Terry Knowles, European Editor07.18.22
Before Brexit was implemented in the UK, there were copious amounts of warnings about what it would mean for businesses here, and now that it has become a reality, the impacts on industry are becoming all too plain to see.
Put in summary fashion, the participation in the BCF’s survey was broadly similar between manufacturers of printing inks and decorative paints and a little less than the participation of UK-based industrial and powder coatings companies. The major findings that emerged are reproduced below:
• Logistics remain the biggest issue for members: availability of haulers (69%), delays to shipments of raw materials coming into the UK (67%), and shipping costs (64%) are the most commonly cited ongoing problems due to Brexit.
• The share of respondents citing issues with customs paperwork (58%) has increased from last year (up from 48.3%).
• Almost a quarter of the BCF survey’s participants reported that EU suppliers no longer wanted to export to the UK, up from 19% last year.
• Brexit is costing UK companies more. Nearly one in six members recorded higher operating costs due to Brexit of more than 4%. Nearly a third (32%) said it had added more than 6%. For some, the additional costs was of the order of 15%.
• Respondents this year reported that exporting to the EU is a smaller fraction of their business than had previously been the case. The number of firms reporting that less than 10% of their business was in exporting to the EU has more than doubled from 19% to 44%.
• Similarly, nearly 40% reported that exports to the EU had decreased, with most losing between 6-10% of exports over the last year or so, although some significantly more.
• Nearly three-quarters of respondents said that while they are still exporting to the EU and they planned to continue, it had become more difficult and costly.
• Conversely, not a single respondent not currently exporting to the rest of the world said they were looking to become exporters to non-EU countries after seeing the terms of the new free trade agreements that the UK government has been negotiating around the world.
• Looking ahead and thinking of their biggest worries over future competitiveness of their businesses, the top three issues cited were: additional trading costs due to customs paperwork (59%); the impact of future divergence of UK REACH from EU REACH (59%); and the impact UK REACH could have on raw material prices in the UK (61%).
• When asked what they saw as future opportunities likely to emerge from the new trading relationship, half simply replied they saw no opportunities resulting from the new UK-EU Trade and Co-operation Agreement (TCA).
As a result of its focus on exports, the survey established a few other key pointers for industry and government to consider. These can be additionally summarised as follows:
• Nearly 45% of respondents said that exports from the UK to the EU were about the same. After that, the most popular responses were that exports had decreased (nearly 40%, as mentioned above) and that the remaining 15% had seen theirexports increase.
• Exports to countries outside the EU bloc are also being impacted. Here, 71% of respondents said that exports from the UK to the rest of the world were about the same. A sixth of companies had seen an increase, and a near similar number (13.1%) had reported a decrease in trade with RoW.
This mirrors the fact that some companies are encountering added costs and complexity in dealing with exporting to the rest of the world post-Brexit. It is not just exports to the EU that have been impacted.
Collectively, 2021 was a good year for the ink industry in Europe. The publishing ink sector grew by 3.5% in value terms to €800 million, and by 0.6% in volume terms to 300,000 tons. The packaging ink sector performed even better, with growth of 5.5% during 2021 to reach a value of €2.1 billion. Volumes of packaging inks sold grew a little slower (compared to the value) at 3.8%, totalling 550,000 tons.
• 2021 was a good year for the ink industry in Europe. In Europe, retail and online sales have been increasing effectively. To stay safe during the COVID-19 pandemic, many people began purchasing food and preparing it at home rather than eating at restaurants. In the UK, a substantial percentage of shoppers has reported changes in their internet buying habits over the past year.
• The growth in food packaging and the ever-increasing demand for corrugated packages in growing e-commerce shipments during the COVID-19 pandemic are the primary drivers of the market. In e-commerce portals, demand has sharply increased for packaging for groceries, healthcare products, and e-commerce shipments.
