Welcome back to the Deep Dive, where we take
the sources you share with us and turn them into
immediately usable knowledge, providing you with
that shortcut to being thoroughly well -informed.
Today, we are analyzing a company whose products
are, well, they're literally stuck to your clothes,
your food packaging, your car, and even potentially
your skin, but whose actual business structure
and, frankly, incredible strategic transformation
remain largely invisible to the public. We are
diving deep into Avery Dennison Corporation.
Now, be honest. When you hear that name, what's
the first thing that springs to mind? That's
the key question, isn't it? For me, it's those
ubiquitous white labels, the ones you'd print
addresses on, or maybe those giant institutional
binders we all used in school. I think of office
supplies. I think of stickers. It gives this
impression of a reliable, maybe slightly boring
legacy paper company. And that mental image.
is exactly what we need to dismantle today. Because
that perception is not only outdated, it's financially
and strategically misleading. That association
is what they sold off over a decade ago. Really?
The whole thing? The whole consumer -facing brand.
So our mission today is to uncover how a company
founded on a very simple... elegant adhesive
idea the pressure sensitive label executed one
of the most remarkable corporate transformations
of the last few decades okay they went from gummed
labels to pioneering the digital identity of
physical objects. That's a massive leap. We're
talking about shedding an entire legacy identity
to become a 21st century tech enabler. Precisely.
This is not just a label company anymore. It's
a critical multinational manufacturer of fundamental
materials. Yes, the pressure sensitive adhesive
materials are still core, but the future is built
around high tech solutions. Like what specifically?
Things like apparel branding systems, the foundational
technology for RFID inlays, and highly specialized
medical products like wearable sensors. When
you look at the sheer scope of their influence
across modern intelligent supply chains, it's
genuinely surprising. The numbers certainly support
the idea that this is far from a simple office
supply vendor. Avery Dennison is a behemoth.
Oh, absolutely. They are headquartered in Mentor,
Ohio, but the roots go all the way back to 1935.
That's 90 years ago. Founded originally in Los
Angeles, California. 90 years of continuous operation,
but more importantly, 90 years... of continuously
evolving its core competency in material science.
That's the key. They've managed to stay relevant
through multiple industrial and technological
shifts. It's pretty incredible. And the scale
today is just staggering. They operate in more
than 50 countries globally, employing approximately
35 ,000 people. 35 ,000. And when we talk about
financial heft, their 2024 revenue snapshot was
U .S. $8 .76 billion, paired with a net income
of U .S. $705 million. Right. This isn't a niche
industrial supplier. This is a Fortune 500 entity
that provides the backbone, literally and digitally,
for a vast amount of global commerce. That's
a perfect way to put it. They don't just supply
labels. They supply the intelligence necessary
for modern retail and logistics. Okay, let's
unpack this history. Because you can't appreciate
the digital pivot without understanding the sticky
foundation it was built upon. It all starts in
1935 in Los Angeles, CA, with a classic American
entrepreneur story. That's right. The company
was founded by R. Stanton Avery and his wife,
and it was initially called Kum Clean Products.
Kum Clean. I love that. The brilliance of that
name captures the entire value proposition. Kum
Clean. It highlights the simple yet elusive technical
goal they achieved, a self -adhesive material
that stuck securely when needed but could also
be peeled away cleanly. Without leaving residue.
Exactly, without leaving that bunk behind. That
seems so simple to us now, but at the time, this
was a eureka moment. Before our Stanton Avery,
labels were often attached with messy, water
-activated glue or they were pasted on. Yeah,
it was a whole process. This self -adhesive or
pressure -sensitive adhesive, PSA material, allowed
for rapid application and... removal and it just
revolutionized how products were priced and branded.
It was a true industrial innovation. And think
about the complexity of the pressure sensitive
concept itself. It's not just one thing. It involves
three layers. The face stock. That's the material
you print on. Right, the paper or the film. Then
the adhesive layer, the sticky part, and then
the crucial release liner, the backing you peel
off. Getting the chemical formulation of the
adhesive just right so it adhered immediately
with light pressure. Hence the name pressure
sensitive. And perfectly balancing the bond strength
to the surface and the ease of separation from
the liner. Well, that was a massive materials
challenge he solved. And Avery's company name
tracked this evolution in precision, didn't it?
