 Good afternoon, I'm Rebecca Marquez with PMMI Business Intelligence. PMMI, along with CPA, the Association for Contract Packagers and Manufacturers, and IOPP, the Institute of Packaging Professionals, would like to welcome you to today's webinar on the new McKinsey and Company Report, Packaging Solutions, Poised to Take Off. It is my pleasure to introduce Nick Sonsanam, Senior Partner and Global Leader of the McKinsey-Industrials Practice, and Shakar Varanasi, Partner in the McKinsey-Industrials Practice, who leads their work in food processing, packaging, and service equipment. McKinsey and Company is a global management consulting firm deeply committed to helping clients achieve lasting success. For 90 years, their primary objective has been to serve as their client's most trusted external advisor, now with consultants in over 120 cities in over 60 countries across industries and functions. Their report proceeds the large, fragmented packaging sector continuing to generate several disruptive trends will require the industry to develop new business models, operational efficiencies, and technology integration programs. Over the next hour, Nick and Shakar will share insights from the report, including major trends and significant opportunities for those companies willing to move fast. A few housekeeping notes, everyone is muted throughout the webinar. If you have any questions you would like to ask the presenters, please type your question in the chat box that is located on your screen, and there is also a questions box as well. At the end of this presentation, which will last approximately 45 to 50 minutes, Nick and Shakar will be available to answer your questions. At this time, I would like to hand the webinar over to Nick and Shakar. Thanks, Rebecca. Really appreciate the introduction and welcome all. Thank you so much for taking the time to join us. Today, what we want to do is, as Rebecca mentioned, walk you through some of the main findings of the work we did, which was spread over six months looking at the packaging sector. So, let's start off by defining what do we really mean by the packaging sector and how big it is. So, if you see the packaging sector, globally, it's roughly a trillion dollars. And it is pretty much broken up across different types of material, whether it is board, flexible, rigid plastics, what you see on the left-hand side. And on the right-hand side, you see the sample players. So, want to get calibrated on when we talk packaging, what are we talking about, which is roughly trillion dollars of which 95% is the packaging material, and roughly 5% of roughly 45 billion dollars is the packaging equipment space. That is the space we want to talk about today. If we go to the next slide, you will see that the packaging sector is really driven predominantly by the consumer segment, which is roughly 60%. I.e., packaging used in food, in drinks, in healthcare, in cosmetics. And roughly 40% of that is in the industrial space, i.e., packaging for industrial purposes. Furthermore, when you then break it out by geography, you will see that Asia Pacific is the biggest region followed by North America, followed by the Western Europe space. So, this is the landscape we looked at. This is the space we looked at to see what really is going on. If you then go to the next slide, you will see that this sector, again, no surprise, is really fragmented, meaning there are a lot of small companies, and which means that you really have the share of the top three players, which is shown on the right-hand side, is very small. So, if you look at, for example, the three top players have 15% of the market, and there is a huge long tail of companies which have the remaining 85% of the market. That is true in flexible, that's true in rigid plastics, that is pretty much true in every sector. And we as McKinsey, and I think this is an industry terminology, we look at the Huffindall Index, which is basically looking at the concentration of the players in this market. You will find that it's extremely small, which means there are a lot of players, and it's not like one player or two players or even five players have a big share of the market. This could be because of two reasons. One is, as we all know, the capital investment needed is not that high to enter the space, and you have given packaging materials are bulky and given it's hard to transport over long distances, they tend to be local, i.e. they end up being close to the customers, and hence you see this big fragmentation. That's the good news or the bad news depending on which way you see it, but it does cause a problem is when you're a company, an individual company, it makes it very hard to grow organically. If you go to the next slide, you will see that this has historically led for the packaging companies to be stuck between the middle. You have on the one side is the raw material suppliers, companies like BASF, Dow, DuPont, and so on. On the other side, you've got the end customers, the big CPG companies, companies like PepsiCo, Coke, Nestle, Unilever. You find what happens is the innovations are driven by the two ends of the spectrum, which is reflected in the kind of margins the company makes, and the packaging solution companies end up being in the middle. What that means is you'll see it in the next page, the economic profits, and let me actually define what economic profits is. Economic profits is return on invested capital minus cost of capital times invested capital, meaning if you're a company, you're borrowing money either from your debt holders or your equity holders. So that is your cost of capital. And ROIC is the return you make on your business. So obviously, if you borrow money from somebody for 5% and you make 6%, that's good. Because if you borrow money from somebody for 5% and only make 4%, you don't and you lose money, that is the premise of economic profits. And what you see on the slide is the light blue line at the bottom is the economic profit shown as a percentage of revenue for the packaging companies. And the light black line on the top is for the overall industrials. And what you will see here is the segment has historically lagged the broad industrial segments. And furthermore, not only is it lagged, it's a destroyed economic profit. So if you look from 2002 till 2012, we have been minus 1.2% got better, but we are still destroying value. And that's not a surprise given the comment I made before, which is the innovation historically