
Growing competition put pressure on packaging prices. Smaller households require smaller pack sizes, while busier lifestyles pose a need for convenience and quality to be always united. Along with this, environmental footprint is highly monitored and represents a key factor for packaging innovation. The complexity of all these requirements boosted the global packaging machinery market in 2013, to reach USD 54bn.
Globally, traditional packaging materials such as paper, metal and glass are losing their attractiveness primarily due to high price and in some cases limited functionality. In 2013, paper-based containers amounted to 15% of total packaging materials’ volume in the world, while the main paper packaging purpose was food and tobacco packaging. At the same time, metal and glass packaging materials amounted to 9% and 8% of total packaging volume respectively. The popularity of metal and glass packaging was maintained mainly by premium products. On the other hand, packaging of mass consumption goods dwindled towards rigid plastic and flexible packaging alternatives due to lower prices.
Rigid plastic packaging growing in popularity
The global packaging materials market was dominated by flexible packaging; however, rigid plastic saw higher growth over 2008-2013. This was mainly due to growing environmental awareness and easier recycling of pure plastic packaging rather than combined flexible packaging. In 2013, rigid plastic materials accounted for 20% of packaging materials’ volume. Over 2008-2013 rigid plastic packaging was the fastest growing type of packaging, recording a CAGR of 4%. PET bottles and thin-wall plastic containers concurred other type of packaging in beverages industry. Meanwhile, within the beauty and personal care industry HDPE bottles and squeezable plastic tubes represented the most common pack types.
Developing countries – home for growth
In 2013 the heaviest users of flexible packaging were in high economic growth regions, primarily in the Asia-Pacific region, where major force was created by India’s and China’s growing consumption. In 2013 the share of flexible packaging materials in India’s and China’s portfolio amounted to 78% and 56% respectively, while the average in Western Europe and North America ranged between 32% and 40% of total packaging materials’ volume. At the same time, Latin America and the Middle East and Africa also saw healthy growth of flexible packaging use, reporting CAGRs of 1% and 3% respectively over the 2008-2013 period. The prosperity of flexible packaging in developing regions mainly came from the rise in consumer wealth and developing retail infrastructure. Historically, sales of unpackaged products accounted for the lion’s share of the retail trade in developing countries, but higher per capita income enabled consumers in developing regions such as sub-Saharan Africa to begin purchasing packaged goods.
Packaging production powerhouse – China
The largest packaging materials’ producers remain the US and China. These two countries took a lead in the supply of all types of packaging materials in 2013. Chinese producers accounted for 56% of glass packaging production in 2013, up 22 percentage points from 2008. The surge in China’s role in glass packaging was mainly based on the availability of cheap raw materials and labor. Meanwhile, the closest rival, the US, accounted for 9% of global glass production. In 2013 paper packaging production increased by 6%, with the largest growth influx derived from China, South Korea and Mexico. In total, China accounted for around 60% of metal and plastic packaging production in 2013. To be able to produce such high quantities of packaging for its growing economy, China is importing growing amounts of recyclable waste, and is now the largest waste importer in the world.
Convenience, value & image
The global food products industry is the largest packaging consumer, amounting to around 45% of total global packaging volume in 2013. Along with global leadership, the food products industry uses the largest volume of flexible and rigid plastic packaging. Innovation in food packaging in 2013 revolved primarily around convenience. Within developed countries, saturation drove brand owners and private label products to meet consumer demand for more functional packaging solutions as a way to ease their increasingly fast-paced and active lives. Portability is a key driver in baby food, but also in confectionery and other impulse food categories, where a small format also means better control over calorie intake. Small formats are especially relevant for African and Asian countries, where wealthier consumers are increasingly starting to buy packaged food and drinks.
Consumers worldwide continued to attach importance to value for money in 2013. In the developed world this was a consequence of the lingering effects of the global economic crisis, while in developing countries consumers are increasingly willing to buy packaged food but have lower disposable income. Packaging innovation has had to fit into this rationale in staple categories such as bakery products and dairy, as well as indulgence categories such as confectionery.
A third major axis of innovation for food packaging aims to raise a product or brand’s awareness and visibility on the shelf. Standing out through packaging has become more important in mature regions such as Western Europe and North America, with dairy, with impulse categories such as confectionery and sweet and savory snacks and sauces being key areas of development.
