Progress: Product development helps drive sales at Sonoco

HARTSVILLE — Despite the toughening economy, Sonoco still managed to set records in sales in 2008, and company officials say the global packaging giant is poised to see further growth in 2009.

Sonoco unveiled an array of new products and services in 2008, many of them in its consumer packaging business, and those products helped drive sales to a record $4.12 billion in 2008, up 2 percent from $4.04 billion in 2007.

New product sales alone reached a record $136.5 million in 2008, with new consumer product sales building to about $117 million. The company defines new products as those commercialized within the previous two years.

Much of that new product development came in Sonoco’s consumer packaging business.

One of those new products, the sleek-shaped Linearpak package that Sonoco designed and is producing exclusively for Target, was named 2008 Package of the Year in the Food Category by Food and Beverage Packaging magazine.

The new cereal container was named one of 13 finalists in the Packaging Machinery Manufacturers Institute’s PACK EXPO Selects awards program and featured in the Showcase of Packaging Innovations at the Pack Expo trade show in Chicago.

A significant first for the breakfast cereal category where bag-in-the-box packaging has long reigned supreme, the Linearpak container Target used to launch its Archer Farms cereals is redefining the category.

In 2006, Target asked Sonoco to help it develop a better cereal package in response to consumer complaints about the difficulty of use of traditional cereal boxes.

This marked the first time Sonoco worked directly with a retailer to solve a consumer complaint, said Charles Sullivan, Sonoco’s executive vice president-consumer.

“This was right up our alley,” Sullivan said. “Sonoco is a technology-driven company, with tremendous package design, materials science and testing resources. Because we’re vertically integrated and produce our own specialty paperboard, rigid containers, membrane closures, labels and opening systems, we felt certain we could meet Target’s expectations.”

Rodger Fuller, vice president of Sonoco’s Global Rigid Paper and Closures, said once the two companies agreed on the new design for Archer Farms cereals, Sonoco produced prototype packages at its state-of-the-art Packaging Development Center in Hartsville and then subjected them to a battery of tests.

“The tests were necessary to ensure the new packages would meet or exceed the consumer’s expectations,” Fuller said.

Target differentiates its brands from competitors’ using distinctive packaging.

Fuller said Sonoco is supplying the entire packaging solution for Target’s whole line of Archer Farms cereals: Linearpak container, peelable membrane closure and plastic overcap.

“Our ability to design, test and produce a complete custom package from start to finish helped streamline a complicated project,” he said.

Company officials said Sonoco also unveiled a new in-mold labeled plastic container at Pack Expo 2008, offering two compelling reasons for consumers to buy and for marketers to convert from another format: superior shelf presentation and enhanced functionality.

The in-mold labeled plastic container’s shelf appeal lies in the production process, company officials said. Sonoco’s packaging solution starts with a polypropylene film label and offset printed in as many as eight colors. The label is lacquered to a matte or high-gloss finish and placed in an injection mold used to make the container.

The mold is filled with melted polypropylene resin, which fuses the label to the container. The result is a ready-to-fill, decorated package with bright, almost luminous graphics. Special effects, such as holographics, add more to the package’s impact.

The containers are suitable for a range of products, including candy, cookies and crackers, snacks, dry soup and dip mixes, cornstarch, biscuit and pancake mix and other baking products, and pet food and treats.

Sonoco’s Chuck Redfearn said the containers offer a new option that gives customers the “sizzle and the steak,” whether they are looking to refresh an established brand, identify a seasonal or promotions package or launch a new product.

“It’s a package that brings everything to the table — a sleek, modern image, product protection, consumer convenience, and it eliminates the need for a separate label process,” he said.

“Already, we’ve seen significant interest from companies wanting to update their image and give consumers more for their money,” he said.

Sonoco is supplying Nurture Inc. with rigid paperboard cans for three varieties of its HAPPYBABY HappyBellies organic baby cereal. The company also is helping many of the world’s largest producers of powdered infant formula, powdered milk and other powdered beverages reduce packaging costs and improve their products’ shelf appeal by converting from traditional steel cans to high-performance composite cans.

When New Carbon Co.-Golden Malted Inc. went shopping for a new package to market its premium blends of wheat flour, corn meal and secret flavorings in its Carbon’s Golden Malted Pancake and Waffle Flour to upscale hotels, restaurants, universities, theme parks and consumers around the world, it turned to Sonoco, which supplies two sizes of its high performance rigid paper cans for the product.

The company is a major packaging supplier to the frozen concentrated industry, providing the round composite can constructed of two layers of 100 percent recycled paperboard, liner and label cost-effective found in grocery, discount and club store freezer sections.

Del Monte Pet Products turned to Sonoco for its Dorpak containers, stackable, resealable and environmentally friendly large format packages that provide superior performance in stores and in the hands of pet owners for its Meow Mix cat food.

Sonoco Chairman, President and CEO Harris E. DeLoach Jr. said 2008 was a difficult year for the Hartsville-based company. Rising costs for raw materials and energy in the first half of the year, coupled with the deepening global recession in the second half, hit consumers — and Sonoco’s customers — hard, he said.

“Our strategy to grow our businesses serving consumer markets served us well during the year as our consumer packaging segment achieved record sales and operating income, with sales increasing 9 percent and operating income growing 25 percent,” DeLoach said.

“Finally, as the economy declined during the year, we took aggressive steps to reduce costs throughout our businesses. In December, we announced and substantially executed a realignment of manufacturing capacity to match market conditions and to establish an affordable fixed cost structure that will help margins going forward.”

DeLoach said the company enters its 110th year focused on improving those areas it can control.

“These include our cost structure, productivity, capital effectiveness, innovation, safety and putting the right people into the right jobs to better serve the needs of our customers,” he said.

“While we are currently holding on to free cash to further strengthen our financial position, we believe there will be some targeted opportunities to grow our business in 2009.”

About Sonoco Products Co.
Established: 1899
Address: 400 N. Second St., Hartsville,
Chairman, president and CEO: Harris E. DeLoach Jr.
Employees: 17,500 globally; 1,535 in Hartsville
Specialty: Packaging products and services
Web site: www.sonoco.com

FAST FACTS
— Sonoco Products Co. is a global manufacturer of industrial and consumer products and provider of packaging services.
— Sales reached a record $4.12 billion in 2008, up 2 percent from $4.04 billion in 2007.
— New product sales reached a record $136.5 million in 2008, with consumer product sales building to about $117 million.
— Sonoco maintains more than 300 operations in 35 countries, serving customers in some 85 nations.
— Sonoco’s new Linearpak package designed for Target was named 2008 Package of the Year in Food Category by Food and Beverage Packaging magazine.