Crown Holdings

There is no more powerful a trend in markets than that of sustainability, and one that is no more evident than in the world of packaging. When it comes to packaging, consumers are driving change. Tired with images of floating islands of plastic waste, there is overwhelming demand for beverage containers to be sustainable. As in re-used. Top popped, guzzled and then recycled. Edelman, the Global communications firm, ran a niche survey last year of beverage can ‘decision makers’ and the penny has clearly dropped. Those decision makers scribble in their forms that they know change is needed, they know that if they don’t change they risk being seen as out of step with the zeitgeist, and they know that their brand’s long-term health is dependent on any change being visible and done in a way that consumers understand and, perhaps most importantly of all, consumers actually believe. For beverage can decision makers this leads them quickly to the aluminium can. Infinitely recyclable and easy-peasy to sort and collect. Indeed circa 75% of all aluminium ever produced is still in use, and a can is able to be enjoyed, crushed, recycled and back on the shelf in just sixty days. It is no wonder then that the can market is sold out. There are not many players in the market with the scale to deliver on the demands of a Coke or a Pepsi. Crown Holdings is one. Crown Holdings, in the thick of the strongest industry fundamentals in decades, also has an interesting bottom-up story to it. The company is in the midst of a portfolio review, the results of which could see non-core assets sold off and the cash used to de-lever or buy back stock. A catalyst that might well unleash a re-rating of the valuation, to close the substantial discount it trades on relative to its closest peer, Ball Corp. A valuation discount to the order of 50%. The shares have comfortably outperformed the S&P 500 year-to-date, but with the results of the review due, that outperformance could well be sustained.