The company yesterday announced it would offload its biodegradable packaging arm and that it is abandoning its proprietary Greenseal technology for recyclable food trays.
Stanleco's moves indicate that that processors and others will have to think clearly about securing their supply source as they change to biodegradable or recyclable packaging.
Both moves are being made as the company realigns itself in the packaging market toward what it believes are more viable and eventually profitable ventures.
Over the past five years packaging suppliers have been introducing various forms of such materials in response to projections that consumers and recycling regulations will drive demand for environmentally-friendly packaging.
Mandates from giant supermarkets forcing suppliers to make the switch are also coming into effect Stanleco was one of the first players to enter the market.
However in its latest announcements it admitted that an 18-month trial of its Greenseal technology with Asda supermarket showed that the process is not commercially viable.
Asda is a Wal-Mart subsidiary and success with the chain would have been a toehold into the world's largest retailer.
Greenseal uses radio frequency technology to heat seal plastic food-tray packages.
The technology means packagers do not need to use a polyethylene sealing layer within the laminate, thus making the packs recyclable.
Stanleco cited the cost and "complexities" associated with tooling the sealing machines, and the changing demands from retailers as the reason for dropping the technology.
In another move the company also announced that it had reached an agreement with MonoSol AF to sell the assets and stock of its wholly-owned subsidiary, Adept Polymers for £494,000.
Adept previously developed and manufactured a range of biodegradable plastics.
The company previously announced in March that it had closed Adept's manufacturing plants.
During the 14 months to the end of last year, Adept made a loss before tax of £2.12 million.
Paul Mines, Stanelco's chief executive office, said the company continues to work within the biodegradeable sector through other company divisions.
US-based MonoSol, which makes water-soluble products and packaging, said the Adept purchase would complement its manufacturing expansion in LaPorte, Indiana, and plans to diversify its operations in the UK.
In March the company also said it had closed its US marketing office but would engage US partners to maintain a presence on the continent.
In a joint venture with SPhere, a major French packaging manufacturer, Stanelco unit Biotec has developed a range of biocompostable plastic polymers called Starpol.
The plastic is based on plants.
The company continues to be an active member of WalMart's sustainable packaging network.
Stanleco reported it now has two of its Starpol biodegradable packaging products on the retailer's shelves in the US, with a third "imminent".
Starpol is one of the biodegradable packaging materials made by Biotec, a joint venture with France-based SPhere.
Biotec manufactures a range of biodegradable products from its base in Germany.
Stanleco said it will now concentrate on developing Biotec, which has doubled its sales over the 14-month period to 31 December 2006.
It plans to expand manufacturing capabilities in Germany and the US to meet what it says is the increasing global demand for Starpol resins.
However the company's board noted that the pace at which it can deliver the packaging material is being influenced by a shortage of one of its core ingredients, polylactic acid (PLA) resin.
PLA, a biodegradable plastic resin made from corn, is manufactured by Cargill subsidiary NatureWorks in the US.
Stanleco said it is investigating several options to obtain further material and is also trialing alternative materials.
"We believe demand for our current and future products will be enhanced by favourable political and economic policies to reduce environmental damage," the company said in its latest financial statement.
"Although there may be further challenges ahead, following our strategic review we believe that Stanelco is well placed to maximise opportunities to commercialise our products."
Note: This story was amended to clarify that Stanleco still produces biodegradable packaging.