From Come Clean Products in 1935, they became
Avery Adhesives in 1937. Then they were incorporated
as the Avery Adhesive Label Corps in 1946. By
1964, they were the Avery Products Corporation,
and then came the crucial international recognition,
Avery International Corporation in 1976. And
that international shift was absolutely necessary.
I mean, it was crucial to meet the increasing
standardization of global retail. But the final...
Definitive Identity, the one we analyzed today,
arrived in 1990. Avery Dennison. After the merger
with the Dennison Manufacturing Company. That
1990 merger is what put the current name on the
map. But it also distracts us from the fact that
the early success of Avery required not just
the inventor, our Stanton Avery, but a vital
business partner to provide the muscle and scale.
Yes, that partner was H. Russell Smith. He was
a college friend of Avery's who joined in 1946
as a one -third owner. And he served as president,
CEO, and chairman for nearly four decades. So
if Avery was the innovator... Smith was the operator.
While Avery provided the innovative technical
genius, Smith provided the professional, the
industrial, and the financial backbone. So what
specifically did Smith do that turned an innovative
startup into a multinational corporation? He
was the system builder. In 1946, he formally
incorporated the fledgling 50 -person company.
He standardized the manufacturing processes that
allowed them to produce the core label materials
reliably and at a massive scale. And he was the
one who pushed them to go global, right? Trucially,
yes. He was the engine of global expansion. They
knew they needed to move beyond the U .S. market,
and he drove that push, establishing their first
overseas subsidiary in the Netherlands in 1955.
In 1955. Yeah. This early European extension
meant they were geared toward global standards
from the midpoint of the 20th century. And on
the financial side, he's credited with taking
the company public, leading to its listing on
the New York Stock Exchange in 1967. That's right.
That's the ultimate validation of moving from
a niche inventor shop to an industrial power
player. It is. Dean Scarborough, who was a later
CEO, he noted upon Smith's death in 2014 that
Smith gave Avery's elegant technical invention
the necessary structure, professionalism, and
scale to endure. I like that phrase. It's the
ability to scale an elegant technical innovation
into a reliable, mass -produced global product
that separates the novelty company from the enduring
corporation. Smith provided that industrial backbone.
So that's the Avery side. 20th century adhesion
innovation. Now let's look at the Denison half
of that 1990 equation, the Denison Manufacturing
Company. This side takes us back much, much further
in time. The Denison lineage is almost a century
older than the Avery side. It's kind of amazing.
It was founded way back in 1844 in Brinswick,
Maine, by Andrew Denison and his son, Aaron Lufkin
Denison. 1844. That's a staggering lifespan for
a modern Fortune 500 predecessor. And they didn't
start with adhesives at all, did they? No, not
at all. They started in the precision craft space,
manufacturing jewelry and watch boxes. So very
high -end, detailed work. Exactly. The son, Aaron
Lufkin Dennison, eventually turned the company
over to his younger brother, Eliphalet Worf Dennison,
who then developed it into a significant industrial
enterprise focused on things like specialized
paper products and tags. And they eventually
moved to Massachusetts. Right. The business moved
to Framingham, Massachusetts, in 1898. Here's
where the historical connection gets intellectually
fascinating, though. Aaron Lufkin Dennison, the
co -founder, is a major figure in American industrial
history for something he did after leaving the
family company. He is. This is a great little
historical footnote. After departing. Aaron Lufkin
Dennison went on to co -found the famed Waltham
Watch Company in 1850. The Waltham Watch Company.
