Rising raw material costs are expected to augment the value of Europe’s flexible packaging market, following declines in 2009, according to PCI Films Consulting Ltd.
Europe’s converted flexible packaging market declined by 3% in value terms to around €10.4 billion in 2009, equivalent to 44.2 billion m² of materials, according to a recent PCI report. The decline in sales value was primarily associated with the fall in raw material costs, especially in the first half of the year, which was reflected in lower prices to customers. Contrary to some expectations, however, demand in area terms actually increased slightly as a result of real growth in a number of end use markets in both Western and Eastern Europe.
Commenting on the publication, study author Paul Gaster said: ‘The robustness of flexible packaging demand is to a great extent underpinned by the strong recession-resistant nature of its end use markets, especially food, pharmaceuticals and pet food, which between them account for around 90% of total European flexible packaging demand. However, raw material costs have risen very strongly this year, reversing the declines in 2009, and this is again putting greater pressure on converter margins.’
Amcor’s acquisition of certain parts of Alcan Packaging now sees it as the largest flexible packaging converter in Europe with approaching 25% overall market share, at a time when a number of other European top ten converters have not yet achieved the critical mass at which they can make an effective challenge.
The report says these trends are expected to result in further consolidation of the European flexible packaging industry as more medium sized converters are acquired by the leading players. The report also details the emergence of a number fast growing medium sized converters that are taking share from the leading players in some national markets.
PCI is forecasting that Europe’s flexible packaging market will grow by 4 – 5% in value terms in 2010 as converters see some stock building, higher selling prices and some real volume growth. Longer term value growth is expected to be around 2.5% per annum up to 2014.
EUROPEAN FLEXIBLE PACKAGING MARKET BY COUNTRY 2009
Further information about ‘The European Flexible Packaging Market 2010 (10th Edition)’ can be found on PCI’s website www.pcifilms.com.