The shift towards e-commerce growth means expanding order mixes, greater complexity, and more packaging diversity. Labor and seasonality also affect fulfilment operations’ ability to meet orders, complicating packaging and resulting in increased damage. Further, network shipping constraints and increasing costs are expected to continue. To compete effectively, more customization and unique solutions will be needed to achieve customer loyalty.
Poland is one of the significant markets for European consumer packaging vendors, owing to the high rate of investment in advanced and innovative packaging across its various end-user industries and the country’s growing focus on lightweight, portable, flexible and environmentally friendly packaging. It has witnessed multiple investments by various market players in accordance with the rising demand for consumer packaging in various industries, e.g. food and beverages.
In April 2022, Amcor launched a new platform of paper-based packaging products called AmFiber. The AmFiber platform demonstrates Amcor’s consumer-centric and adaptable approach to innovation, as it aims to redefine the capabilities of traditional paper packaging, thus, providing a wider range of features and functional benefits to meet the changing needs of consumers.
In April 2022, Sealed Air introduced Prismiq, a digital packaging brand with a portfolio of solutions for digital printing, design services and smart packaging. Digital printing technology is creating game-changing value for customers, enabling touchless automation in the company’s facilities and customers’ operations.
Also in the same month, Pregis invested in a new 1960 square meter (21,000 square foot) customer experience facility in Europe designed to provide holistic solutions to protective packaging challenges and reduce costly waste incurred by
damaged products.
In March 2022, Huhtamaki Oyj’s site in Alf, Germany, announced that it was switching its focus from plastics to smooth moulded fiber (SMF) products to meet the increasing demand for plastic-free alternatives to food packaging. According to the company, in 2022, the unit plans to replace more than 2,000 tons of plastic with fiber.
A Survey in the Wake of Brexit
Recently, the British Coatings Federation (BCF) published the results of a survey of its member companies that had been designed to probe for how the UK sector was performing post-Brexit, and what industry figures thought of the steps ahead in terms of co-operation and free trade agreements that the government had established for UK exports.Put in summary fashion, the participation in the BCF’s survey was broadly similar between manufacturers of printing inks and decorative paints and a little less than the participation of UK-based industrial and powder coatings companies. The major findings that emerged are reproduced below:
• Logistics remain the biggest issue for members: availability of haulers (69%), delays to shipments of raw materials coming into the UK (67%), and shipping costs (64%) are the most commonly cited ongoing problems due to Brexit.
• The share of respondents citing issues with customs paperwork (58%) has increased from last year (up from 48.3%).
• Almost a quarter of the BCF survey’s participants reported that EU suppliers no longer wanted to export to the UK, up from 19% last year.
• Brexit is costing UK companies more. Nearly one in six members recorded higher operating costs due to Brexit of more than 4%. Nearly a third (32%) said it had added more than 6%. For some, the additional costs was of the order of 15%.
• Respondents this year reported that exporting to the EU is a smaller fraction of their business than had previously been the case. The number of firms reporting that less than 10% of their business was in exporting to the EU has more than doubled from 19% to 44%.
• Similarly, nearly 40% reported that exports to the EU had decreased, with most losing between 6-10% of exports over the last year or so, although some significantly more.
• Nearly three-quarters of respondents said that while they are still exporting to the EU and they planned to continue, it had become more difficult and costly.
• Conversely, not a single respondent not currently exporting to the rest of the world said they were looking to become exporters to non-EU countries after seeing the terms of the new free trade agreements that the UK government has been negotiating around the world.
• Looking ahead and thinking of their biggest worries over future competitiveness of their businesses, the top three issues cited were: additional trading costs due to customs paperwork (59%); the impact of future divergence of UK REACH from EU REACH (59%); and the impact UK REACH could have on raw material prices in the UK (61%).
• When asked what they saw as future opportunities likely to emerge from the new trading relationship, half simply replied they saw no opportunities resulting from the new UK-EU Trade and Co-operation Agreement (TCA).
As a result of its focus on exports, the survey established a few other key pointers for industry and government to consider. These can be additionally summarised as follows:
• Nearly 45% of respondents said that exports from the UK to the EU were about the same. After that, the most popular responses were that exports had decreased (nearly 40%, as mentioned above) and that the remaining 15% had seen theirexports increase.
