Bioplastics back up buzz

Biobased plastics have been generating buzz in the media for several months. Analysts have been predicting market growth as petroleum prices and environmental awareness have increased and retailers have begun eliminating plastic bags and reducing packaging. Now, the first small crop of bioplastics manufacturers is beginning to back up the buzz with reports of profits well beyond analyst expectations.

JER Envirotech, a small manufacturing company in Vancouver, B.C., reported a 700 percent increase in sales from Q2 2007 to Q2 2008, and a 7 percent increase from Q1 2008 to Q2. The company’s revenue for the first half of FY 2008 totaled $820,982, which is 88 percent of its revenue for the entire 2007 fiscal year. In a Q2 financial statement, President and CEO Ed Trueman attributed JER’s increased sales to the growing use of raw biocomposite pellets in the North American extrusion and injection molding industries.

Meanwhile Hawthorne, Calif.–based Cereplast reported in December 2007 a 181 percent year-over-year increase in revenue, up from $800,000 in fiscal year 2006 to $2.3 million in fiscal year 2007, with an $8.6 million increase in operating expenses due to the release of a new line. In March 2008 the company announced two large sales deals—with Harco Enterprises, a promotional goods manufacturer, and CSI/Cosmolab, a cosmetics packaging firm—prompting CEO Frederic Scheer to predict similar growth through 2008.

Iowa-based bioplastics manufacturer Metabolix (Nasdaq: MBLX) went public in late 2007 and plans to complete construction on a large manufacturing facility in Clinton, Iowa, by the end of 2008. The company in February announced a new program to develop advanced industrial oilseed crop to produce bioplastics. Larger companies are benefitting from the boom as well. Cargill’s NatureWorks subsidiary launched its new packaging line in February 2008; the company is now supplying polymers to coat compostable cups for cafes.

London-based Stanelco announced in late 2007 a packaging supply deal with Wal-Mart and forecasted it would be the first company in the bioplastics industry to turn a profit.