Sealed Air

Sealed Air Corporation

I. What has been happening in this market? How has Sealed Air (SA) been doing? To what do you attribute SA’s success?

Between 1971 and 1980, Sealed Air Corporation (“SA”) was one of only two producers of air bubble packaging materials in the United States (the other being Astro Packaging, whom SA has licensed their patented technology to). SA produced two products, a foam-in-place system called Instapak that was generally used for packaging heavier materials, and AirCap bubbles used primarily for more delicate materials and as void fill. Although there was another type of air packaging, uncoated bubbles, most customers in the United States (more than 85%) purchased coated bubbles, of which SA was the market leader. SA distinguished their coated bubble packaging with its special inside coating with saran that offered good protection for shipments. SA used market education to encourage customers to purchase coated bubbles. As a result, SA had been experiencing high levels of annual growth (averaging 25% in net sales and net earnings).

SA’s success in the United States was largely attributed to their market leadership and technological development along with patent protection and an attitude that viewed packaging supplies as a productive and cost-saving resource. SA was the first to develop a foam-in-place packaging system. Additionally, SA was one of the first companies in the packaging industry to focus product development on the customer’s needs, causing customers to abandon their old system of using packaging material that was produced primarily for other purposes. SA also had an extremely well-trained and knowledgeable sales force. The sales forced used a consultative approach and used a selective distribution policy that helped preserve distributor’s profit margins.

However, SA had recently begun to encounter stiffer and somewhat unanticipated competition, as smaller competitors had found a way to invent around SA’s...