• Exports to countries outside the EU bloc are also being impacted. Here, 71% of respondents said that exports from the UK to the rest of the world were about the same. A sixth of companies had seen an increase, and a near similar number (13.1%) had reported a decrease in trade with RoW.
This mirrors the fact that some companies are encountering added costs and complexity in dealing with exporting to the rest of the world post-Brexit. It is not just exports to the EU that have been impacted.
Data on the EU Ink Markets
Meanwhile within the EU, the European Printing Ink Association (EuPIA) has published its official statistics relating to business in 2021. The countries that performed best in terms of sales value growth were Ukraine, Slovakia, Turkey and Greece. Most countries reported in the data list recorded growth but there were some notable exceptions, namely Germany (down by 0.9%), Hungary, Belarus, Finland and Denmark.Collectively, 2021 was a good year for the ink industry in Europe. The publishing ink sector grew by 3.5% in value terms to €800 million, and by 0.6% in volume terms to 300,000 tons. The packaging ink sector performed even better, with growth of 5.5% during 2021 to reach a value of €2.1 billion. Volumes of packaging inks sold grew a little slower (compared to the value) at 3.8%, totalling 550,000 tons.
On the Trail of Packaging Growth in Europe
Meanwhile, for more on the packaging sector itself in Europe, a recent report titled “Europe Consumer Packaging Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)” from Mordor Intelligence offers some interesting insights into where ink suppliers can find growth and trends in their end markets. According to the report, growth is pegged at 4.1% p.a. Some of the key trends are as follows:• 2021 was a good year for the ink industry in Europe. In Europe, retail and online sales have been increasing effectively. To stay safe during the COVID-19 pandemic, many people began purchasing food and preparing it at home rather than eating at restaurants. In the UK, a substantial percentage of shoppers has reported changes in their internet buying habits over the past year.
• The growth in food packaging and the ever-increasing demand for corrugated packages in growing e-commerce shipments during the COVID-19 pandemic are the primary drivers of the market. In e-commerce portals, demand has sharply increased for packaging for groceries, healthcare products, and e-commerce shipments.
The shift towards e-commerce growth means expanding order mixes, greater complexity, and more packaging diversity. Labor and seasonality also affect fulfilment operations’ ability to meet orders, complicating packaging and resulting in increased damage. Further, network shipping constraints and increasing costs are expected to continue. To compete effectively, more customization and unique solutions will be needed to achieve customer loyalty.
Poland is one of the significant markets for European consumer packaging vendors, owing to the high rate of investment in advanced and innovative packaging across its various end-user industries and the country’s growing focus on lightweight, portable, flexible and environmentally friendly packaging. It has witnessed multiple investments by various market players in accordance with the rising demand for consumer packaging in various industries, e.g. food and beverages.
In April 2022, Amcor launched a new platform of paper-based packaging products called AmFiber. The AmFiber platform demonstrates Amcor’s consumer-centric and adaptable approach to innovation, as it aims to redefine the capabilities of traditional paper packaging, thus, providing a wider range of features and functional benefits to meet the changing needs of consumers.
In April 2022, Sealed Air introduced Prismiq, a digital packaging brand with a portfolio of solutions for digital printing, design services and smart packaging. Digital printing technology is creating game-changing value for customers, enabling touchless automation in the company’s facilities and customers’ operations.
Also in the same month, Pregis invested in a new 1960 square meter (21,000 square foot) customer experience facility in Europe designed to provide holistic solutions to protective packaging challenges and reduce costly waste incurred by
damaged products.
In March 2022, Huhtamaki Oyj’s site in Alf, Germany, announced that it was switching its focus from plastics to smooth moulded fiber (SMF) products to meet the increasing demand for plastic-free alternatives to food packaging. According to the company, in 2022, the unit plans to replace more than 2,000 tons of plastic with fiber.