The company that makes cans for White Claw is spinning off on a double trend
The most annoyed-sounding company name... Ardagh Group (pronounced: ard-ugh?) is one of the world's largest metal and glass packaging companies. Think: Heineken bottles, minus the beer. Now the publicly-traded company is spinning off its can business into another public company. The new can-only company is valued at $8.5B. Unsolicited name suggestion: OnlyCans.
- From soda and beer: When Ardagh acquired its canning operation in 2016 for $3B, most of its sales came from big soda and beer companies.
- To seltzer and 'bucha: Today, more than half of Ardagh's $7B in annual sales come from cans for brands like White Claw, Truly, and LaCroix.
Weird SPACaging... The new company is going public by merging with a SPAC — a company that goes public only to acquire a real company. The SPAC is betting on the continued growth of canned drinks, which are more enviro-friendly: aluminum is easier to recycle than plastic (Ardagh calls it "infinitely recyclable"). OnlyCans has two trends going for it:
- Short-term: Canned-everything. You're not drinking glass bottled beer at the bar — you're cracking open a canned wine at home.
- Long-term: Sustainable-everything. Just this month, Nestle announced it's selling its North American water biz for $4.3B (bye, plastic bottles).
Commodity is hard to conquer... Ardagh is selling "shovels" in the seltzer gold rush. But at the end of the day, an aluminum can is an aluminum can. And Ardagh can't control the price of a commodity like aluminum. Aluminum prices have risen over the past year, partly thanks to the "canned-everything" trend. Aardagh also has to compete on price with companies like Ball Corp, which makes Coke cans. That's likely why Aardagh's profit margin is slim.