And their historical significance wasn't just
making watches. It was that they perfected the
American system of watch manufacturing. Which
was all about precision. The system focused entirely
on producing highly accurate, standardized, and
most importantly, interchangeable parts. And
this is the connective tissue. This is the fundamental
philosophy that the two companies brought together
in 1990. You have the Denison legacy, which is
rooted in 19th century precision, standardization,
and the mastery of mass manufacturing required
for interchangeable parts. That conceptual foundation
is the ancestor of modern standardized supply
chain elements. The ability to produce billions
of identical reliable components like tags or
labels. So we merged the 19th century mastery
of standardized high volume manufacturing from
Denison with the mid 20th century innovation
and chemical adhesion technology from Avery.
By 1990, you have a combined entity, Avery Denison,
that is perfectly positioned to dominate the
global production of standardized technical high
volume materials. The name Avery Denison captures
two entirely distinct yet perfectly complementary
industrial strengths. It's the definition of.
of a synergistic merger. They combine the expertise
in what to make, you know, the adhesive science
with the expertise in how to make it at scale
and distribute it globally, the manufacturing
and standardization expertise. Now we come to
the great pivot. We talked about how the Avery
Dennison name became cemented in the public consciousness
in 1990. For many, that consciousness was built
on their office and consumer products division,
which was formally created back in 1982. Right.
This is the business line that defined them to
the average consumer. Absolutely. When people
think of the recognizable Avery Brandon logo,
they are thinking of the products that came out
of this division. The three ring binders, the
file folders, the simple self -adhesive name
badges, the mail merge labels. These were the
finished or converted materials aimed directly
at you, the consumer. Or at small businesses.
That's the key distinction, right? That's the
one. These were final products, contrasting sharply
with their much larger materials division, which
sold raw label stock in giant rolls to other
industrial converters who would then turn them
into final products. That distinction is vital.
The office products division was high volume,
but eventually it became lower margin, especially
as the market changed. That division flourished
throughout the late 80s and 90s with the boom
in personal computing and printing. Oh, yeah.
If you were doing any conventional mailing or
organization, you needed their products. You
had to have them. But the global communication
landscape fundamentally shifted. You mentioned
the rise of email and the decline in conventional
mail volumes. That entire market began to plateau
and eventually shrink. Which leads to the big
question. Why would a major company sell the
most recognizable, reliable cash flow business
it had? It seems counterintuitive. It was a clear
-eyed recognition macro trends and a calculated
financial decision. The conventional office products
business was becoming a drag on growth. Oh, so?
It required constant physical distribution and
the margins were being squeezed by digital competition.
So Avery Dennison had a choice. Either try to
save a declining business. or double down on
their high -margin, specialized material science
and emerging high -tech solutions. They chose
the latter, resulting in the massive divestiture.
On July 1, 2013, they sold the entire Office
and Consumer Products division, including the
popular Avery brand logo and name for those specific
products, to CCL Industries. This move was a
defining moment for the modern corporation. They
retained their full corporate name. Avery Dennison,
their history and their intellectual property,
but they shed the entire business line that most
people associated with them. So they were signaling
a change. A huge one. They were signaling that
their identity was no longer defined by finished,
consumer -facing office goods, but by specialized
industrial materials and digital technology.
It was a calculated separation of brand legacy
from future strategic direction. If the office
products are gone, what is the modern structure
of this $8 .76 billion company? You said they
operate on two main pillars. They do. Based on
2023 net sales figures, the organization is clearly
bifurcated. The first pillar, and still the foundational
business, is the materials group. This accounted
for a massive $5 .8 billion in net sales in 2023.
$5 .8 billion. That is huge. This is where the
core R. Stanton Avery legacy lives, right? Absolutely.
This group is tasked with manufacturing and producing
the essential raw and highly specialized pressure
-sensitive materials. This includes standard
film and paper labels, but critically, it extends
to complex high -performance applications. Like
what? Sophisticated graphics, durable reflective
materials, and specialty functional products.
Can you give us a sense of what functional products
means in this context? Sure. Think about durability
and environment. This includes things like high
-tech adhesives for industrial equipment, whether
resistant films used in construction, or the
specialized media used for full vehicle wraps.
