Avon and Estee Lauder both lower 2005 expectations

The HBA Expo floor was abuzz that both Avon and Estee Lauder have reduced their earnings expectations for financial year citing the continued rise in oil price that is hitting manufacturing costs, as well as other factors.

Avon announced that and unexpected shortfall in all of its four sales regions will be effecting its original projection by as much as 16%. Avon is still expecting revenue increases though in spike of the current situation.

On the other hand, Estee Lauder expects an approximately 1% hit due to currency translation negatively impacting sales and a 10% hit to their bottom line caused by factors such as expenses relating to closures and over-stocking.

Cosmetic and personal care manufactures all expressed concern yesterday because of economic uncertainty and the fact that raw material costs especially in packaging, and transportation are expected to skyrocket.

Distributors of packaging complained that increases on inbound freight on packaging such as glass bottles have been affected by as much 25% this year, which does not even factor in the latest fuel increases.

Manufacturers of packaging and packaging distributors have no choice but to pass these increases on to their customer, which has everyone up in arms. Since packaging accounts for about 10% of most products cost, this is going to effect bottom lines if even the most profitable companies.

The announcements are early signs that cosmetics manufacturers are in for a rough storm, as economic conditions continue to look doubtful.

Both the Packaging and Industrial Films Association (PIFA) and Flexible Packaging Association (FPA) warned its customers of significant price increases.

On a brighter note, two suppliers of printed labels I interviewed both claim that the do not expect any price increases that they will have to pass onto their customers and that they are both doing so well they are willing to absorb the increases of their raw material costs.

HBA Packaging show jitters…

It is that time of the year again when the best packaging, cosmetic and personal care show -the HBA Expo in New York City begins.

This show looks like another groundbreaker from what I saw yesterday while walking the floor after an interview yesterday.

Since I have exhibited or visited all but one show since the HBA Expo started, I guess I can be considered and expert on this show.

New booths and an ever-expanding Asian supplier section are the first things that struck me when walking the trade show floor. Plenty of new packaging and new raw materials I saw in the cases and in displays is what is drawing me back today for the grand opening of the premier packaging show.

Anyone who recognizes me and asks for a a free dinner tonight, gets one. I will be the person in the suit with shoes on and a briefcase. See if you can find me!

Traditional Packaging still preferred by consumers.

According to a report by the Can Manufacturers Institute (CMI) in conjunction with PACK EXPO, Americans continue to favor traditional packaging, including metal cans, instead of pouches and newer packaging in their food and beverage Purchases.

This report was based upon telephone interviews of 1,000 respondents who considered metal cans to be the safest of all containers. The study also revealed that busy consumers want future packaging to be simple, easy to use and convenient. This further reinforces the fact that all of the recent innovations in metal packaging and not only overwhelmingly applauded by consumers, it shows that the metal can remains one of the most economical, environmentally friendly and safest packaging format.

88% of the survey respondents favored traditional packaging such as metal cans, plastic and glass bottles and jars over pouches and paperboard packaging. There is also a perception by consumers that metal packaging is best at keeping nutrients without preservatives.

90% of survey respondents cited food safety and tampering as major concerns as that the metal can was the most tamper evident packaging followed by glass containers, plastic containers, paperboard packaging and the pouches used in packaging.

Robert Budway, CMI president proudly announced that "This packaging trends report captures a moment in time," and that "The metal-packaging industry is in the midst of a dynamic change with breakthrough innovations easy-to-use containers with twist-tops, resealable metal lids, pull-tab lids and peelable opening systems representing an exciting new chapter in the venerable food can's 200-year life." He went on to say "Increasingly convenient packaging methods and rising recycling rates highlight the new focus of the metal-can industry: improving the ease of consumers' lives and protecting the environment around them."

Cans have been on of the most successfully recycled component of packaging for many years now and my own experience has shown me that people who are not normally "recyclers" more of then that not at least recycle cans so it was not surprising to me that 86% of the packaging survey respondents listed metal cans as recyclable over paperboard and pouches.

I had the pleasure of spending hours discussing packaging and the evolution of packaging with two extremely well known packaging industry distribution insiders and our combined experience in the packaging field exceeded 50 years.

