Europe’s converted flexible packaging market grew by approximately 1.6 percent in 2008 to reach €10.3 billion, according to a recent report from PCI Films Consulting.
Commenting on the publication, study author Paul Gaster said, “The flexible packaging industry has shown steady long term historic growth with its prospects only recently being significantly affected by the global recession.”
He went on to note that industry sales growth in the first half of 2008 were largely offset by steep declines in the second half of the year, following the onset of the global economic crisis in the autumn.
While demand in most major food applications saw growth overall, mostly associated with demand growth in Eastern Europe, some non-food sectors such as pharmaceuticals and pet foods grew more strongly.
However, the report warns European converters of the growing volume of imported converted materials from outside Europe, which although small at present, are likely to become a larger threat over the next few years.
PCI forecasts a tough year in 2009, with European flexible packaging demand contracting by 4 to 5 percent in value, largely the result of declines in raw material prices, which are now being reflected in lower converted flexible packaging prices to customers. The expectation is also that there is likely to be a real year on year volume decline this year as the recession continues to impact consumer spending and sales of packaged foods.
PCI expects European flexible packaging demand to stabilize in 2010 and subsequently return to historic growth trends of 1 to 2 percent per annum thereafter.
PCI also reported a number of effects of the recession.
Key findings include:
•Converters are now placing more emphasis on production planning to ensure they do not purchase excess stock.
•Order sizes are now smaller as customers are less certain about their own business and the use of consignment stocks is more prevalent.
•Converters are increasingly indebted at a time when credit insurance has been difficult to obtain or has been sharply curtailed.
•Consumers are trading down to own label products and shopping in discount stores, and this is impacting the value of flexible packaging sold.
More information on the report, “The European Flexible Packaging Market 2009” can be found at PCI’s website at www.pcifilms.com.