has been in the two ends of the spectrum. Then if you fast forward the movie and sort of say, how does life look past 2012 and go to the next slide, what you'll find is the companies have sort of looked at this and said, the only way we are going to get out of the middle is by building scale. Because at the end of the day, you can look and say, okay, I can create economic profits and to create economic profits, I have to change my auto IC, my return on invested capital. And one way to do it is to get scale. And by getting scale, I get better margin, I get the synergies. And what you'll see is between 2013 and 2017 is the number of M&A deals per company. For the 45 large companies, and we did this across even for the broader tale, this trend holds true, is the number of deals have gone up roughly 2x. The median size has stayed relatively flat. And that means really what they've done is they have acquired companies to get scale, and that has been the way to create value. Furthermore, if you go to the next slide, what you'll find is that has really allowed them, and you can see them in the numbers, is allowed them to change their financial performance. So if you look from 2002 to 2012, the chart I showed before, where the economic profits went negative, it was getting better, but it was still negative, the industry was running at 8.3%. The last four years has gone up to 10.3%. So there's a 30% bump or 200 basis point improvement. The capital turns, how quickly do you turn your capital has gone from 1.8 to 1.9, that's a 10% improvement, and that has actually allowed this industry in the last four years to create positive economic profits, i.e., they've gone from minus 0.7 to plus 0.7. So one is they've reversed the trend, two is obviously they've gone on the positive side, and the trend has gone from value destruction to value creation. So what does this really mean? This really means is in the last four years, we've looked back over the last 17 years, but just to break it up into chunks, the first half or maybe two-thirds of the period, the industry was destroying economic profit and was fragmented and was really trailing the industry. But over the last four years, over the last five years, the segment has sort of started to reverse the trend, has basically started moving from negative to positive. And more important is you're starting to see it in the financial performance and you have started to see that in increased positive economic profit, which you see in this slide. So if you look at this slide, what you'll find is the period of 2002 to 2007 was value destruction. So we were minus 1.2%. We were 0.9% in 2007 right before the big crash. And well, the line at the top is the industrial segment. So they were making profits, we were not. The last, the next five years, which is from the middle of 2007, 2008 to 2012, we reverted towards zero, which is we didn't create value, but we didn't destroy value either. And then the last five years, the 2013 to 2018 has been a period of value creation, which is we have moved from minus 0.1 or roughly zero, meaning we really didn't create any economic profits to roughly 0.6, meaning for every dollar of revenue, we are creating 0.6 dollars of economic profit or 0.06, sorry. So that says is we are starting to close the gap to the industrial segment. If you then go to the next slide and sort of say, okay, this is all fantastic. How does that put us with respect to other sectors? So let me explain this chart. What you'll see on this chart is we have rank ordered the various industrial segments, starting from cables and wires, you see the packaging equipment, you see the food equipment, the power equipment, and so on. We have rank ordered them from the most value destruction to the highest value creation. So in this particular chart, what you will see is in the period 2002 to 2007, cables and wires as a sector was the most value destruction at minus 1.4. We were not that far off at minus 1.3. I know the other end was the electrical equipment and the multi-application components, which were running at 3.2 and 3.4 percent. Then you then go to the next chunk of period from 2008 to 2012. You will see we have got better. We have gone from minus 1.3 to minus 0.3. Before we were the second last in performance. Now we are fifth from the performance, but we have improved. Then come to the last period, which is the recent period from 2013 to 2017. One, we have improved our position, but two, which is important if you're a shareholder or a different stakeholder is we are now value creation. We have gone from minus 0.3 to plus 0.8 and we are creating value as a sector. We are creating value as a segment for the various stakeholders. If you go to the next page, that's what I told you is looking in the back, looking in the past and sort of say, what does the past tell us? The past tells us we were not doing great, but we have got better. What comes the even better news I would say? We as a segment are now in a better shape just as various global mega-descriptions are starting to happen. We call them description 2.0 and description 2.0 is defined as basically where we are dealing with different things. Before description 1.0 was just doing things differently. Description 2.0 is about doing different things and there are five big trends which are starting to happen, which all have a positive impact or should have a positive impact on the packaging sector. One, there is a shift towards sustainable materials. There is a big demand from various parts of the consumers, the various parts of the customer segments looking from climate change and just the broader circular economy asking for sustainable material. Again, the companies, the sector which can play the lead on this is packaging. Two, there is a lot of descriptive technologies happening, AI, blockchain, augmented reality and we'll talk about that shortly. All of that can be enabled or can be benefited or you can get a multiplier effect through packaging. Three, there's a change in consumer behavior. A great example is our generation, our parents' generation used to go to restaurants for eating. Now Uber Eats and Postmates and Door Dash is taking on, which means food is being delivered to your house, which again needs more packaging. Similarly, before people would go to retail, the start of the e-commerce, e-commerce means more packaging, more things needs to be delivered to your house. Again, that's driving a different demand from the packaging