In both interviews the topic of cycles of evolutions in rigid packaging was disused at length. Metal cans for aerosol came up in one interview, and metal packaging for food and beverage played an important role in the second interview. Both insiders perspective clearly showed that while individual metal packaging components have changed - especially an aerosol packaging, metal packaging is still an integral part of their business and they expect that metal will continue to be so based upon their customers demand for traditional packaging.

Plastic resin prices poised to soar…again.

Plastic resins prices have already surged almost 40% since June and with even the limited damage caused by Rita. Prices will surge again.

Going to the gas station has become increasing painful for everyone the past few months and we all knew that this is not the last place our wallets and pocketbooks were going to be affected by the ever increasing cost for oil and natural gas.

Soaring natural gas prices are not only going to be dramatically increasing the cost to heat homes this winter, they are pushing up the costs of chemicals and resins that will increase across the board packaging costs.

Natural gas is going to increase resin prices for packaging because not only it is and integral raw material in plastic resin but it is a fuel source to run the plastic resin manufacturing facilities.

Not only is styrene, glycols and other raw materials in tight supply because of 2 hurricane-related production shutdowns and transportation issues, fuel surcharges for trucking materials to their destinations have doubled creating business-threatening cost changes. Manufactures in the plastic molding industry will have no choice but to pass these increases costs to their customers, which will ultimately hit consumers hard.

If this is not bad enough, the law of supply and demand will also dictate higher prices for plastic resin in packaging as according to the U.S. Census Bureau figures, the U.S. trade deficit in plastics products grew to an astounding $1.47 billion in 2003 from a mere $526 million in 2002. Resin shortages may even become an even bigger concern than higher prices.

According to Chuck Hamley, president of Advanced Extrusions Inc "So far we are not having trouble getting material. But it is my No. 1 concern".

Packaging Manufacturer Saint-Gobain Calmar Acquires Italian Pump Company

Saint-Gobain Calmar a packaging manufacturer who specializes in pumps, dispensers and sprayers has just acquired Microspray Delta an Italian manufacturer of pumps for the fragrance and cosmetics industries.

Calmar is one of the leading manufacturers of pumps sold in the US and abroad is going after the small but competitive European market for cosmetic pumps. The other current leaders of this niche market are the leader Rexam and the Aptar group. This move by Saint-Gobain Calmar will thrust them into the number 2 position.

Calmar is best know her in the US for their dispensing packaging such as fingertip sprayer pumps, trigger sprayers pumps, dispensing pumps, cosmetic treatment pumps, and airless dispensing systems. In 1998, Calmar became part of the Saint-Gobain Group's Packaging Sector. While Calmar has now sold fragrance pumps for years in the US, their sales pale in comparison to the dominate leaders in the US fragrance pumps market: Emsar (a division of Aptar) and Rexam.

Microspray Delta who employs 70 people and whose revenues reached over €16 million, was established in 1948 an for the last 18 years specialized in producing pumps which has allowed the Milan based company to sustain growth as a result for increasing demand for pumps.

Microspray Delta currently manufacturers including screw, snap-on and crimper pumps, along with a variety of actuators, caps and other accessories. Their pumps have always been received well by packaging buyers and consumers alike due to functionality and consistent quality.

Good Job Alcan!

Alcan Inc. announced today that it is donating 500,000 to the American Red Cross to assist in relief efforts following the devastation caused to the U.S. Gulf coast by hurricane Katrina last week even though Alcan does not currently have any facilities in the affected region.

"On behalf of Alcan, our deepest sympathies and prayers go out to the families and friends of the victims, in particular those who are part of our family. At present, many Alcan retirees and at least one employee were directly impacted by the hurricane," said Travis Engen, President and Chief Executive Officer of Alcan Inc. "Tens of thousands of people have lost everything: family, friends, homes, jobs. It is reassuring to see the global community unite and collectively assist the survivors to rebuild their lives," he added.

Ironically, Alcan operated a cable plant until 2003 in Bay St. Louis, Mississippi, which is a town that was virtually flattened by Katrina. This facility is one of the few buildings to have not been completely destroyed by Katrina and is being used in the relief effort. Alcan has also stated that they are monitoring developments in the region and continuing to assess additional means of providing assistance.

