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FLEXO Magazine : February 2014
North American Flexible Packaging The North American converted flexible packaging market accounts for nearly 30 percent of global consumption at $20.7 billion in 2013, reveals a new report from PCI Films Consult- ing. Nearly 90 percent of sales in the region are concentrated in the U.S. , with Canada and Mexico accounting for 7 percent and 5 percent, respectively. The report notes that industry consolidation continues to be an important factor in driving change in this very fragmented industry, with private equity firms continuing to play a key role. Important private equity deals in 2013 included: • Constantia Flexibles’ acquisition of Globalpack (both portfolio investments of One Equity Partners) • Constantia’s purchase of the U.S. based Spear labeling group • Private equity firm Sun Capital bringing together its Exo- pack Holdings business in North America and four of its packaging portfolio businesses in Europe to form Coveris Exopack Holdings After slowing in 2012 due to the economic downturn, de- mand for converted flexible packaging recovered to grow by around 4 percent in the U.S. and Canada in 2013. However, the Mexican flexible packaging market slowed markedly during the year to around 1.5 percent, due to uncertainties following the change of government and slowing GDP growth. Weakening margins and other competitive pressures caused significant rational- ization and restructur- ing in the region, with many plant closures and divestments, especially amongst the leading players. For the future, converted flexible packaging growth in North America is forecast to average around 4 percent per year to reach more than $25 billion by 2018, with growth in Mexico expected to bounce back to U.S . and Canadian levels over the period. Per capita consumption of flexible packaging in Mexico is less than one fifth of what it is in the U.S ., illustrating its potential for future growth. About the Author: For more information on PCI Films Consult- ing’s The North American Flexible Packaging Market to 2018, visit www.pcifilms.com. Pouch Potential The U.S . standup pouch market has seen dramatic growth over the past five years, increasing by 50 percent to approach 17 billion units in 2013. Beverages and pet food are the largest categories, each accounting for one third of demand, fol- lowed by human food applications at about 30 percent share. Stimulating the recent growth in pouches has been the drive to replace plastic bottles, glass bottles and cans, reducing the cost of packaging and trends in consumer convenience. In its new report on the stand up pouch market, PCI Films Consult- ing forecasts that U.S. demand for pouches will continue to grow by around 7 percent annually to reach nearly 24 billion units in 2018, at least twice as fast as volume growth expected in the U.S . flexible packaging market as a whole. Future increases in volume are expected to come from a wide variety of end uses: • Frozen foods • Fruit compotes • Frozen spirits • Cocktails • Baby food • Shredded and diced cheeses • Laundry and dishwashing refill packs • Soups Other opportunities are only in the early stages of devel- opment, but pouches used to pack motor oils, dietary meal solutions and possibly olive oil and fresh vegetables are also forecasted to grow in volume. The growing interest in pouches has been satisfied on the supply side by the expanding infrastructure of toll converters and contract packers as well as advances in pack reseal- ability and slider technologies. Pre made pouches retain a majority share of the U.S. stand up pouch market with printed laminate for form fill seal applications currently accounting for less than one quarter of total pouch units. PCI’s compre- hensive new report, The U.S . Market for Stand Up Pouches to 2018, which follows publication earlier this year of a similar study on the Europe- an market, analyzes the major factors driving growth in this dynamic market. Learn more at www. pcifilms.com. 16 FLEXO FEBRUARY 2014 www.flexography.org 88% US 5% Mexico 7% Canada North American Flexible Packaging Market by Country 2013 Source: PCI Films Consulting LTD/Industry Sources