company, different packaging solutions. Fourth is growth in emerging markets. So this is a wide space, a new market. For example, you look at large emerging markets like India and China. There is a big rise of the middle class, there's a big rise of the demographics, which is demanding all the things which has been in the western hemisphere for quite some time. So that is really driving new markets for broad economy, but has the multiplier economy and multiplier effect for the packaging space. And last but not for the least is there's an increased use of flexible materials, just given the customer preference, given what the market demands. So as you look at all of these five trends, these are all tailwinds for the packaging sector and all of this really is coming in when the sector itself is getting positioned better because of its better economic performance to take benefit of that. Going to the next slide, what you'll see is, and we call this the PPP thing, if you look at packaging, it has its role has evolved. Historically, the role of packaging material was to protect. You take the most expensive stuff, you take the most fragile stuff, you take the stuff you care about, and to protect it, you put it in a packaging material, whether it's a cardboard box or an aluminum can. Over time, that role has evolved. It has moved from protect to promote. I mean, how many times have we seen our kids, we get them the most expensive gift, and they really do want to play with the box and not with the gift itself. And that's because the way it promotes, the way it appeals to the audience has changed. And so you're starting to see the packaging material, the packaging solution play a bigger role in promoting the product, whether promoting the virtue, promoting what's great about it, or even driving the impulse purchase or the instant gratification for the end consumer. And last but not the least, and I'm sure this will continue to evolve, packaging has now moved on to a role of what we call performing, meaning it actually performs a different role than what it has historically performed. So what does that mean? Let's go to the next slide. As I said, promote is a great example, you sort of now are starting to see examples of augmented reality, where the packaging is just not a dumb packaging, but it's a more lively packaging which enriches the user experience. A great example is a smart bottle cap, which drives medical adherence, drives better user experience. And who would have thought that's important when you're sick? It of course, does matter a lot. And then the great thing about how do you use this for making user reordering, replenishing, and written easy. So that's all in the promote. In the perform, this is the point we were making before about AI and blockchain and augmented reality coming on. With foot safety becoming big, foot authenticity becoming big, blockchain is starting or will start to play a role in that. And the enabler of blockchain or the beneficiary of blockchain will be the packaging material on top to drive that. Similarly, putting sensors in packaging to ensure product quality and safety, that's not just the job of protecting the package, as we've said before, it is actually performing a different task. And last but not the least, this has been around, but it's starting to sort of get to the next version, which is the inventory management through RFID tags or different sensors or digital marks, which really allows you to drive better traceability, better trackability, real-time tracing, so that you as an end consumer or you as a middleman can actually know where the package is, and it really allows it to perform a different task. Next slide, please. So, so far we have been talking in a monolithic way, we have been talking about the packaging sector, we have been talking about the trillion dollar sector. We now want to sort of go one level below and sort of think, okay, that's great, all are equal, but some are more equal. Let's look at not packaging overall, but let's look at the various sub-segment. If you remember on slide one, we talked about 900 billion dollars of packaging, and we said, hey, comprises of different segments such as glass, metal, flexible. And so here we did the same thing, which is we took the same, we took the segments, which you see on the left-hand side, and said, how have the segments done in auto IC, written on invested capital, over the last four years? Each dot is that of a company, and what you'll see the the vertical line is the median. No surprise, it is not homogeneous, right? I mean, none of the sectors themselves are homogeneous, you can look at the lines, they're all over the place, right? You see them as low as roughly 11% or 12% auto IC to as high as 21%. And so for example, just I'll call your attention to, if you look at paper and board, they run roughly 11% auto IC. If you look at flexible plastics, they run roughly 20%. So there's a 2x delta. But what is even more interesting is within a segment in each one is that dot is a company, and to protect the innocent, we have not named the companies. But what you'll find is there is a widespread, even within a segment, picking diversified, for example, you have a company which is running roughly at 40% auto IC, and then you have a company which is running roughly at 6% auto IC. So the point of this page is there's significant variance across the segments and companies. What does that mean? Go to the next slide. What you slide is, there has to be something which drives performance, right? Is it your preordained to be 40% or your preordained to be 6%? And that's the question a lot of our clients ask. And so we went and looked instead of say, what does that mean? And I'm going to start with the good news. The good news is it's really not the company's starting point. So let me explain this chart to you. The y-axis is you see from 2002 to 2007 where companies were on quartiles on their auto IC. So roughly 15% was in the top quartile, going from top to bottom on the left-hand side of the slide. 