Sonoco will acquire Peninsula Packaging Company for $230 million, improving its performance in the fresh produce fixture of US supermarkets.
California-based Peninsula Packaging manufactures thermoformed packaging for fresh fruit and vegetables.
The majority of its business is focused on packaging for a range of whole fresh fruits, pre-cut fruits and produce, as well as prepared salad mixes. It recorded pro-forma sales of approximately $190 million in 2016 and operates five manufacturing facilities – four in the US and one in Mexico.
The deal forms part of Sonoco’s plan to expand its consumer packaging portfolio, and comes just three months after it bought flexible packaging company Plastic Packaging.
Peninsula Packaging makes thermoformed containers for the fresh fruit perimeter.
Sonoco president and chief executive officer Jack Sanders said: “Our goal has been to strategically expand our consumer packaging portfolio to grow our offerings in both the centre of the store and the fast-growing perimeter. With the addition of Peninsula, Sonoco will nearly double its thermoforming packaging capabilities and occupy a strong packaging position serving the perimeter in fresh food products, combined with our existing offerings in the centre of the store, including those serving a range of frozen and shelf-stable foods.”
The phrase perimeter is used mostly to refer to the fresh produce sections of supermarkets, like fresh dairy, meat, bakery and fresh produce.
Sonoco executive vice-president and chief operating officer Rob Tiede noted that, over several years, supermarkets have spent $15 billion growing their freshly prepared options in order to increase sales of items along the perimeter of the store.
Recent industry research projects that perimeter store sales of fresh foods could achieve compound average growth of between 6% and 7% over the next four years.
“Combining Peninsula’s product lines with Sonoco’s packaging capabilities positions us extremely well to capture new growth in the rapidly expanding fresh and natural category,” Tiede said, “while greatly accelerating and enhancing our ability to offer our customers the most diverse consumer packaging formats and solutions in the industry. For example, this combination will allow Sonoco to deliver manufacturing and supply-chain synergies gained from the connection between thermoformed trays and film lidding stock, which is an important customer differentiator.”
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