Hi mark1013I also share your enthusiasm for the potential of...

Hi mark1013

I also share your enthusiasm for the potential of bioplastics, and I think if the industry does take off CNN's in a sweet spot to gain handsomely from it. However, as you rightly pointed out, there's a real difference between a good idea and buying the good idea. If you have a look at many of the "greentech" companies in Oz, for example geothermal electricity production, they're all great ideas. The world needs them, in the same sense that the world needs to recycle or reduce its carbon emissions. But without sales, their share prices are languishing.

In my mind, what's been challenging for greentech industries like bioplastics is the short-term view of consumers and industry. People agree that more should be done to curb pollution, but when it comes down to passing that law or signing that accord, there's so much resistance because companies fear it eating into their profits.

Therefore, in considering the revenue drivers for the bioplastics industry, we have to take this into account.

1. Corporate sustainability policies.
These may be wishy-washy, but some companies take them quite seriously. CNN needs packaging heavy companies like FMCGs to take their environmental footprint seriously and reduce their reliance on carbon-additive conventional plastics, and switch instead to biodegradable, oil-reduced, or CO2 polymers. For this to happen, either laws need to be passed, or companies need to feel they can make money from differentiating themselves as being environmentally conscious. We have little control over how quickly this happens. If it does, then great. But often, these things take a back seat to more immediate profit/loss concerns. My worry is that in today's economic climate, when companies are slashing costs and cutting staff, and there is in general low consumption levels, it's hard for companies to justify spending extra on bioplastics.

2. Cost of oil
I unfortunately don't have the numbers to prove if I'm right or wrong, but I believe that the recent growth in bioplastics has been buoyed significantly by the rise in oil prices. The price of crude will dictate the cost of conventional plastics. The more expensive oil becomes, the more expensive conventional plastics become. I don't know the cost comparison between CNN's bioplastics and conventional plastics, but I wouldn't be surprised if bioplastics are more expensive. Therefore, if the price of oil remains high, then bioplastics will start to look more economically competitive.

Anyway, these are in my opinion 2 major drivers for this market. As we can see from the presentation, the bioplastics markets' "double digit growth" is coming off a very very low base, so double digit growth really isn't something that impressive. For bioplastics to become significant in this industry, bioplastics need a value proposition superior to conventional plastics and other competitors/substitutes, be it in biodegradability, cost, differentiation through being environmentally sustainable, or otherwise.

Good luck with your research!