Sanitary Food Containers, Except Folding

This industry consists of three major segments: cups and liquid-tight paper and paperboard containers; milk and milk-type paperboard cartons; and other sanitary paper and paperboard food containers, boards, and trays.

According to Supplier Relations US LLC, the U.S. nonfolding sanitary food containers industry brought in $3.7 billion in revenues in 2008. About $131.0 million of product was imported, and exports were worth $313.4 million. Total domestic demand equaled $3.5 billion.

Although paperboard remains a staple of the food container industry, it faces competition from other materials. Metal cans and glass jars saw increased innovation and growth during the late twentieth century. In the 2000s, plastic containers experienced the most growth. The Foodservice & Packaging Institute reported that the value of shipments for thermoplastic resins and plastic materials segment grew 21.1 percent between 2004 and 2005. Although paperboard food containers also experienced growth during this period, it was more modest. Cups and liquid-tight paper and paperboard containers, for example, grew only 0.9 percent.

Despite the fact that paper cups, plates, and other disposable paper products are relatively difficult to recycle because most are contaminated with food or beverages after use, the category continued to grow throughout the decade. In the mid-1990s, manufacturers of sanitary food containers were able to answer some of their environmental critics by including recycled fiber in their products. This was made possible when the Food and Drug Administration (FDA) issued guidelines for the use of recycled paper in products that come in contact with food. In 2004, after eight years of trial and error, Starbucks Corp. received FDA approval for the world's first recycled beverage cup. By 2009 Starbucks coffee cups could be recycled in some communities, although most could not process this form of packaging. Jim Hanna told Official Board Markets in September 2009, "In addition to the cup design, it's critical that we address the full product life cycle--including the recycling collection infrastructure." The article went on to state that if all of the disposable coffee cups that were used in the United States every year were recycled, it would divert 645,000 tons of waste from landfills annually.

The popularity of coffee has fueled consumption of paper cups in the United States, the world's leader in that segment. Official Board Markets reported that in 2009, the United States used about 58 billion disposable coffee cups a year. Although U.S. demand for foodservice paper disposables was expected to continue to climb, other global markets were also expected to experience heightened demand as their take-away food industries grow. Experts look to China and Eastern Europe for much of that projected growth.

Paperboard milk cartons have a formidable competitor in milk jugs made from high density polyethylene (HDPE). These plastic milk jugs captured a growing share of the milk market in the 1970s and 1980s, most particularly in the gallon size but also in the half-gallon size. However, an extended decline in sales of paperboard milk cartons began to slow and even stop in the 1990s when it became widely known that paperboard milk cartons retain vitamins better than their plastic counterparts because fluorescent lights in dairy cases leach vitamins from milk in translucent plastic jugs. This knowledge led some dairies and consumers to again favor paperboard. Furthermore, major efforts to promote the recycling of milk cartons by milk carton manufacturers, notably International Paper Co., helped improve the appeal of this type of packaging. Product innovations, such as adding spouts with resealable caps to paperboard orange juice cartons, have also helped increase the use of carton packaging.

Because of the paperboard milk-style carton's ease of storage and ability to withstand repeated access, additional domestic uses for it were developed. These included packaging for nondairy flavored drinks, fruit juices, dry pet foods, laundry detergents, candy, and hardware. Such alternative uses helped increase the sale of milk cartons: in 1980, nondairy carton tonnage accounted for only 13 percent of all milk-carton sales. By the late 1990s, that percentage topped 32 percent.

The benefits of paper containers for milk obviously did not filter down to the level of public consumption, as plastic was the consumer's resounding choice over paper for milk packaging in the 2000s. According to ACNielsen, plastic containers of milk were responsible for 84 percent of the category's dollar sales in 2005, whereas milk in paper cartons generated only about 16 percent. Moreover, a survey by the National Dairy Association in 2005 found that schoolchildren prefer milk in plastic as opposed to paper containers, although paper cartons have been the traditional way for milk to be delivered to schools. Some processors balk at converting to plastic containers for schools because of cost and availability issues. Others contend that the possibilities to improve the graphics on paper milk cartons represent an opportunity to increase milk consumption in schools. A study conducted by the St. Louis Dairy Council in cooperation with other associations in 2005 found that milk sales jumped an average of 12 percent per school (even 35 percent in one school) in the St. Louis area when students were offered milk in multicolored paperboard cartons in multiple flavors. If the results were applied nationally, milk unit sales would jump 600 million units annually, according to Victor Zaborsky, senior marketing manager of the International Dairy Foods Association. The battle of plastic versus paper in the schools is just one area that could affect the food container manufacturing industry in the future.

Leaders in this industry include a mixture of major paper companies and independent converting companies. One of the leading company is Georgia Pacific Corp. (GP) of Atlanta, Georgia, manufacturer of Dixie Cups and other sanitary paper products. A diversified company and the second largest forest products manufacturer in the world (behind International Paper Co.), GP had 55,000 employees and annual sales of $2.1 billion in the mid-2000s. Other key market players include Solo Cup Co. (Highland Park, Illinois), which cocreated Starbucks's recycled cup and purchased Sweetheart Holdings, maker of the Sweetheart cup, in the late 2000s. The firm had 2008 sales of $2.1 billion with 8,700 employees. Huhtamaki Foodservice Inc. (DeSoto, Kansas) was the manufacturer of the Chinet dinnerware brand as well as other disposable food service products. The firm had 1,270 employees and sales of $77.8 million in 2008.