Growth in New and Existing Markets to Boost Growth in Flexible Packaging IndustryWednesday, January 31, 2018
According to our Flexible Packaging Association (FPA) 2017 State of the Industry Report, the worldwide flexible packaging market was $86B in 2016 and projected to reach $1,39B by 2021.
Where is this growth coming from? Based on data from that same report, steady growth and expansion of the flexible packaging industry is going to rely on three growth factors:
- Innovation and technology in products,
- Growth in new and existing markets, and
- The ability to quickly adapt to changing consumer behavior and preferences.
In this post, we’ll talk more about how expansion in new and existing markets, with emerging markets and a growing global middle class acting as key factors, will spur new growth for the converting and flexible packaging industry.
Based on PCI Films data, North America and Europe represent 15% of the world population and a per capita consumption of Flexible Packaging of $37.45 a year. The developing world, representing Central and South America, Asia, and Africa/Middle East has 85% of the world population and a per capita consumption of Flexible Packaging of $6.97 a year.
If you consider that there are 1.8 Billion People in the Global Middle Class today but 3.2 billion are expected by 2020, that is huge increase in new consumers to the market. Further out the numbers show that 4.9 billion are expected by 2030, with 66% of Global Middle Class represented by Asia. There will be 1 billion Chinese people considered middle class by 2030. These numbers indicate huge potential growth for many brands that rely on our flexible packaging to bring their products to market. There are enormous growth opportunities in developing countries.
As for existing markets, product category innovations as well as packaging innovations will spur growth in the next few years.
Brand owners overall expect to transition to a higher mix of flexible packaging over the next five years for a variety of reasons, including that consumers are willing to pay more for food products in flexible packaging.
We see the most opportunities for growth within specific product categories like beauty/personal care, pet food, foodand beverages.
What types of packaging will these product categories need? The types of flexible packaging forecasted with the most growth opportunities are flexible plastics and pouches.
This chart depicting converters materials purchases illustrates that 90% of flexible packaging is plastic.
In 2016, resin was 23% and film was at 46% of all purchases. The breakdown by type of film and resin used by converters is shown in the lower right hand corner and it’s no surprise that Polyethylene is the largest usage, since that is what brands are demanding.
Flexible plastic packaging is desired for its affordability and light weight, which is why you see such growth in packaged foods where those two features are important. However, you can see in this chart that demand for pouches - stand-up, aluminum, and plastic is growing dramatically.
Global Growth of Flexible Packaging by Type
Our FPA survey responses indicate that flexo continues to be the predominant printing method in the industry with 72% in 2016, but digital is gaining strength and acceptance.
Converters Printing Comparison
The final key factor impacting growth in our industry for this blog series will be changing consumer behavior and preferences and our industry’s ability to quickly adapt to those demands. Look for our next blog to learn more!
Post Contributor: Alison Keane, Esq. is the President and CEO of the Flexible Packaging Association. Serving as the voice of the flexible packaging industry since 1950, the Flexible Packaging Association's goals are connecting, advancing and leading the flexible packaging industry.