Ah, so the stuff that has to survive in the real
world. Exactly. The materials group provides
the raw composite materials, the multi -layer
sandwiches of face stock, adhesive, and liner
to other companies who then convert them into
the final product. Their continued success relies
on constantly innovating the acrylic and polymer
chemistry behind the adhesive itself. Like I
said, that's pillar one. And the second pillar,
which is their engine for future growth and higher
profitability, is the Solutions Group. Correct.
The Solutions Group brought in $2 .6 billion
in net sales in 2023. This is the high -tech,
high -value engine focused on providing not just
a material, but a complete solution centered
around information and identity. And this is
where we see that three C's strategy you mentioned
earlier. This is it in action. Connectivity,
customization, and care. Let's start with connectivity
and customization here. What products drive that
$2 .6 billion? This segment handles sophisticated
branding and information management, particularly
for the global apparel and general retail industries.
They provide everything from woven and printed
labels, external embellishments, price management
systems, and specialized graphic elements. So
if you bought a shirt and it has a fabric tag
listing the size, that probably came through
the solutions group. If it has a synthetic patch
on the sleeve or specialized external branding,
that's them. Yes, but the most impactful element
within connectivity is their work in radio frequency.
Frequency identification, RFID, tags, labels,
and inlays. The digital voice of the product.
That's it. An RFID tag contains a tiny chip and
antenna. And when activated by a radio frequency
reader, it can transmit a unique digital ID.
And why is that so much more valuable than a
standard barcode? I mean, barcodes work fine,
don't they? They do for what they were designed
for. But a barcode requires line of sight and
can only identify the type of product, the SKIOU.
An RFID tag identifies the specific individual
item, its unique serial number, and it can be
read almost instantly from a distance, hundreds
at a time, without line of sight. This fundamentally
revolutionizes inventory management, loss prevention,
and supply chain visibility. The Solutions Group
is a global leader in manufacturing these RFID
transponders. Now let's pivot to the third C,
care. The adhesive expertise, which started with
peeling a sticker off a piece of paper, is now
being deployed in life -critical medical applications.
That's a fascinating evolution. It truly is.
This falls under the Other Specialty Converting
Businesses designation. And it houses Avery Dennison
Medical, which used to operate under the name
Vansive Medical Technologies. And who do they
sell to? They sell highly engineered products
directly to healthcare device manufacturers.
What makes this material science so different
from, say, a standard shipping label? The technical
demands are just. They're exponentially higher.
A skin contact adhesive must be biocompatible.
It cannot cause irritation over long periods
of wear. Which is a huge challenge for devices
like continuous glucose monitors or long -term
wearable sensors. A massive challenge. They provide
specialized barrier films. sophisticated wound
dressings that might incorporate different layers
for absorption and protection, and custom -engineered
securementates designed to reliably hold vital
medical devices or tubes in place on the body
without causing trauma upon removal. So it has
to stick, but not too much. Right. It's a very
delicate balance. This segment leverages their
polymer and adhesive chemistry expertise to solve
critical problems in patient safety and long
-term care. So the move away from paper office
supplies wasn't just lateral. It was a fundamental
strategic elevation toward high margin, high
tech, and mission critical applications across
the three vectors of connectivity, customization,
and care. And that strategic elevation was driven
almost entirely by money, by an aggressive, intense
merger and acquisition strategy over the past
15 years. They weren't just waiting for technology
to appear. They were buying intellectual property,
deep expertise, digital platforms, and access
to new high -value customer segments. A shopping
spree. A very strategic one. The M &A activity
signals a deep commitment to transforming into
an information and connectivity provider. Okay,
let's break down this M &A activity by those
strategic focus areas. Starting with the massive
push into retail, apparel, and identification,
which firmly establishes the connectivity and
customization pillars. The foundation for this
vertical integration was laid back in 2007 with
the acquisition of Paxar. Paxar was foundational
because they were already a major manufacturer.
of identification and tracking systems specifically
for the retail supply chain. So they bought the
infrastructure. Exactly. This immediately gave
the newly forming solutions group the infrastructure
and market access needed to integrate subsequent
identification technologies. It was the platform
upon which they built their RFID dominance. And
speaking of RFID dominance, 2020 saw perhaps
the most significant single technology acquisition,
Smartrack's RFID transponder business. That was
the move that cemented them. as the undisputed
global leader in the RFID space. SmartRack was
one of the other leading technology platforms,
and by absorbing that business, Avery Dennison
consolidated expertise, patents, and market share.
