This is one conclusion of a report by PCI Films Consulting entitled The European Flexible Packaging Market 2009 as it predicted a “tough year” for the sector.
But the study forecasts that demand should stabilise next year, with a return to historic yearly growth trends of 1-2 per cent from 2011 onwards.
The report notes that demand for European flexible packaging in 2008 was €11.7bn – including both converted and unconverted materials – which accounts for just under a third of global sales. This represents overall growth of 1.7 per cent compared to 2007.
Converted materials
Converted materials saw sales of €10.3bn last year, which represented year-on-year growth in value and, in some markets, in volume. However, the sector saw sharply differing fortunes during 2008; characterised by positive growth driven by raw material increases during H1, followed by a sharp decline on widespread de-stocking across the supply chain in H2, said the report.
Exports of converted materials from the region fell to €909m during the year as the increased value of the Euro made them less competitive.
Imports and Eastern Europe
In 2008, overall sale values grew despite volume sales remaining static as converters passed on raw material price hikes to customers. But the worldwide economic recession has hit consumer demand for flexible packaged goods, causing a contraction in sales values. The switch by consumers to own label products and shopping at discount stores has also affected the value of flexible packaging sold, said the study.
However, the report warned 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. In 2008, these rose by 8 per cent to €200m – some 2 per cent of the total market.
Flexible packing production in Eastern Europe continued to grow but at a lower rate in 2008, said the report. This expansion came as a result of major multinational food brand owners boosting production bases in the low cost region. Various converter groups from Western Europe have followed suit to meet this increased packaging demand, added the study.
Value by sector
The value of flexible packaging used for confectionery; fresh and processed meat; cheese and dairy products and baked goods accounted for more than 40% of total sales in 2008, – with each exceeding the €1bn mark, said the report. Sales of packaging for dried foods and cereals were just below €1bn, while those for crisps and nuts were around €550m. Frozen foods and ice-creams sales topped €600m and those for fresh fruit and vegetables exceeded €200m.
But the report pointed out that the highest growth during 2008 was seen in non-food packaging sectors including pet foods and pharmaceuticals.
Report 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.”