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June 06, 2001
EarthShell Serves Environment-Friendly Food Packaging
by Mark Thomsen
Container manufacturer beginning to see fruit of research and development with expanding in-market
Corporation (ticker: ERTH) is a small company that is pioneering huge innovations in disposable
packaging for food. The Santa Barbara, California-based manufacturer uses composite materials to
produce containers that biodegrade when exposed to moisture in nature or physically disintegrate in
water when crushed or broken. Although the three-year old company still does not have a product on
the market and has yet to make a profit, it has good reasons to be optimistic about the future.
Fast-food giant MacDonald's (MCD) likes the concept
of EarthShell’s packaging and has been testing containers for a year at over 100 locations in
Chicago. EarthShell announced this week that met its commitment to supply McDonald’s a newly
designed Big Mac container. To receive approval for the design, the container had to meet
McDonald’s world-class performance requirements for distribution, warehousing, store
operations and customer expectations.
“Supplying the McDonald’s restaurants,
currently using the EarthShell package, with the final product design must be seen as an important
milestone,” said Simon K. Hodson, Chief Executive Officer of EarthShell Corporation.
“Capacity is being readied for expanded use of the hinged container to more McDonald’s
locations in the Midwest and the introduction of the product to the West Coast in the near
The market replied favorably to news of the redesigned product.
EarthShell’s stock price rose 60 cents the day after the announcement, about 19 percent,
closing at $3.69. At the end of trading today the price was $3.90
The Big Mac containers
are made from reclaimed potato starch, natural limestone and post-consumer recycled fiber,
biodegradable polymer and wax coatings, and water. The post-consumer recycled fiber means that no
trees were cut, a feature McDonald’s seems to value.
Product development has been an
expensive process for EarthShell and its founders. More than $25,000,000 has been spent in
researching, testing, and developing the environmental attributes of the firm’s packaging.
EarthShell is also beginning to go after the hot beverage cup market, which in the U.S.
alone is valued at just over $1 billion annually. It recently announced that after extensive
in-house testing of the first EarthShell hot beverage cups, initial in-market testing will begin
shortly at a California coffeehouse chain.
The potential popularity of biodegradable food
containers revealed itself recently on a college campus. EarthShell disposables used at a
“green graduation” at Hampshire College in Massachusetts drew rave reviews for their
functionality. Hampshire College cooperates with four other nearby colleges in a recycling effort
called the Five College Recycling Program. The Recycling Program managers are recommending that
EarthShell products be used at campus dining facilities at all five colleges.
its 2001 first quarter earnings report, the company has $6.7 million in cash, no debt, and an
on-target cash burn rate. And the company has retained its ability to raise equity capital.
"Our achievement of strategic milestones with regard to the clamshell, bowl and plate is
currently allowing us to raise capital on more favorable terms," said Scott Houston, EarthShell
Chief Financial Officer.
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