A global flexible-packaging market SWOT statement to 2016

Simon King PCI FilmsICE USA Intl. Converting Exhibition LogoAt the recent ICE USA 2013 in Orlando, UK-based PCI Films Consulting president Simon King (left) offered a traditional SWOT statement in his keynote presentation on the “Global Flexible Packaging Market.“* Dissecting the data he gave, here’s a Converting Curmudgeon bullet-point breakdown:

cq213brk FPA5Strengths

  • The global flexible packaging market (at $71 billion in 2011) will grow by around 5.0% a year, reaching $90 billion in 2016. North America and Central/East Asia will be the top two regional markets with 25% and 24% shares, respectively.
  • Flexible packaging is an industry relatively immune from global economic downturns.
  • In 2016, 42% of the industry will be in Asian markets, which are growing at about 7% a year — the fastest growing region is Southeast Asia and Oceania, driven by high demand in India with 15-20% annual increases.
  • The global arena remains “local” with regional converters supplying the vast proportion of local packaged-goods customers’ needs. Only 4% of flex-pack production is traded outside the region in which it is manufactured.
  • Amcor, Bemis and Sealed Air are the top three product converters with 9%, 8% and 4% global market share, respectively.
  • Flex packs’ inherent source-reduction characteristics (thin materials, lighter weight) allow packaging-waste reduction over rigid formats.

cq213brk FPA3Weaknesses

  • Flexs packs have a reputation for being hard to recycle — especially multilayer laminated structures that are often not accepted in curbside recycling programs.
  • Higher raw-material costs and lack of suitable barrier properties of biodegradables and compostables mean that so far these materials have had little impact.
  • Economic uncertainty has encouraged only short-term buying, just-in-time delivery by customers in some regional markets.
  • Western Europe (and to a lesser extent, North America) is suffering from low value growth (1-2% a year) compared to other regions. Volumes are being sustained primarily by serving only defensive end-use markets.
  • Mature flex-pack markets in Oceania (Australia, New Zealand, Singapore) are growing only 1-2% a year.

cq312brk FPA4Opportunities

  • Global personal disposable incomes are rising, encouraging consumers to buy more packaged goods of all types.
  • Standup pouches, the dominant format in Western Europe, are a vanguard of positive environmental and consumer-convenience trends for flex packs.
  • High oxygen- and moisture-barrier, metallized laminates  and coextrusions are likely to extend the value-added sector.
  • Multinational brand owners are sourcing globally, driving inter-regional M&As among converters, or converters adopting strategies for a global presence.
  • Investment in new plants, equipment in places such as Russia, India, Indonesia is boosting lower-cost, more-efficient production.
  • Converters need to establish lower-cost production in countries where access to cost-conscious markets is free (Mexico, Poland).
  • Promotion and possible investment in breakthrough pyrolysis systems are needed to boost this important new flexible-packaging recycling process for laminates and aluminum-foil structures.

cq213brk FPA1Threats

  • Flex-pack converters must address environmental issues to cut packaging waste, promote growth in lighter weight products as cost-effective alternatives to rigid packaging.
  • Sustainability has now become just as important as the above traits.
  • Legislative pressures may force adoption of non-oil-based materials.
  • For North America, low-cost imports from Asia are increasing, especially onto the US West Coast. Converters with Mexican plants are exploiting the low-cost base to competitively supply into the US. And growth in imports of pre-packaged products into the US from Mexico translates into reduced demand for US-made flexible packaging.
*Flexible packaging, as PCI Films Consulting defines it, embraces the manufacture, supply and conversion of plastic and cellulose films, aluminum foils and papers that are used separately or in combination, for primary retail food packaging; non-food packaging applications such as pet food, DIY, hygiene-product overwrap, household detergents, tobacco; and certain other specialist non-food packaging sectors, such as medical and pharmaceutical packaging. PCI’s definition relates specifically to value-added, converter-supplied flexible packaging (printed, laminated, coextruded or made into bags and pouches). The value of flexible packaging is measured at the packer level. This definition specifically excludes shrink and stretch films used for secondary packaging and pallet wrap, carrier bags, supermarket self-service and counter bags, silage bags, refuse sacks, industrial IBCs and other industrial packaging, etc.
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