Avery Dennison (AVY) Baird 2024 Global Industrials Conference summary

Business Overview and Strategy

• Focused on materials science and digital identification, with 2023 revenue of $8.5B split 70% Materials Group and 30% Solutions Group, and operations in over 50 countries with 34,000–35,000 employees.

• Drives long-term shareholder value through GDP-plus growth, top quartile returns, and disciplined capital allocation.

• High-value segments, especially Intelligent Labels (UHF RFID), are key growth drivers, with high-value categories up 10 points since 2019.

• Emphasizes execution of five evolving strategies, portfolio improvement, and broad market exposure, with ~60% of sales in staple categories and ~40% in the U.S.

• Leverages industry-leading innovation, proprietary manufacturing, and a global footprint to maintain competitive advantage.

Intelligent Labels and Technology Adoption

• Intelligent Labels platform, led by UHF RFID, has grown at mid- to high-teens rates over the past decade, with a 17% organic sales CAGR and targeting 15%+ long-term annual growth.

• Recent partnership with Kroger targets perishable food items, with a multi-year rollout starting in bakery.

• Apparel segment at 40% RFID adoption, with saturation expected at 60-65%; new rollouts continue.

• Cost of RFID has dropped, enabling tagging of low-price items and driving store efficiency.

• Significant untapped market for Intelligent Labels, especially outside apparel, with a 350+ billion unit addressable market.

Market Trends and Segment Performance

• Inventory destocking and inflation impacted volumes in 2022-2023, but CPG volumes may reenergize.

• Europe remains muted, Asia (outside China) shows growth, and North America is stabilizing with expectations for a normalized 2025.

• Promotional activity and category volume velocity are increasing, especially in North America and Asia Pacific.

• Materials segment volumes now exceed 2019 levels, with stable or slightly improved market share.

• Portfolio strength is increasing, with exposure to diverse end markets such as food, healthcare, logistics, and industrial sectors.