5% was in the second quartile, 2% is in the third quartile, and so on. And the x-axis or the horizontal axis you see on the top is the companies which are in the top quartile, second quartile, third quartile, bottom quartile, but for the 2013 to 2017 time period. The shaded gray portion, which is the 15%, the 2%, the 5%, and the 15%, which goes orthogonal basically says a company was the top quartile and remained in the top quartile or was in the second quartile and remained in the second quartile and so on. So what this really tells you is if you really look, only a small portion, only 15% of the companies started in top quartile auto IC and stayed in the 15%. Or if you look at the bottom, only 15% of the companies started in the bottom quartile of auto IC performance and stayed there. That's good news. That means you're not preordained to stay where you are started. Or put it differently, I'm an optimist. I would say over 60% of the companies saw an improvement in their performance or decline in their performance between the two periods. So point number one, there's a big difference in performance, but what is good is you're not pre, wherever you start, you're not preordained to stay there. Go to the next slide please. Then you sort of look and say, okay, does this mean what is your starting size, starting sizes, revenue, starting sizes, market cap? That's what we plotted on the x-axis. You'll see revenue and the y-axis is auto IC and you'll find there's no correlation. The r squared is point zero one, meaning there's really no correlation. It doesn't matter what your starting point is. You could have been big under the bottom of the barrel or you could have been small and could have been top of the barrel and vice versa. And similarly, the question we looked at was how much money you spent, which is a function of your capex. And fortunately or unfortunately, there isn't anything there either. R squared is point zero five, which means there is really no correlation. And hence it doesn't matter how much money you spend. Your auto IC does not have a positive or a negative correlation. So just to recap, your auto IC is various across companies. It's not preordained. Like if you're rich, you don't stay rich. If you're poor, you don't stay poor. Two is it's not preordained on your revenue or preordained on your capex. So what explains it? So one of the things we did as McKinsey is we went and we plotted all the auto IC and we also did this for TRS, total return to shareholders. We also did this for alpha multiple. So we did this for multiple variables. We show on this chart just the auto IC. And here we find there is a positive correlation to this thing called Corey or quality of revenue index. So the next question obviously is going to be what is Corey? So if you go to the next slide, what you find is Corey is think of it as a pedigree of your quality pedigree or a quality of the company's revenue. And quantitatively it determines by five factors. One, the market the company places, the end markets, the geography. You'll say, yeah, Nick, I got it. That's self-explanatory. Second, the type of customers, meaning are the customers they are playing with, are they playing with winning customers or they are doing with the laggards? Are the industry leaders or the industry laggers? Are the customers themselves their performance improving or not? Third is within that customer, what is the company position? Meaning, are they in all new programs? Are they doing NPI? Are they the end of line? Or, are they just a commodity product? Are they mainstream product? First three, you will say, yes, that those are intuitive makes sense. What we've then found very interesting is four and five has an outsized impact on Corey. One is what is the uniqueness of company offering? Meaning, how much of it is proprietary? How much of that is designed in with the customer? How much of this appeals to a particular pain point or solution for your end customer? Which you can sort of say, is it single or multi-sourced? And last but not the least is a monetization model. Meaning, is it a one-time sale or is it a recurring revenue? And is it something where you have a transactional relationship with your customer or is it a long-term relationship with a customer where the customer keeps coming back to you? So the razor razor blade model, packaging, packaging, material model, you can use any euphemism, but really the monetization model, what is your recurring revenue, plays a big role in your Corey and in return plays a big role on your auto IC. If you then go to the next slide, what you find is Corey is not something which you sort of say you're born in with a Corey. Either you have a high Corey or a low Corey. Corey is really determined by what we call how well you play on your innovation cube. The innovation cube is, let me explain this chart on page 21, which is how are you doing on products? How are you doing on operations? And how are you doing on business models? Typically, when companies and everyone think of innovation, it's thought about innovation along the product line. Do you have a mouse trap? Do you have a better mouse trap? And so that's the obvious innovation, right? How well are you innovating? How well are you doing on your fundamental core R&D? How quickly are you introducing new products, which is refreshing your product portfolio? How much is it better than out there? How much is it a segment of one? How much is the customer, you're anticipating a customer pain point and solving? That's sort of stating the obvious. Then comes how well are you innovating on operations? How well are you making and selling it? How well are you deploying capital? How well are you having your process discipline not only in your operations, but also in your back office? How well are you innovating? And what we find very interesting here, just to give you one data point, is if you look at, this is not true for packaging, but across all industrial companies, the average EBITDA for an industrial company runs roughly 13%, while the best in class or segment of one runs at 30%. So what is very interesting is innovation in operations does reflect immediately in a better EBITDA, and by definition reflects in a better ROIC. And then last axis is the innovation in business model. And this is an interesting concept because if you look at the industrial segment itself broadly, but then look within packaging, there's not been a lot of innovation in the business model, meaning how do you actually create a platform? How do you really create an ecosystem to allow various companies or various solutions to be brought together for the end customer? And in that process, you're creating a recurring revenue or a different cost free revenue model. And more important or equally important, how do you use this to get closer to the customer, get to know the customer well, you can anticipate what they want. And back to