Alcan, not only a leader in packaging, a company setting a good example!

Injection molder for Packaging bought by Rexam

The Rexam global packaging group has acquired US-based Delta Plastics who employs over 350 people for $154m.

Delta Plastics designs and manufactures jars and closures primarily for the personal care and food packaging sectors. They also have a technology center, which designs, develops and manufactures Delta Plastics own molds and automation equipment.

Delta Plastics 2004 sales reached $50m and it had net operating assets of $49m was previously owned by private equity fund Stonebridge Partners, which took control in June 2003.

Rexam chief executive Lars Emilson said: "Delta Plastics is a well run operation that has posted impressive growth rates in recent years.

"The acquisition is perfectly in line with our strategy to grow our Plastic Packaging business and enhance our current product offering. It will increase our presence in the important US market and we foresee a number of synergies in areas such as raw materials purchasing, technology access and additional sales."

Alcan and United Steelworkers move forward

850 unionized employees represented by United Steelworkers (USW) Local 5668 at the Ravenswood, West Virginia, aluminum rolling mill, have ratified a new five-year agreement effective as of June 1, 2005 with Pechiney Rolled Products, LLC., a wholly-owned subsidiary of Alcan Inc.

"I am very pleased with the outcome of the ratification vote. It is a
clear demonstration that all parties concerned are determined to work together to build a bright future for Ravenswood," Michel Jacques, President and Chief Executive Officer, Alcan Engineered Products. "Building on the progress achieved in the last two years, we are now in a position to undertake new initiatives to improve the long-term viability of the plant. Soon to be re-named Alcan Rolled Products-Ravenswood, the facility is a key asset of the Engineered Products Business Group, helping to serve better a wide range of customers especially in aerospace," he added.

The Ravenswood plant is one of the largest aluminum rolling mills in the world and produces high quality aluminum plate, coil and sheet products for the packaging, aerospace, aeronautical and transportation industries.

Alcan is a multinational, market-driven company and a global leader in aluminum and packaging which employs almost 70,000 people and has operating facilities in 55 countries and regions. With operations in primary aluminum, fabricated aluminum as well as flexible and specialty packaging, aerospace applications, bauxite mining and alumina processing.

Aluminum Can Companies Donate Cans

Millions of Cans of Water for Victims of Hurricane Katrina will be possible because of the generous donations by Aluminum Association member companies Alcoa, ARCO Aluminum, and Novelis whom are sending truckloads of canned water to the victims of Hurricane Katrina.

250,000 cans were shipped yesterday from The Aluminum Association's Cans for Habitat for Humanity recycling program, with the packaging donated by Crown Cork and Seal.

The companies are arranging production for about 5 million more cans for the ongoing relief effort. Packaging companies Ball Corporation, Crown, and Rexam are producing the new canned water supplies. Even beverage and can maker Anheuser-Busch Companies announced Friday its plans to donate 2.5 million cans per week.

"This is a major natural disaster with untold death and human suffering," said Aluminum Association Steve Larkin. "Our thoughts and prayers are with the people of New Orleans and the Gulf Coast."

The Aluminum Association, based in Washington, DC, represents U.S. and foreign-based primary producers of aluminum, aluminum recyclers and producers of fabricated products, as well as suppliers to the industry. Member companies operate almost 200 plants in the United States and many conduct business worldwide contributed $1,000 to the American Red Cross for the relief effort.

I am glad to see when there are so many on need, that members of the packaging industry are pulling together to make a difference. Thanks for making for making a difference.

Packaging company Rexam to build new plant

Rexam global consumer packaging group has announced that it is to build a new beverage can making plant in Brazil, to meet increased demand.

Rexam's Chief Executive Lars Emilson, announced "The project is a continuation of Rexam's strategy to increase our presence in this important market and will reinforce our competitive advantage in the region. It is an important step forward in an exciting market and it will strengthen our capability to serve our beverage can customers in South America."

The packaging manufacturer Rexam is and the world's number 1 beverage can manufacturer and the cans slated for product in the new plant are regarded as the optimal packaging solution for beverage distribution.

The beverage can manufacturing plant will be in Cuiab, in the state of Mato Grosso, in the centre-west of the country which is the region with the fastest growing GDP levels in Brazil.