It provided them with unrivaled scale in manufacturing
those critical inlays that power the digital
identity of products. Now let's look at how they've
integrated this digital ID into the physical
garment. It's a rapid -fire series of acquisitions
designed to provide an end -to -end service for
apparel brands. You see that progression from
2022 and 2023. In 2022, they acquired Textrace,
a Swiss technology developer. Textrace, what
did they bring to the table? They specialize
in custom -made woven and knitted RFIB products.
Now, this is a subtle but profound step. The
identification system is no longer just a hang
tag. It can be woven or knitted directly into
the fabric of the garment. So it becomes part
of the shirt itself. Why does weaving it into
the fabric matter so much for the brand? It matters
for durability and aesthetics. If the tag is
durable and discreetly integrated, it lasts the
life of the product and can withstand industrial
washing. Which is crucial for workwear or rental
garments. Absolutely. It moves the embedded intelligence
from a simple accessory to being part of the
material structure itself. And the acquisitions
in 2023 focus on adding aesthetic and functional
customization capabilities. They acquired ThermoPatch.
A specialist in labeling, embellishments, and
transfers. Often used in high durability environments
like industrial laundry and workwear. And then
they followed that up with Lion Brothers. A designer
and manufacturer of high -end apparel brand embellishments.
Think decorative patches, logos, and badges.
And then Silver Crystal Group. Right. A company
that customizes jerseys and apparel for sport
organizations. If you look at those three together.
Thermopatch, Lion Brothers, and Silver Crystal.
It paints a picture of massive vertical integration.
Avery Dennison isn't just selling the raw label
stock anymore. Not even close. They are now involved
in the design, customization, manufacturing,
and application of the branded embellishment
itself. They are moving up the value chain from
material supplier to full -service branding partner.
And I'm guessing they can build the RFID right
in from the start. And crucially... Yes, they
can integrate their RFID technology directly
into those embellishments from the point of manufacture,
ensuring the digital identity is built in from
day one. This provides massive competitive advantage
and much higher margins than selling raw materials.
Let's shift focus to the materials group, the
$5 .8 billion pillar, which also saw a necessary
expansion to stay competitive in specialty films
and substrates. This shows the second strategic
focus area. That's right. They continuously invested
in upgrading their foundational science. In 2016,
they acquired Ink Mill Corporation. This was
purely a technology play. What kind of technology?
It was about combining their advanced ink capabilities
with Avery Dennison's portfolio for specialized
media, like complex reflective materials. Reflective
media, which we'll see later, is a high -stakes
area used heavily for safety, road signs, and
transportation applications. Extremely high stakes.
They then expanded their film expertise in 2017
with two key acquisitions. First, Haneda Coatings,
a manufacturer specializing in specialty films
and laminates. And what are those used for? These
films are often used for things like window films,
specialized industrial coatings, or flexible
packaging barriers. Very technical stuff. And
second, Youngle Tape Company Ltd., a manufacturer
of specialty tapes and related products. What
constitutes a specialty tape that justifies an
acquisition? Specialty tapes are high -performance
industrial adhesives. They are engineered to
perform reliably under severe environmental stress
that a consumer tape just couldn't handle. So
not the stuff you have in your junk drawer. Definitely
not. We're talking about tapes used in the automotive
sector for sealing and dampening, or potentially
in electronics for bonding components, or tapes
that must maintain adhesion through extreme temperature
fluctuations or specific chemical exposures.