the point, you're creating a different kind of relationship with the customer rather than just being a vendor. And if you look at, unfortunately, this is not in the industrial space, but if you look at the broader tech space with all the new descriptive companies, that's what they're trying to do, which is how do you innovate on the business model? How do you innovate to get a platform that allows you to get to the customer, it allows you to get more data, allows you to monetize that data so that you can collect it from data to information and use that to service the customer better. And in that process, drive better stickiness and drive better ROIC. If you then go to the next slide, and this is looking backwards, right? I mean, obviously, we can predict the future, but bringing it back to us, what we find very interestingly is when we looked at the packaging space, we found there already are instances of successful companies who are pursuing multiple levels to improve their query. So apologies for the small print on this, but if you look at this, you'll see on the product side, which is the middle box, you'll find is companies are using a new playbook. They're using advanced analytics, they're using next-gen manufacturing, product portfolio optimization to really innovate and sort of say, how do you move, sorry, I apologize, it's the left-hand side, how to move on operation? If you look at the middle box, this is how do you innovate on the product side? How do you get smart products? How do you use blockchain for traceability? How do you use sustainable materials? New materials keeps constantly coming up, which allows you to have better shelf life, better cost, better performance while being environmentally friendly. And then the business model, which is my earlier comment, which has historically not been the area of focus for industrial companies, is starting to happen, which is you're really starting to see portfolio of businesses coming together, different monetization models, different go-to-market, which has all really now led to a point where you're no longer having the classical, you sell a product once you make a product and you make revenue once, but you're building a different relationship and companies are very, very successfully starting to do this. And especially in the packaging space as the work we did over the last year, what we found was there is an interesting set of both interesting startups and newcomers, but also incumbents who are really doing this. And I truly believe that those companies are going to see a big improvement in the quality of revenue, which is going to relate into a better auto IP in the coming years. And if you're having this conversation again in five years, I think you'll be showing you a chart with not a 0.6 or 0.7 economic profit, but more than the three to four percent, as we showed for the other companies, which would be putting the packaging sector as a whole in the top, quartile, or at least above average in economic profits. If you go to the next slide, we have sort of talked a while and so we'll pause and take questions from the group. What we want to start is sort of saying, what does this all mean? What are the imperatives for companies? And what we would say is it really comes down to five big imperatives at a company level. And we put them across three groups, you know, where to play, how to play, and when to play. In where to play, it's very easy to sort of say, Hey, there are a lot of things going, how do we prioritize? And what we found is successful companies have prioritized two or three large efforts to pursue. So whether it's internal to go driving EBITDA improvement or external to drive an innovation on products or packaging or operation so that they're able to prioritize, they're able to put their best resources and when they put the best resources went. Two is the how to play. And one of the interesting things we found is for a long time packaging sectors were very siloed. Companies did everything within the four walls. But what we now find more and more is working more jointly with your customers, understanding their pain point, defining and what they need and collaborating with them makes a big difference. And also how you build the offering. So it's not everything needs to be built. It can be done through partnership. It can be done through IP transfer. It can be done through, you know, tuck in M&A. That plays a big role. And then being very honest on what capabilities are needed, because as these big descriptions come in, what we are finding is it's very hard for any company, for any company of any size to have all the capabilities in house. So having a capability heat map and we as McKinsey do this for a lot of our clients, which is sort of saying, where are you on your capabilities and what are the capabilities you need to win in the next decade. And really getting that done scientifically rather than sort of say my gut feel I need X versus Y. So really understanding what capabilities you need. And then figuring out what is the process just like if you need an equipment, you will do a CAPEX requisition. It is similar to that sort of saying, what is the capability gap you have and then figuring out the process to get it is going to play a big part. And then the last one is when to play. As much as we all say, everything needs to be done now, the short answer is not everything needs to be done now. There is a timing element and it's very important to realize when do you need to make an investment. And as I tell all my clients, it is as important to know when to jump in to know when not to jump in, right. So really doing this, we call it the test and learn or fail fast model of increasing the odds of winning. Knowing when to enter and how to enter, meaning are you going to enter with a big bank or are you going to enter with a pilot, makes a big difference. And when to play plays a big role so that you don't enter too early or you don't enter too late. So in conclusion what I would sort of say to recap, when we did this work, we were very excited with the trend line the packaging sector has been in. They have made the reverse the trend from destroying value to creating value. They have all the ingredients to have a great tailwind with all the descriptive technologies coming their way. They are in the center of the storm in a good way to drive these descriptions and to capture it. And last but not the least is what we're finding is that a lot of companies