Steam-in-bag technology
The search for solutions offering easier meal preparation has been undertaken by frozen food manufacturers. The packaging landscape in this category is often rather homogeneous, dominated by flexible plastic and folding cartons. However, frozen food companies strived to stay on top in the competition against dried, canned and chilled processed food alternatives by offering food that is ready to be steamed, often in meal portion-sized flexible plastic packs. Alongside portioning, these frozen food pack solutions encourage steaming, also meeting consumers’ increasing desire to eat healthy, quality foods while watching their spending. This is particularly valued in countries such as Japan, where steaming is widely used as a cooking method. For instance, in 2012 Nippon Meat Packers Inc released in the country a 180g steam-in-bag flexible plastic presentation for frozen fish.
Meanwhile in France, Iglo France SAS launched Papillote Océane in a 250g folding carton containing two steam-in flexible plastic packs, while Findus France SAS chose a simple, steam-in flexible plastic bag that is detachable into four portions for its wild salmon fillets. More such developments could make their way into Eastern Europe, where boiling food is common and value for money is considered particularly important. Equally, in North America the large consumption volume of frozen ready meals offers potential for steam-in-bag flexible plastic.
What lies in the future?
The key ingredients to success for packaging materials will remain functionality and value. Glass and metal packaging will advance due to the ever greater influence of the environment on consumers’ purchasing decisions, especially in more developed economies. At the same time, lightweight and easier pack re-designs are essential, so flexible and plastic packaging will remain the most popular packaging materials. These packaging types will experience the largest interest in innovation and development, in order to achieve greater efficiency of biodegradable plastic. Finally, paper packaging is expected to continue to see its popularity decline.
The increasing health and environmental footprint awareness, as well as consumers’ wish to mitigate the effects of their personal waste, are already influencing purchasing decisions in many developed countries. Moreover, the UN pre-launched program dedicated to sustainable consumption and production worldwide. The program is expected to attract more attention to excess packaging and packaging recycling issues thus encouraging countries to take firmer action. The increasing talks at international level will force developing countries to enter into deals to ensure environmental sustainability and waste management. Therefore, new environment-friendly innovations in packaging materials are expected in the mid-term future. The Chinese Government has already released the bill on Promotion of Clean Production, which stresses efforts to cut down on excessive packaging. Currently, this is the only benchmark initiative from developing countries.
China dominates machinery industry
In 2013, packaging machinery production was mainly driven by emerging capacities in developing economies, where China and Turkey continued to show prosperous double-digit industry growth, while more developed counterparts such as Germany, Italy, Japan and the US continued to stagnate. Strong growth in China was observed mainly due to the booming local market, driven by consumers’ increasing disposable incomes, and the diversification of consumers’ needs in relation to packaging functionality and quality. Chinese production of packaging machinery stood at USD 24bn in 2013 – a figure more than three times higher than in Germany, the second-largest producer of packaging machinery in the world.
Western countries struggle
In 2013 price-sensitive US industrial buyers opted for imported machinery, in particular from China and Mexico. Part of the shift towards imported production was attributable to the international expansion of US manufacturers, as relocating production hubs to countries offering cheaper labor enabled many producers to cut operational costs. In total, US production of packaging machinery stood at USD 3bn in 2013. In Germany, the packaging machinery industry was still very sensitive and had not yet returned to its pre-crisis level. The mature German packaging machinery production environment was mainly driven by the performance of the non-alcoholic drinks, cosmetics and food industries. Moreover, rather conservative German consumers allow producers of durable and non-durable goods to save on constant updates of packaging, thus renewals of machinery are quite sluggish. At the same time, Italy, the second-largest packaging machinery market in Europe, experienced 7% growth in packaging machinery production in 2013. The upward trend in packaging machinery demand was mainly driven by a successful performance in developing markets as such Russia and China.
Innovations in packaging machinery
Western countries see increasing demand for packaging machinery in the developed world. The two largest exporters of packaging machinery are Germany and Italy, followed by China; however the export stream from China is almost six times smaller compared with Germany. Germany remains the largest exporter of packaging machinery in the world, with exports amounting to over US$5.7 billion in 2013. The country has well-established trade routes to developed countries such as the US, France and the UK. However, in recent years, growth has increasingly originated from developing countries such as China, Russia and Brazil, which are increasingly able to buy high-quality machinery. Germany mainly specializes in packaging machinery for filling, closing, sealing, capsuling or labeling. Following the German model, in 2013 Italy, the second-largest exporter in the world, based its growth on penetration of South-east Asian and Latin American regions. In 2013 exports of packaging machinery, mainly machinery for packing or wrapping, amounted to US$4.9 billion, up 7% compared with 2012.