Strategy: To replace oil based plastics with bio-degradable replacements for global packaging needs by development and licensing of innovative products for packaging companies. Lessening dependence upon oil and capitalizing on consumer and government preferences for clean, organic packaging.
Product: At pricing that is 20-25% higher than comparable oil based products; Cereplast designs and manufactures proprietary bio-based, sustainable plastics used in all major converting processes – such as injection molding, thermoforming, blow molding and extrusions.
Market- On November 11, the company said it expects the U.S. bio-plastics market to reach $10 billion in sales by 2020. The U.S. market accounted for approximately $1 billion in sales in 2007, with some estimates pointing to bio-plastics capturing 30% of the total plastics market by 2019. Cereplast has some products that are food based, with a focus on algae based products as well. Cereplast is an investment in their technology and the market.
Competition: Metabolix, Archer Daniels Midland, Alcoa, Synthetic Genomics, Martek
Funding: A private investor group led by a Swedish Bank has contributed funding in 2009, Cereplast has the right to sell $20MM of common stock to Cumorah Capital, and most significantly in 2007 the company announced it received $14.5 million in new capital through a private placement of common stock from a group of leading “green” institutional funds, including UBS Global Innovator Fund, Swisscanto Green Invest Fund, Fortis L Fund Equity Environmental Sustainability World, and Credit Suisse Future Energy Fund.
Stock Symbol (OTCBB:CERP)
In a related note, Exxon has invested $600 million in Synthetic Genomics and BP has a $10 million investment in Martek Biosciences that compete with Cereplast.
Management: Frederic Scheer, Founder, Chairman and CEO of Cereplast
Comment: This company is an investment in a growing sector, but is their technology superior to larger and better funded competitors? Will their food based products overcome the hurdles that corn based ethanol faced?