are already starting to make the mood to benefit from these trend builds to improve the quality of revenue. And based on the data, based on the work we did, we would say improving the quality of revenue is not just a nice thing to do or a good thing to do. It actually does improve your ROIC, which in return should improve your shareholder returns. So in conclusion, I would say great place to be. And we've had great times and there's even more great time for the packaging sector. Thank you, Nick. Thank you for the insights you've provided us and your latest report on the packaging solutions industry. I'd like to open up the session for questions. Please enter any questions you would like to have answered in the question box on your screen or in the chat. We can address both. And we'll give that just a moment for a couple of questions. And we do have one question for Nick. Nick, considering the amount of disruption 2.0 that's taking place in the industry that you talked about at some length, where would you say you're seeing innovation happening? Is it coming from the OEM side or is it really coming from the CPG side? Rebecca, that's a very interesting question because historically when you look at the packaging sector, what you'll find is most of the innovation, if not all of the innovation, came from the material guys or the CPG. But I would say in the last few years, the last three, four years, you're starting to see a lot of the innovation also happen in the packaging sector, meaning if you look at the innovative materials, if you look at the smart technologies incorporating sensors, and that is being done by packaging material companies, obviously in conjunction and collaboration with their customers. So to answer your question, now I would say as disruption 2.0 happens, you're starting to see innovation being widespread. It's no longer the preview of one company or even one sector. And we believe that's a good thing because that's the only way you're going to push this industry forward and also ensure value creation and value capture is spread out. Okay, great. And we do have several questions coming in now. One of our attendees would also like to know what are the metrics that you use to know when to play? That's an interesting question. This is, I mean, as we say, everybody can be a Monday morning quarterback. After the event, we could have said we can say, oh, you should have never got an or, oh boy, you should have bought the winning lottery ticket. So it's very easy after the event to say when to enter. It's very hard to say before. But we use three parameters to really judge a company's readiness when to enter or when not. The first one is when we look, and let's go down the order from where the trend is, where the sector is from where the company is. When we look at a trend, we look and say, is this trend being around where there's a lot of VCs putting in money? And very honestly, VCs have that habit of putting in 50 bets and if one wins, that's good enough for them. And so if there's a lot of VC activities, and have been around for a few years, we sort of say, okay, this trend is now starting to come from niche to mainstream. So this is a time at least worth considering. Versus if it's something where really there's no VC investments, it's in the early stages, we sort of say, look, it's in its infancy, and you better let the VCs play around with it a little bit before you jump it. The second is we come at the sector level and we look at where are the companies playing at, meaning whether the big companies or the whether the incumbents are starting to make the investments are starting to talk about it. And again, what we find here is there is often a chatter before the investments happen and then the investments happen. And then they, I mean, like every other thing when you make the investment for the first time you fail. And so there's a couple of rounds before it happens. And then the last is you where are you as a company because obviously if you're a large company with a heavy balance sheet, you can take more risk. And so one of the things we often say is whether you are the big guy or small guy does play a role in where you want to play and when you want to play. I the time you enter really depends on how much risk are you willing to take. But independent of the risk, it's a question of fail fast model. Given all these innovations, what we find is there are very few companies who can actually get it right the first time you want to go and tip your toe learn from it. And I mean, I know we say this confidence fail fast because the first time you are going to fail, but fail fast, but really learn from it to move on. But it's really a combination of those three things is when you make a decision on when to move because you don't want to move in too early, but you also don't want to move in too late. And that is really gated by what is the financial power you have or what is the financial balance sheet you have. Okay, great. And we do have a few more questions coming in. Another attendee would like to know if you would be able to discuss the adoption of MAAS or what I'm understanding of metal as a service in the packaging equipment space. So Sheiko, would you like to talk about it? I know we looked at it. I mean, at least the work when we looked at it, we would say, you know, we did not come to a definitive conclusion on which way it was going. So I would say if I answer the question, it'll be a guess on my part because we really could not come up with any data points to sort of say what the adoption was or what was driving it and was it going to become a mainstream or a niche? But Sheiko, would you like to comment? I think you've captured it, Nekha. I think, you know, I think it is, the way I characterize it is, you know, I think there's definitely interest in that option. You know, I think the jury is still out on, you know, how quickly it'll get it, how quickly the adoption will scale up or ramp up and it cross specifically across what parts of the market. But, you know, there's definitely, there's definitely interest in it as far as I can tell. Okay. Thank you, Shaker. And another attendee would like to know from either of you, do you anticipate additional consolidation of packaging manufacturers and suppliers or is this trend slowing down? I think, I mean, this one I'm looking at the crystal ball. I would say the consolidation wave has started. I don't think personally it has slowed down and I