They are small components, but absolutely mission
critical for the durability and safety of the
final product. And linking back to the care segment,
don't forget the acquisition of Finesse Medical
in 2017. Right. Finesse Medical, based in Ireland,
immediately brought new product lines and manufacturing
capabilities into that high -value health care
materials business. It fast -tracked their ability
to produce advanced medical adhesives and films,
reinforcing their focus on biocompatibility and
patient care applications. Okay, we've covered
their efforts to solidify their existing business
and vertically integrate into apparel. But the
third focus area is perhaps the most revolutionary
and future -forward, the push into digital identity,
connectivity, and sustainability. This is where
we see the company truly embracing its role as
an information conduit rather than just a material
supplier. In 2021, Avery Dennison launched at
AveryMade .io, spelled A -T -M -A dot I -O. They
marketed it as a digital product cloud to connect
physical and digital worlds. That phrase, digital
product cloud, sounds like sophisticated marketing
jargon. In plain terms, what exactly is the competitive
advantage of at AMA .io? Aren't they competing
with massive cloud providers like Amazon or Salesforce
in the supply chain data space? They are, but
they have a unique advantage. They manufacture
the physical gateway. At my .io is essentially
the operating system or the specialized data
infrastructure built specifically to manage the
concept of the digital twin. The digital twin.
Every product that receives a unique digital
ID, usually for one of their RFID tags or sensors,
gets a corresponding data profile hosted and
tracked on at ma .io. The sticker or the tag
isn't just a physical identifier. It's the trigger
that initiates and updates a massive data profile
in the cloud. Exactly. Atmana .io allows brands
to track that item's entire lifecycle. Yeah.
From raw material sourcing through every stage
of manufacturing, shipping, retail, consumer
sale, and crucially, its eventual recycling or
disposal. Wow. This provides unparalleled supply
chain visibility. and enables brands to verify
authenticity or even communicate with the consumer
post -purchase, for instance, providing recycling
instructions specific to that item's materials.
The label is the physical key to a massive stream
of lifecycle data. And to make those keys ubiquitous
and cheap, they needed to invest in futuristic
hardware. Look at their investment in Pragmatic
back in 2016, focused on flexible electronics.
The goal there was to miniaturize and cheapen
the electronics used in intelligent packaging,
making the package itself a data broadcasting
point. But the technology that truly illustrates
the future they are betting on is the investment
in Williott. Avery Dennison joined Williott's
Series B funding round in 2019. This is where
we move into the realm of truly pervasive...
inexpensive connectivity. Goliath specializes
in what they call ambient IoT, specifically battery
-free Bluetooth sensors. This is a breakthrough.
Battery -free? Yes, because traditional IoT sensors
require batteries, which are bulky, expensive,
and require maintenance. Goliath sensors are
paper -thin, tiny digital pixels. And the technical
marvel is how they power these things if there's
no battery. They harvest power from ambient radio
frequencies. Wait, what does that mean? It means
they run on the energy floating in the environment.
Wi -Fi signals, cellular signals, or existing
Bluetooth signals. Because they don't need a
battery, they can be made incredibly cheap, highly
resilient, and essentially permanent fixtures
embedded into the material itself. That means
these sensors can be embedded into nearly anything
without adding weight, volume, or requiring maintenance.
Can you give us an analogy for the listener about
the real -world application here? Sure. Imagine
every single item in a grocery store. Every jar.
every head of lettuce, every box, having a sensor
the size of a postage stamp embedded in its label.
That sensor is constantly broadcasting data about
its location, its temperature, and its status
using the surrounding radio waves. A store manager
could instantly know if milk is about to expire,
if a specific product is misplaced, or where
every single item is globally without ever needing
to manually scan or even install a power source.
That is incredible. That level of pervasive battery
-free visibility is what Avery Dennison is buying
into. They are buying into the idea that every
physical object will soon have a real -time,
permanent digital identity. And linking the physical
world to the digital future must also address
the enormous environmental challenge associated
with manufacturing billions of materials. This
is where their sustainability investments come
in. It's a crucial business necessity for a company
that produces billions of labels, tags and specialty
films that inevitably end up on packaging and
apparel. They need to ensure their materials
can participate. in the circular economy. Right,
or they become part of the problem. Exactly.
This led to investments like Roadrunner Recycling
in 2020 and Cirque in 2023. Before we move on,
what does the Cirque investment in textile -to
-textile recycling specifically mean in the context
of the billions of apparel tags they produce?
