Plastics, Foil, and Coated Paper Bags

Note: The U.S. Economic Census now reports industrial information under the North American Industry Classification System (NAICS) instead of the Standard Industrial Classification (SIC) system. As a result, the value of shipments data reported below is for NAICS 322223 (the replacement for SIC 2673), and includes only a small portion of what used to be reported for SIC 2673. For example, the 1994 shipment value for SIC 2673 was reported at $6.02 billion; in 1997 the shipment value for NAICS 322223 was reported at just $512 million.
While the U.S. Census Bureau classifies this category under paper and allied products, the industry actually uses very little paper in its products, and even that small percentage is declining. The vast majority of products in this industry are made exclusively from plastic.

Products found in this classification include merchandise bags, trash bags, waste bags, frozen food bags, garment storage bags, and wardrobe bags. The vast majority of products manufactured in this sector are specialty bags, pouches, and liners, and multiweb laminations and foil, except film. This segment accounted for 75 percent of total shipments in 2004, up from 60 percent in 2001. Shipments for this segment had declined steadily throughout the 1990s. However, the industry rebounded with shipments of $564.3 million in 2002. By 2007 value of shipments had grown to $784.8 million. According to Supplier Relations US LLC, the plastics, foil, and coated paper bag manufacturing industry had revenues of $800 million in 2008. About $2.6 billion worth of products were imported that year; exports totaled $900 million.

Other significant industry products include specialty bags, pouches, and liners, and coated single-web paper, which accounted for less than 25 percent of total shipments in 2004. Shipments for this industry segment increased every year between 1997 and 2001, growing from $143.0 million to $176.1 million, yet fell to $164.0 million in 2002. Another category, plastics, foil, and coated paper bags not separated in kind, appeared to be on the decline before an increase in 2002. Shipments of these products declined from $19.6 million in 1997 to $14.2 million in 2001, and then rose to $19.8 million the next year.

While the outlook for the industry was generally thought to be quite positive as more retail outlets converted to plastic merchandise bags and as other applications were developed, the sluggish U.S. economy hindered industry growth in the 2000s.

The biggest purchaser of plastic, laminated, and coated paper bags continued to be retail trade outlets (not including eating and drinking establishments). These retail outlets purchased about 60 percent of all bags produced in this category. Personal consumption and wholesale trade each accounted for less than 10 percent of the output. The remainder of product shipments was purchased by a wide variety of other economic sectors, mostly in manufacturing.

The vast majority of products produced by companies in this industry in the 2000s were made from plastic resins or sheets. Plastic resins used in granule, pellet, powder, or liquid form accounted for about 40 percent of the materials consumed by this sector. Plastic products used in the form of sheets, rods, tubes, and other shapes accounted for about 15 percent. By contrast, paper accounted for just 5 percent of industry purchases. Other significant raw materials for this category include printing ink, paperboard containers, boxes and corrugated paperboard used to ship finished products, and glues and adhesives.

A large portion of this industry's output is in branded products, with trash bags one of the leading products. Leading national brands include Glad, Hefty CinchSak, Hefty, and Glad Stress Flex. However, of the total U.S. trash bag market in 2005, private label products held a 34.6 percent share, compared to 20.5 percent in 1995. Total trash bag sales in 2008 fell 5.4 percent. According to Private Label Buyer, "Declines in the overall trash bag segment can be partially attributed to ongoing environmental concerns, including the ongoing growth of recycling programs and push to reduce landfill waste."

Although the plastic wrap and foil segment of the industry saw possibilities for growth in the economic recession of the late 2000s, as more Americans were dining at home as opposed to eating out, thus creating an increased demand for food storage, sales in that sector did not rise as expected. Bob Pando of Minigrip Consumer Products Group commented, "In the food storage bag category, overall dollar sales are relatively flat, though we are seeing a migration from national brands to private label." Unit sales in the foils and wraps category fell 5.7 percent between 22 March 2208 and 22 March 2009, and dollar value of sales rose only 0.7 percent. In addition, consumers' more cautious and frugal buying habits were evidenced by the figures that showed private label dollar sales rose 10.3 percent during this period.

The plastic, foil, and coated paper bag industry has made extensive use of new plastic materials to make products that are both lighter and stronger. For example, the use of high-density polyethylene by all manufacturers expanded at a healthy 6 percent annual rate in the early twenty-first century. High-molecular weight resins offer major performance improvements over linear-low density polyethylene. While the primary application for this product is retail plastic bags, trash bag manufacturers are using this material as well to take advantage of its strength, toughness, and printability.

Leaders in the industry included Pactiv Corp., maker of Hefty trash bags as well as slide-lock baggies and other foodservice products. Based in Lake Forest, Illinois, Pactiv had 12,000 employees and total sales of $3.5 billion in 2008. The Glad Products Co. made plastic wrap, GLAD trash bags, and food storage bags, among other household products. Reynolds Food Packaging of Richmond, Virginia, maker of the well-known "Reynolds wrap" foil product, was also a major player. Alcoa, Reynolds' parent company, sold the firm to United Kingdom-based Rank Group Ltd. in 2008 for $2.7 billion.