don't think it will slow down given there is still a long tail or fragmentation. And so my hypothesis, and I'm sure I'm going to be proven wrong in a couple of years when we get back on this call, but I'm going to say you're not going to see a slowdown at least in the near future. And maybe Nick, if I can just add one thing, please. I just want to separate between the face of M&A and the face of consolidation. I think the face of M&A in our case has, has historical highs and will likely continue. Now, what the other interesting trend that we've noticed in recent years is the portion, the portion of M&A that goes, that is being deployed towards increasing scale versus acquiring innovation and capabilities. And that percentage that's focused on acquiring innovation and capabilities is increasing, right? So our take is, I think the face of M&A will continue at a pretty healthy clip, but increasingly some of that will be diverted to building new capabilities, acquiring new innovation, and therefore, and less so on building scale. And what that means is obviously, you know, we'll have to wait and see, but M&A as a whole should continue. Okay, thank you, Shaker. And we have another question. Is there a feeling that there is sufficient innovation going forward, regards to eliminating the plastic bottle conundrum? Can I ask a clarifying question? Is it just the plastic bottle or is it plastic as a material for innovation or for packaging? I would, the question did not specify. I would assume that it's plastics in general. I can let you know if the asker changes, but let's go with plastics in general. So, I mean, this is a hot topic, right? I mean, it's a hot topic. It's a hot topic in social media. It's a hot topic with the end consumer. And this has been around for quite some time, and I think it has gained traction. I mean, like for example, San Francisco, where Shaker and I live, have now banned plastic water bottles at the airport. So, there's a lot of trends where there's actions, there's regulatory actions being taken or being promoted or economic costs being added. Having said that, I would say it's going to be, it's changing consumer behaviors, it's about changing customer preference. And if you're a consumer flying through San Francisco, now you need to remember to carry your own water bottle to fill up your water, or you have to go find a water fountain. It should be readily available. And so, I think it's going to be one of this, and I think the word conundrum is absolutely the right thing. It's not going to be solved, at least our own, our finding is it's not going to be solved by one individual, or it's not going to be solved by one company, right? It's going to be one where there is a role played by plastic bottle, and I'm calling it the bottle here in particular, but then we can talk about packaging plastics in general, is there is a role being played. And it will be solved when two things happen, when the substitute is found at the same service level, the same quality, and the same, or at least, comparable price point. And so, I think to solve the conundrum, there are a lot of companies which are investing time, there are a lot of companies which are investing the effort, and genuinely, if you look at the sustainability effort and everything, there are a lot of companies who really want to drive this change, and these are companies which are in the process of either making plastic stuff or in the process of using plastic, so we see that earnest effort by companies, but I think it's going to take time to break this conundrum just because you really need, this is a, it's a multi-party solution, and all the multi-parties have to come together to solve the quality, the cost, the availability, and so on, and that's just going to take time, would be my hypothesis. So, you mentioned that recently in San Francisco plastic bottles have been banned in the airports, so the asker has come back, and would like to know if you've heard anything specific to bottle, the bottles themselves, or, I mean, we spoke generally about plastics, but have you heard anything, I mean, even given the recent ban, have you heard anything about plastic bottles specifically? Shaker, have you heard, I personally, I mean, as I said, this is a hot topic for the different stakeholders every time we talk, I mean, and it is genuinely a serious problem which that needs to be addressed, right, so there are companies talking about it, there are different consumer groups talking about it, and as I said, there's a lot of regulatory actions and economic actions being taken, but I have, I mean, this is my own personal observation, and Shaker, correct me if I'm wrong, I have personally not seen sort of, is there a substitute to a plastic bottle, which, I mean, obviously, there's the stainless steel bottles which people are using, but what is the adoption rate and how is that working, I don't have this ability to do it. No, that's exactly right, Shaker. Yeah, no, we, I don't think we have a holistic view, if you will, on the outlook for plastic bottles, we've not studied that particular question, and as Nick said, there's increasing chatter about it, you know, I think there's increasing consciousness among consumers about the impact of plastic, and in particular single-use plastic bottles, and, and, and, you know, I think there's definitely segments of consumers that are taking action on their own, like getting their own bottles or minimizing usage of reusing plastic bottles, but we have not done a systematic study to have a, to have a really strong point of view. Yeah, I would say that's what I would just reaffirm. The comments we made are more, I would say, here's what we have heard, but we have not done a structured work on the space to really understand what is happening or what can be done to solve this kind of drum. Okay, and we have another question, a couple more coming in. Another attendee would like to know if you've seen any disruption technologies or heard about any disruption technologies in the defense or aerospace industry for packaging, but I would, I would say yes for any kind of packaging and defense or aerospace. Shaker, you should remind me, I mean, when we looked at innovations in packaging, I'm trying to think here, what we found was a lot of the innovations are happening in the consumer space, meaning how packages delivered in e-commerce, how is food delivered to the end consumer when they, for example, order a hot burger or a hot French