking the time today. I guess if anybody listening has any questions, feel free to reach out to myself or the IR team is still there. I'm sure we can help you fill that gap there. I don't know if Myra anybody else from Sealed if you guys have anything you want to close with or if you're all good.

Thank you for having us. Appreciate the opportunity.

Alright, thank you very much.