StarchTek has two kinds of rivals: well-established producers of petroleum-based expanded polystyrene (EPS) merchandise and small companies making an attempt to carry starch-based Styrofoam to the market. A lot of the legacy EPS producers have giant manufacturing capacities. Cellofoam has 14 vegetation, Atlas Molded Merchandise has 16 places, and Storopack has 21 places. Because of their scale, they’ll decrease their prices and seize giant shares of the market. Most EPS producers can adapt the form of their merchandise to their purchasers’ wants. StarchTek doesn’t have the same scale. If it tried to accumulate costly gear and produce its StarchaFoam product — a starch-based compostable foam — in its personal plant, it wouldn’t have the ability to value it competitively. A licensing resolution is StarchTek’s solely probability to compete with legacy EPS producers on value.
Within the second quarter of 2022, EPS producers in the US bought their merchandise for $3,315 per ton, equal to $1.66 per pound. The worth elevated by 20.1% in comparison with the primary quarter of 2022. On the buyer finish, the ultimate value of polystyrene relies on the form of the product. Uline resells foam rolls at costs starting from $5.62 to $12.20 per pound. It additionally resells polystyrene sheets from $0.20 to $1.35 per sq. foot primarily based on the thickness.
A number of corporations are beginning to promote starch-based polystyrene. Uline resells starch-based biodegradable foam sheets as a retailer. Its costs vary between $30.50 and $33.30 per pound.
TemperPack sells ClimaCell, a polystyrene different case manufactured from 90% corn starch and paper. It replaces petroleum-based polystyrene used to maintain gadgets chilly or recent throughout delivery. Its goal market is smaller than StarchTek’s, but it surely has well-defined branding and current purchasers. TemperPack sells its field panels on Uline’s web site at costs starting from $6.46 to $12.60. Even when the product seems low-cost, it’s much less versatile than different polystyrene merchandise on condition that its use is restricted to the cargo of cool merchandise. Nonetheless, ClimaCell may grow to be a extra direct competitor towards StarchTek if the agency determined to develop its enterprise mannequin.
StarchTek’s StarchaFoam panel prices $0.45 per sq. foot for finish customers, in response to the founder. The corporate’s foam roll, known as StarchaWrap, prices $10.10 per pound. These costs are similar to Uline’s petroleum-based polystyrene sheets and rolls, so StarchTek’s enterprise mannequin is aggressive. StarchTek additionally sells instances much like TemperPack’s for $2.35 or $2.70. StarchTek’s costs are no less than 3 times cheaper than TemperPack’s costs, and TemperPack has already raised $208.9 million. Based mostly on the corporate’s information, a StarchaFoam cardboard case is barely simpler at insulating cool temperatures than TemperPack.
StarchTek has unique rights on eight patents from Michigan State College to create its starch-based polystyrene. Whereas its patents do present StarchTek some defensibility, it’s restricted. Even when StarchTek’s rivals use completely different strategies to create polystyrene options, they might nonetheless provide merchandise with comparable features.
General, StarchTek is well-differentiated. StarchTek’s merchandise are cheaper than the few different corporations promoting starch-based expanded polystyrene. Its projected value can be much like the worth of conventional EPS producers because of its licensing mannequin. The corporate can present giant EPS corporations with a cost-efficient and eco-friendly product with out ready for governmental bans on petroleum-based polystyrene.
