Karat Packaging Enters Definitive Joint Venture Agreement to Build New Factory in Taiwan for Manufacturing Compostable Foodservice Products

Rhea-AI Summary

Karat Packaging Inc. (NASDAQ: KRT) has announced a joint venture with Happiness Moon, Co. Ltd to establish Green Earth Technology in Taiwan, focusing on manufacturing eco-friendly foodservice products. Karat will invest approximately $6 million and hold a 49% stake in the new entity. The 180,000 square-foot facility is set to produce 7,560 tons of bagasse products in 2023, with half allocated for Karat’s customers. This initiative aims to enhance Karat’s vertical integration and meet growing demand for compostable products, supporting its commitment to sustainability.

Positive

• Joint venture with Happiness Moon enhances eco-friendly product manufacturing.
• Karat invests approximately $6 million, demonstrating financial commitment.
• New facility to produce 7,560 tons of products in 2023, boosting production capacity.
• Half of production aimed for Karat's customers, enhancing market reach.

Negative

• None.

-- Investment Further Demonstrates Company’s Green Initiative and Plan for Enhanced Vertical Integration to Accelerate Growth --

CHINO, Calif., April 07, 2022 (GLOBE NEWSWIRE) -- Karat Packaging Inc. (NASDAQ: KRT) (Karat), a specialty distributor and manufacturer of environmentally friendly, disposable foodservice products and related items, today announced it has entered a definitive joint venture agreement with Happiness Moon, Co. Ltd (Happiness Moon) to establish a new corporation, Green Earth Technology (Green Earth), to build a new 180,000 square-foot factory in Taiwan.

The new facility will have state-of-the-art robotic automation to manufacture compostable foodservice products from bagasse, a derivative of sugar cane pulp, which is a fast-growing source of 100% compostable foodservice products. Happiness Moon is one of the leading manufacturers of disposable foodservice products and machinery in Taiwan, with a global blue chip customer base.

Karat will hold a 49 percent interest in Green Earth, and its initial investment is approximately $6 million. Manufacturing is anticipated to start in the second half of 2022, using proven machinery and technologies developed by Happiness Moon. The new plant is expected to produce approximately 7,560 tons of products in 2023, or approximately 648 containers of take-out boxes, plates, bowls, tableware, and other bagasse products. Approximately one half of the production will be earmarked for Karat’s customers, with the remainder for other customers in Asia and Europe.

“Our investment demonstrates Karat’s commitment and leadership position in providing eco-friendly disposable foodservice products,” said Alan Yu, Chief Executive Officer. “Most bagasse products in the United States are currently imported from China. The joint venture will enhance Karat’s vertical integration in its supply chain and accelerate growth and margin expansion.

“Our objective in the next several years is to become the leading manufacturer of bagasse foodservice products for the U.S. market. After thoroughly assessing the technology and robotic capability in Taiwan, which we believe will enhance efficiencies and productivity, we plan to bring the proprietary manufacturing processes to the U.S. and build a first-of-its-kind bagasse production plant.

“Expanding the use of environmentally friendly, compostable products, which have a lower carbon footprint, represents a critical step to help businesses and consumers transition toward sustainable living. Karat’s unique complementary operating platform of supplier network and manufacturing enables us to provide customers broader product offerings and customization, with shorter lead times,” Mr. Yu added.

About Karat Packaging Inc. 
Karat Packaging Inc. is a specialty distributor and manufacturer of a wide range of environmentally friendly, disposable foodservice products and related items, primarily used by national and regional restaurants and in foodservice settings throughout the United States. Its products include food and take-out containers, bags, tableware, cups, lids, cutlery, straws, specialty beverage ingredients, equipment, gloves and other products. The company’s eco-friendly Karat Earth^® line offers quality, sustainably focused products that are made from renewable resources. Karat also offers customized solutions, including new product development and design, printing, and logistics services. To learn more about Karat, please visit the company’s website at www.karatpackaging.com.  

Caution Concerning Forward-Looking Statements 
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, including, but not limited to, completion of the new manufacturing plant in Taiwan, production capacity and building a U.S. plant, are subject to numerous conditions, many of which are beyond the control of the company, including those set forth in the Risk Factors section of the company’s most recent Annual Report on Form 10-K for the year ended December 31, 2021 and our other public filings made with the Securities and Exchange Commission (SEC) (File No. 001-40336). Copies are available on the SEC’s website at www.sec.gov. Karat undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law. 

Investor Relations and Media Contacts: 

PondelWilkinson Inc.         
Judy Lin Sfetcu/Roger Pondel 
310-279-5980         
karat@pondel.com  

FAQ

What is the joint venture between Karat Packaging and Happiness Moon about?

The joint venture aims to establish a new company, Green Earth Technology, to manufacture eco-friendly foodservice products in Taiwan.

How much is Karat Packaging investing in the joint venture?

Karat Packaging is investing approximately $6 million in the joint venture.

What products will the new facility in Taiwan produce?

The facility is expected to produce compostable foodservice products made from bagasse, including take-out boxes and tableware.

When will manufacturing start at the new facility?

Manufacturing at the new facility is anticipated to start in the second half of 2022.

What percentage of production will be allocated to Karat's customers?

Approximately half of the production will be earmarked for Karat's customers.