The special comment, "Food and Beverage to Continue to Support US Packaging Sector," answers questions investors most often ask Moody's analysts about the US packaging manufacturers industry.

Organic unit volumes look set to stay flat in 2013 for US food packagers that derive more than half of their revenues from North American sales, including Bemis, Consolidated Container and Plastipak, Moody's says. Even so, "the non-discretionary nature of food and beverage sales provides a floor to demand," says Vice President -- Senior Analyst Edward Schmidt.

Companies with greater scale and exposure to faster-growing developing markets are likely to see the most income growth in the next year, Schmidt says. Consumption of soft beverages and beer is rising in these markets, as are disposable incomes.

In addition, developing markets generate higher margins for packagers. Ball, Crown, Owens Illinois, Bemis, Reynolds, Sealed Air and Plastipak should all benefit from their exposure to developing countries.

Exposure to Europe remains a concern, however, as ongoing economic weakness there affects companies' earnings and unit volumes. Many packagers have already taken steps to reduce their European exposure, and their earnings next year will not be affected as much as they were in 2012. Ten of the 20 packagers that Moody's rates generate 15% or more of their revenues in Europe, including Crown, Greif, Owens Illinois, Reynolds and Sealed Air.

Volatility in prices for resin and other raw materials generally do not pose a cause for concern, Moody's says. "We focus more on how quickly companies can pass through increased costs, and the use of contracts with cost pass-through provisions are becoming more common," Schmidt says.

Companies such as AEP, Intertape and Tekni-Plex, which have limited contractual relationships, are more vulnerable to resin price increases, Moody's says.

Moody's subscribers can access this report at http://www.moodys.com/research/US-Packaging-Manufacturers-Food-and-Beverages-to-Continue-to-Support--PBC_147964. ***

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Edward Schmidt Vice President - Senior Analyst Corporate Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Brian Oak MD - Corporate Finance Corporate Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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