Avery Denison operates through two main segments: Materials Group, contributing 69% of total net sales, and Solutions Group, accounting for 31%:

The Materials Group is a key player in the pressure-sensitive label and graphics industries, offering a diverse portfolio that includes label materials, graphics, reflective materials, and functional bonding solutions such as tapes. Its products enhance brand visibility, improve supply chain efficiency, and support sustainability efforts across various markets. The group manufactures and markets well-known brands like Fasson®, JAC®, and Avery Dennison® for label materials, as well as Avery Dennison® and Mactac® for graphics and reflective products. Its largest competitors in label materials include UPM Raflatac, a subsidiary of UPM Corporation; Fedrigoni Self-Adhesives; Lintec Corporation; Flexcon Corporation. In the graphics and reflective products segment, major competitors include 3M Company and Orafol Group. The performance tapes market sees competition from 3M, Tesa-SE (a subsidiary of Beiersdorf AG), and Nitto Denko Corporation.

The Solutions Group is a global leader in providing information and branding products that connect the physical and digital worlds, particularly through its advanced RFID solutions. This group addresses complex challenges across various industries, including apparel, logistics, and retail, by enhancing supply chain transparency, improving efficiency, and elevating consumer experiences. Its offerings range from brand embellishments and sustainable packaging to item-level RFID for visibility and loss prevention. Its primary competitors include CheckPoint, a subsidiary of CCL Industries, R-pac International Corporation and SML Group Limited.

The Materials Group, generating $5.8 billion in net sales with an adjusted EBITDA margin of 15.8%, leads the self-adhesive label industry, outpacing its nearest competitor by 2.5 times. Its success is anchored in global scale, advanced materials science, and innovations that drive functionality and sustainability. Growth is fueled by trends in premium packaging, e-commerce, and a strong presence in emerging markets. The revenue is primarily driven by Label Materials at 74%, with Graphic and Reflective products contributing 13%, and Performance Tapes & Medical products 8%. High-Value Categories make up 36% of the portfolio. Geographically, the group’s revenue is distributed across the US & Canada (32%), Western Europe (26%), Asia Pacific (25%), Eastern Europe & MENA (9%), and Latin America (9%).

The Solutions Group, with net sales of $2.6 billion and an adjusted EBITDA margin of 16.6%, is a leader in global branding and identification solutions, addressing complex industry challenges. With clear competitive advantages in scale, innovation, and solutions capability, the group drives key digital initiatives like omnichannel, IoT, and supply chain visibility. Significant growth is propelled by Intelligent Labels and external embellishments, positioning the group for long-term profitable growth. The Solutions Group sees 40% of its revenue from Base Solutions, 32% from Intelligent Labels, 18% from Vestcom, and 10% from External Embellishments. High-Value Categories represent 60% of its portfolio. The group’s geographical revenue distribution is concentrated in the US & Canada (65%), followed by Europe (27%), Asia Pacific (8%), and Latin America (<1%).

In Q2 2024, Avery Dennison delivered strong financial performance, with adjusted EPS up 26% and net sales reaching $2.2 billion. The Materials Group saw robust sales growth and significant margin expansion, with label materials volume growing by double digits. The Solutions Group also reported double-digit sales growth and margin improvements, driven by strengthening apparel volumes and the growing adoption of intelligent labels. Adjusted EBITDA rose 19% year-over-year to $367 million, with a margin of 16.4%. The company raised its FY24 adjusted EPS guidance to $9.30 to $9.50 and increased its outlook for organic sales growth to 4.0% to 5.0%.

Avery Dennison is positioned for growth within large and attractive end markets, offering significant opportunities across retail and industrial segments. The company faces a market opportunity exceeding 350 billion units, with sectors like food representing a substantial portion at 200 billion units. Apparel has around 40% industry penetration with an addressable market of 45 billion units, while other sectors like logistics (60 billion units), general retail (20 billion units), and healthcare (10 billion units) show lower penetration but immense potential. As automation and sustainability trends continue to rise, Avery Dennison is well-equipped to address complex industry challenges and capitalize on these expansive opportunities.

Acquisitions and venture investments have been strategic avenues for expanding capabilities and complementing organic growth. In 2023, several key acquisitions were made, including Silver Crystal Group, a Canadian provider of sports apparel customization solutions; Lion Brothers, a Maryland-based designer and manufacturer of apparel brand embellishments; and Thermopatch, a New York-based manufacturer specializing in labeling and transfers for various industries. These acquisitions, totaling approximately $231 million, align with efforts to enhance product offerings and market reach. In 2022, acquisitions like TexTrace, a Swiss developer of RFID products, and Rietveld, a Netherlands-based provider of embellishment solutions, further strengthened technological and market positions.

Avery Dennison is a strong and well-positioned company with solid revenue growth and healthy margins, providing a strong foundation for further expansion. Having achieved nearly a 5500% increase in value since 1972, the company shows no signs of slowing down. However, its future growth will largely depend on the management's ability to successfully acquire and integrate new brands while continuing to innovate and maintain its leadership position in the market.