Cirque focuses on breaking down used polyester
and cotton blends and separating them at the
molecular level so the fibers can be fully reused
to make new fabric, hence textile -to -textile.
I see. For Avery Dennison, this is about ensuring
that the materials they use for embellishments,
labels, and identification systems are compatible
with modern recycling streams. If the label or
the adhesive contaminate the textile recycling
process, the whole system fails. By investing
in this technology, they are ensuring their products
are designed for circularity, which is essential
for meeting brand sustainability goals. Beyond
their core areas of materials, apparel ID, and
digital cloud, they made a few other noteworthy
acquisitions that show their willingness to pivot
into adjacent market spaces. Absolutely. In 2017,
they invested in Wrapify, which is focused on
expanding the car wrap industry. This is a direct
play on their high -performance graphics and
materials group, exploring how their advanced
adhesive films can be used for wide format, durable
outdoor advertising, and vehicle personalization.
And showing a pivot toward food retail operational
automation, a key emerging sector. In 2021, they
acquired Zipium. Zipium is a California -based
startup focused on developing software and hardware
solutions specifically for operational automation
and inventory management for food retailers.
This moves them beyond simply providing label
and into providing the system that manages the
product lifecycle within a quick service or grocery
environment. Again, leveraging digital IDs and
streamlined logistics. And also in 2021, they
acquired Vestcom. Vestcom is a provider of pricing
and branded labeling solutions, but specifically
focused on the retail shelf edge. This is a very
targeted acquisition. The shelf edge. The shelf
edge is a critical, high -volume, necessary retail
touchpoint where consumers make their final purchasing
decisions. By owning that space, they reinforce
their presence exactly where the physical material
meets the consumer interaction point. So the
overall acquisition strategy is profoundly cohesive.
Solidify dominance and specialty materials, acquire
the best digital ID technology like SmartTrack
and Williott, build the cloud infrastructure
to manage the resulting data with AppMe .io,
and then vertically integrate into high -value
customer segments like apparel customization
and specialized healthcare. That's the playbook.
is a stunning transformation driven by strategic
investment. A company of this stature, operating
at the intersection of critical industrial IP,
faces inevitable corporate challenges and competition.
That scale often leads to confrontations with
other industry giants. Which is why the 2012
litigation with 3M Company is worth noting. Yes,
the 3M dispute was significant because it highlighted
the fierce competition and high stakes involved
in their legacy materials group, particularly
around proprietary safety technology. The core
dispute revolved around highly specialized, high
-performance materials, specifically retro -reflective
sheeting used for road signs, traffic control
devices, and other transportation products. And
3M, of course, is a massive player in this space.
And they allege that Avery Dennison infringed
on their patents related to this retro -reflective
technology, particularly focusing on Avery Dennison's
Omnicube product line. And just to clarify, retro
reflective sheeting is that stuff that seems
to glow at night when your headlights hit it,
right? Exactly. It's deceptively complex. It
uses micro prisms or beads to reflect light directly
back to the source, like a car's headlights,
to maximize visibility at night. The proprietary
design of those prisms is immensely valuable
intellectual property. And 3M requested an injunction
to stop Avery Dennison from selling Omnicube,
which would have been an immediate and significant
blow to that part of the materials group. It
would have been, yes. But fortunately for Avery
Dennison, the court denied 3M's request for the
injunction, which signaled skepticism about 3M's
immediate claim to harm. And then things got
interesting. And here's where the legal maneuvering
got intense. Avery Dennison brought counterclaims
of their own against 3M, alleging both patent
infringement by 3M and critically antitrust violations.