fries. I'm trying to think, and I'm again, I cannot think of any big innovation, which I would have sort of said, wow, this is something I have yearning for the first time in the aerospace and defense. Again, Shaker, differ to you. No, you're exactly right. I mean, I think broadly speaking, you know, I think one of the slides you presented, if you shared this data point, 60% of packaging is for, is spend is in consumer-related segments and about 40% is industrial. Now, within industrial, obviously, aerospace and defense is one of the primary segments for, you know, for, for many, many different supply groups, including packaging. What we, at least I don't have a, you know, I've not looked specifically at applications in aerospace and defense or looked at exactly what innovations are taking shape in that space. Okay, thank you. And we're just waiting for a couple more questions. Maybe just give it another moment. And just so everyone is aware, we will be sending a link to the full report to all attendees of the webinar. So all of this information plus more will be available to you shortly. The webinar has also been recorded. So if you would like to review anything, you will be able to do so within the next 24 hours at PMMI.org. And we do have another question. Actually, we have a few more just pop up. Another attendee would like to know if you could discuss which e-commerce business has the largest growth in packaging innovation? I would say, I mean, Sheika, you should correct me wrong. You looked at, I think this is actually across the entire e-commerce, meaning we have seen innovation in like an e-commerce buying perishable material through online has driven a lot of innovation because now the material has to be fresh has to be protected has to be preserved. We have seen a lot of innovation in apparel because obviously you want your apparel to arrive at the right time. You want to arrive at the way you ordered it. We have seen it in food delivery where we have seen a lot of innovation because obviously going and drinking a smoothie at McDonald's or having a French fries is very different than having it delivered to your house 30 minutes later. We have seen a lot of innovation happening in the pizza industry for example, the pizza packaging, how it comes to your house. So I would say, fortunately or unfortunately, the innovation has been true across pretty much every one of the e-commerce channel. I mean, on a relative basis, I don't know if one is significantly ahead of the other or not and Sheika again, I know we looked at it, I don't know the number of companies and so on. You might have the data, but I would sort of say we have seen it pretty much in a good way widespread pretty much across all parts of the e-commerce chain. Yeah, exactly. And I think if you recall the framework, the CP framework that we presented before, protect, promote and perform, I think a lot of the innovation has been, I'd say more, some on the protect side. So new materials that are more sustainable during the shipment process and also have a lower carbon footprint, for example, a lightweight can reduce your, you know, reduce or easy to transport. So there's been a favorite of innovation on the protect side, but a lot of the innovation actually is on the perform side. So there are things like, you know, more on the, for example, with, like Nick said, you know, having smart tags or FIDs and packaging so that they're easier to process in your warehouses, you know, having, for example, the ability to track the contents and ensure that the contents have not been tampered with, innovations that protect the or, you know, give you track temperature through the entire delivery chain. So lots of innovation, I'd say, you know, I think if I had to hazard a guess, I'd say the majority of it has been on the perform side. There's been a fair bit on the protect side as well. And then in keeping with that sort of protect versus perform theme, have you noticed anything about trends in corrugated boxes versus shelf ready boxes for retail? Can you ask the question again? I'm sorry, I do not understand the question. So we were talking a little bit about protect and perform and one of our attendees would like to know if you've noticed any trends between the use of corrugated boxes, which I'm understanding as being more for protection purposes, although they can be performed as well, versus shelf ready boxes or retail ready boxes, which are kind of the same thing, but they're more performance if they seem more performance focused, because they have to just be ready for display. Did that make sense? Yeah. I mean, this is an interesting question. Yeah, Shikha, go ahead. You know, I think it is. And you're seeing a bit of that. I know the question is about retail, but you're seeing a lot of that actually in the e-commerce space, right? So historically, there was the same packaging for retail in e-commerce, and the e-commerce players would have to take out the contents of, for example, a tertiary package and then put it in a different package and ship it to the consumer. Now there's a fair bit of innovation in making sure the primary packaging can also be used as secondary packaging or tertiary packaging, right? And that trend extends to retail as well. I think that the drivers are multi-fold, but primarily it's cost, right? So because all of this packaging creates a fair bit of cost for the retailers and e-commerce players, so reducing that cost and from a sustainability standpoint, reducing the amount of material that's used. So we are definitely seeing some trends. I personally have seen more on the e-commerce side, but I've seen a couple of examples on the retail side as well. Okay, great. Thank you, Shikha. And we'll just give it just a couple more seconds for any more questions from our attendees. If there's anything else that you would like to know. And again, we are going to make this full report available to all who attended the webinar today. Okay, well on behalf of PMMI, CPA, the Association for Contract Packagers and Manufacturers, and IOPP, the Institute of Packaging Professionals, thank you everyone for participating in today's webinar. As a final note, you'll receive an email to complete an evaluation for today's webinar. Please complete the evaluation as soon as possible and let us know how we can improve our webinars in the future. Nick, Shaker, everyone involved, thank you so much and have a great day, everyone. Thank you, Rebecca. Thank you all.