As part of the agreement, the partners will create Green Earth Technology, an entity in which Karat will hold a 49% interest.
Green Earth will facilitate the construction of a 180,000ft² factory in Taiwan.
The factory will be equipped with Happiness Moon’s advanced robotic automation, which will manufacture compostable foodservice products using bagasse, a derivative of sugar cane pulp.
Scheduled to begin manufacturing in the second half of this year, the plant is expected to produce approximately 7,560t worth of products by next year.
These products will include take-out boxes, plates, bowls, tableware and other bagasse products.
Karat will reserve around half of the factory’s production for its customers, while the remainder will be supplied to other customers in Asia and Europe.
The company will make an initial investment of around $6m in the facility.
Karat Packaging CEO Alan Yu said: “Our investment demonstrates Karat’s commitment and leadership position in providing eco-friendly disposable foodservice products.
“Most bagasse products in the United States are currently imported from China. The joint venture will enhance Karat’s vertical integration in its supply chain and accelerate growth and margin expansion.
“Our objective in the next several years is to become the leading manufacturer of bagasse foodservice products for the US market.
“After thoroughly assessing the technology and robotic capability in Taiwan, which we believe will enhance efficiencies and productivity, we plan to bring the proprietary manufacturing processes to the US and build a first-of-its-kind bagasse production plant.”
Based in California, Karat Packaging supplies environmentally friendly, disposable foodservice products and related items.
The company’s products include food and takeaway containers, bags, tableware, cups, lids, cutlery, straws, speciality beverage ingredients, equipment and gloves.