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FLEXO Magazine : February 2014
INDUSTRY INDICATORS Flexible Packaging Analysis Materials, Growth Areas, Regional Trends The flexible packaging market is considered to be one of the most dynamic sectors in the field, exhibiting di- versified types of packaging and materials used across the regions. In the realm of consumer packaged goods, the most important constituents, according to Markets and Mar- kets (M&M) analysts, are: • Food • Beverages • Personal care products • Pharmaceutical industries Food packaging dominates market share in terms of value as well as volume. M&M research indicates the flexible pack- aging market is broadly divided on the basis of raw materials used; these include polypropylene (PP), polyethylene (PE), eth- ylene vinyl alcohol (EVOH), polyamide (PA), biaxially oriented polyethylene terephthalate (BOPET), polyvinyl chloride (PVC), cellulosic, aluminum and paper. With a huge market potential and growing consumer preference, the market is likely to witness substantial growth in the coming years. FLEXIBLE PACKAGING’S PLAYERS Flexible packaging plays a vital role in protecting and ex- tending the shelf life of end products. A variety of resins may be used for conversion and developing the required pack- aging solutions. Depending on the characteristics of the end product and value to be offered by packaging, the selection of resins and packaging type is decided. The right packaging type is essential to preserve end products and prevent chem- ical reactions endangering the consumer ’s health. Hence, an efficient and suitable packaging solution is imperative. The flexible packaging market consists of various stake- holders, such as manufacturers, traders, distributors, raw material suppliers and end-users. Some of the companies enjoying substantial market share are: • Sealed Air Corp. (U.S .) • Bemis Co. (U.S .) • Sonoco Products (U.S.) • Amcor Ltd. (Australia) • Mondi (South Africa) • Huhtamäki Oyj (Finland) Key industry players are increasing their business and consolidating their presence by pursuing mergers and ac- quisitions in potential markets. The top six players in flexible packaging held a market share of around 58 percent. This fragmented industry structure is primarily due to the availabil- ity of a number of pack types and raw materials. In Figure 1, we see the growth trend from 2013 to 2018. The global flexible packaging market is projected to grow at a compound annual growth rate (CAGR) of 5.1 percent over that period. PE dominated the flexible packaging market by material, accounting for nearly 32 percent of the total market share, and is projected to grow at a healthy CAGR during the span. PP accounted for the second largest share in the segment; it consists of biaxially oriented polypropylene (BOPP) and cast polypropylene (CPP). Of these, the BOPP segment holds a significant share of around 80 percent from 2013 to 2018. Paper and aluminum are growing at a CAGR of 5.5 percent and 5.4 percent, respectively. Cellulosic is one of the materials that shows potential growth in the future—it is projected to grow at a CAGR of 8.2 percent through 2018. REGIONAL GROWTH The North American market is expected to show a modest growth trend, owing mainly to saturated end use markets in the region. The European market, which has also witnessed signs of maturity, is given a small boost by the Eastern Euro- pean nations. Changing consumer preferences and high disposable incomes in Asia-Pacific economies drive the end use market. Developing economies such as China and India are pushing growth in this region. Consumer preferences in convenience foods, Westernized eating habits in terms of packaged food demands and rising disposable incomes are some of the important factors influencing the trend. In the same way, the growing food and beverage processing industry in Brazil and other Latin American countries drives the growth. Most of the countries in the Asia-Pacific region are emerg- ing economies that exhibit a strong economic growth in the future. With the growth in per capita income, consumers have adopted trends and preferences from developed western markets. The growing population and consequential demand for packaged food, beverage, personal care products and pharmaceuticals are driving the markets in these regions. GLOBAL GROWTH The global flexible market has grown considerably in the last few years and is expected to grow at a faster pace in the near future. Factors such as consumer preferences toward conveniently packaged products are helping the industry to grow at a global level. Increasing innovations help to drive BY THE NUMBERS: MATERIALS COMPOUND ANNUAL GROWTH RATES • Biaxially oriented polyethylene terephthalate – 5 .8 percent • Polyvinyl Chloride – 5 .7 percent • Paper – 5 .5 percent • Cellulosic – 5 .4 percent • Aluminum – 5 .4 percent • Polyethylene – 5 .1 percent • Polypropylene – 4 .9 percent 20 FLEXO FEBRUARY 2014 www.flexography.org