So it wasn't just a defensive posture. It was
an aggressive counterattack introducing the element
of antitrust. Exactly. The dual pressure IP infringement
allegations going both ways, plus the threat
of a prolonged, costly antitrust investigation,
led to a resolution where the parties ultimately
agreed to dismiss the three pending cases. So
nobody won. but nobody lost it was a mutual strategic
dismissal rather than a decisive court ruling
it demonstrated that neither party had the clear
upper hand and both preferred to avoid extended
public litigation over highly sensitive intellectual
property. That detail underscores that while
the company is chasing the digital cloud, the
complexity and high value of their core materials
group products, like specialized films and sheeting,
remain a fierce competitive battleground. It
also demonstrates their willingness to defend
their IP aggressively. even against a titan like
3M. You don't execute a near $9 billion transformation
without being willing to take risks and fight
for market share in both the physical and digital
domains. And speaking of that physical domain,
it's vital to remember that despite the flash
of Atmed .io and Williott, they are still fundamentally
an adhesive science company. We see proof of
their continued investment in that foundational
R &D with the 2022 ASC Innovation Award. Yes,
the Adhesive and Sealant Council. ASC, recognize
them for advanced acrylics technology for high
-performance pressure -sensitive adhesive applications.
Which sounds very technical. It is, but it's
a crucial detail for you, the learner. It shows
they aren't neglecting the chemistry that supports
the entire enterprise. Acrylics are versatile
polymers, and advancing their technology allows
them to create better, longer -lasting, thinner,
and more specialized adhesives. And why does
that matter today? Why is better glue still so
important? Because every single high -tech application
we discussed relies on that foundational chemistry.
Better acrylics mean better, more skin -friendly
adhesives for wearable medical sensors. It means
better, more durable bonding agents for permanent
automotive graphics and more reliable, heat -resistant
bonds for the RFID inlays that are sewn into
textiles. The digital future is literally held
together by Better Glue. It connects their 90
-year history directly to the future of the solutions
group. And finally, let's return to the massive
corporate scale we mentioned at the start, driven
by these strategic moves. The decades of growth.
The strategic divestiture of the low -margin
business and the relentless acquisition strategy
have cemented their place among America's largest
manufacturers. The company ranked number 421
on the 2023 Fortune 500 list, reporting total
sales of $8 .4 billion for that period. Wow.
That rank doesn't just represent success. It
represents an essential, globally significant
position in modern manufacturing and supply chain
management. They successfully transformed from
a traditional manufacturer into an essential
partner in global commerce and technology deployment,
proving that corporate reinvention is possible,
even for a company rooted in 19th century manufacturing.
What does this all mean for you, the learner,
taking the deep dive today? The transformation
of Avery Dennison is really a masterclass in
strategic corporate evolution. They recognized
that the old business model selling basic office
products was obsolete. And they acted on it.
They successfully navigated that challenge by
investing heavily and strategically in what we
defined as the three Cs, connectivity. That's
the RFID, Williott, and at Alma .io. customization,
the vertical integration into apparel embellishments,
their high -value specialty medical materials.
They successfully merged two distinct industrial
histories, Denison's 19th century mastery of
standardization and Avery's 20th century adhesion
innovation into a 21st century digital and specialty
materials conglomerate. The resulting company
spans 50 -plus countries and employs 35 ,000
people, proving that scale and high -tech relevance
can coexist. They are not just selling a product,
they're selling the underlying intelligence that
powers the visibility and efficiency of global
retail and logistics. The fundamental insight
here is that the physical material they produce
is no longer inert. It is a conduit for information.
The label is no longer just paper and glue. It
is the physical manifestation of a digital identity,
serving as the gateway to the digital twin concept.
Which brings us to our final provocative thought
for you to chew on. Avery Dennison is heavily
focused on using invisible, paper -thin, battery
-free sensors and digital ID platforms like at
AFMA .io to track products from manufacturing
through to recycling. This implies pervasive
tracking infrastructure. Consider. How far are
we, really, from a future where every single
physical object you own, from the appliances
in your kitchen to the individual clothes in
your closet, has a constant real -time digital
identity embedded directly within the material
itself, constantly streaming data about its history,
location, authenticity, and potential for reuse?
It's a vision where the physical and digital
worlds are seamlessly unified. and that Unity
is powered by a remarkably sophisticated piece
of pressure -sensitive adhesive technology. Thank
you for joining us for the Deep Dive. We'll see
you next time.