PCI FILMS: World flexible packaging consumption growing

WORLD Over the past decade flexible packaging has emerged as arguably the most dynamic and innovative of packaging formats. As a sector which is broadly resistant to economic cycles, the global flexible packaging market has been growing by around 5% per annum, reaching over USD 74 billion in 2013. With the exception of the broadly mature West European market, all other world regions have experienced growth ranging from around 4% p.a. in North America to 10% in South East Asia and Oceania. By far the most dynamic individual markets have been China and India, currently growing by around 12% and over 15% per annum respectively in value terms. Much of the growth in flexible packaging has been underpinned by the rapid globalisation of the food processing industry, with dramatic growth for processed and packaged food in the developing world.

What does this mean for the global flexible packaging industry?

Food packers in developing regions are likely to significantly increase the proportion of locally sourced materials in the medium to longer term. Meanwhile, global players are already changing their supply strategies: targeting acquisitions of local converters or investing in local greenfield plants to shorten lead times. The end result is that multinational converters have started to switch their growth plans away from traditional but mature flexible packaging markets to emerging markets where higher growth potential exists. It is worth noting, however, that while the flexible packaging industry is expected to continue to consolidate at both the global and the regional level, there will still be a place for smaller regionally based short run, lower cost, and niche converters supplying both major brand owners and smaller packers. Technical advances, particularly in the development of high barrier materials and the rapidly growing popularity of flexible formats such as the stand-up pouch, has seen flexible packaging successfully challenge metal, glass, board and composite rigid formats. It is seen as an increasingly viable, cost effective, consumer friendly and environmentally acceptable alternative in a growing number of applications, with demand continuing to grow at a steady pace. A tentative economic recovery is now underway in North America and the EU, while a growing number of developing economies, especially in the Middle East & Africa and in Asia, continue to grow rapidly. However, in several BRIC countries, GDP growth has slowed and there are fears of an emerging-market financial crisis. This is nevertheless unlikely to significantly impact global flexible packaging demand, which PCI believes will continue to experience average growth of around 5% per annum to reach around USD 95 billion by 2018.