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Market Intelligence Guide for Packaging

September 2009
2 Overview
Our advantage is that we are embedded in the
packaging industry. Pira International is recognised
world wide as a leading centre of excellence
specialising in technical, commercial and strategic
aspects of packaging and the application of
packaging within the supply chain.
Pira has over 50 years experience in testing of
packaging materials and packaged products,
packaging technical investigations, packaging
cost reduction, undertaking improvement
projects relating to packaging performance
and specification, supplier review, machine/
material interaction, documenting packaging
specifications and manuals, packaging training
and management support.
Pira’s knowledge in-house includes experience
of flexible and rigid plastics, paper and board,
This white metal and glass, conversion, print, distribution
paper provides a and logistics, machine interaction and production/
snapshot of Pira’s filling, food contact legislation, environmental
research on the legislation and safety. Pira’s global network of
consultants, analysts and researchers provides
global packaging
additional material specific, line specific and
market. regional know-how where required.
As part of our core service for the packaging Our high client
industry, we compile and maintain databases on retention rate is a
the global packaging market broken down by testament to the
material (paper and board, flexibles etc.), substrate
(PE, PET etc.) packaging product (bottles, cans, jars
speed, accuracy
etc.) and end-use sector (food, beverages, personal and depth of
care etc.). This data is captured for each key region our data, and
and for 80 countries. the confidence
in our robust
Our data is used by many of the world’s biggest methodology.
raw material suppliers, equipment and machinery
suppliers, packaging converters, technology
providers, brand owners and retailers, as well as
financial institutions, major consultancies and
government organisations.
Our high client retention rate is a testament to the
speed, accuracy and depth of our data, and the
confidence in our robust methodology.
We publish more than 50 market and technology
studies annually, many of these on core packaging
markets. Studies on subjects like folding cartons
and barrier films provide quantitative market
sizes and five-year forecasts. In addition, we
publish many technology-oriented reports and
technology forecasts as well as technical books.
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3 A full list of titles is available from our market
report brochure.
Every two years we publish our flagship title The
Future of Global Packaging. The new edition is due
in the final quarter, 2009.
Widening our scope beyond packaging, we also
benefit from tracking developments in adjacent
industries such as print and paper. We gather data
on these industries split by print process, paper
grade, end-use, country etc.
In addition, we have a specialist division –
IntertechPira – covering fast-growing, niche
markets such as advanced materials, LEDs,
nanomaterials and many others. This wide scope
assists us greatly when monitoring for technology
innovations and developments and for assessing
possible disruptive technologies on the horizon.
There are many ways for clients to tap into our
knowledge and expertise.
Need information in a hurry? Our comprehensive
range of off-the-shelf studies will provide the
information you are looking for, and if not,
you can ask us for a quote for a fast turnaround
project. Need specific data and packaging
knowledge to help you make an important
decision? Speak to us about a bespoke single
client project. Our packaging experts are
on-hand to help, and as our global network
reaches into all materials, all products, all end-
use sectors and in 80 countries, you can be sure
the project team will comprise the necessary
experience and expertise.
Global trends
Our view is that the global economic slowdown
will impact upon packaging demand in the short-
medium term before returning to trend levels by
around 2011.
The ‘Credit crunch’ resulted in a sharp downturn
in business confidence in Autumn 2008, leading
to significant fall-off in economic activity during
the last two months of that year. The economic
downturn will have an impact upon companies’
financial performance and further industry
consolidation is likely in the near future.
Consumer expenditure on ‘big-ticket’ items and
also discretionary products (e.g. fragrances) is down
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4 in many countries, with evidence of ‘destocking’ at According to IMF forecasts, the global economy We valued the
the turn of 2008/09. will only revert to trend growth levels by 2011 after global packaging
a sharp downturn in 2009 and close to zero growth market at $578
The main impacts will be a slowdown in demand in many countries in 2010.
for packaging for discretionary items, as well
billion in 2007,
as some postponements in the installation of Global Packaging trends with an annual
new packaging lines, resulting in a slight pause in We valued the global packaging market at $578 growth of 7.7%
materials substitution in some cases. billion in 2007, with an annual growth of 7.7% in in current terms
current terms between 2003 and 2007. Excluding between 2003 and
Developments in materials technology will lead to inflation and exchange rate movements, the global 2007.
growing use of natural polymers – driven to a large
extent by environmental concerns and regulatory
requirements – as well as lighter plastic packaging
materials with enhanced barrier properties

There were some signs of rising business confidence

by the middle of the year, but rising unemployment
levels are set to depress consumer expenditure.

The biggest impact appears now to be in countries

with significant heavy industrial base such as Japan
and Germany, although impact of the downturn on
consumer expenditure could be more prolonged
in countries like the UK and US where consumer
debt levels are high and government debt has risen
sharply, with tax rises likely to follow in the short-
medium term.

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5 market was growing at 1.6% per annum over the latter including toys, small electrical appliances and
same period. also cosmetics, principally mass market skin care
and make-up products.
Into 2008, the market grew by an estimated 9% in
current dollar terms but by just 1.3% in real terms Across developed packaging markets, consumption
with a sharp slowdown into the last two months has been growing at low-mid single digit rates year
of the year. In Euro terms, the global packaging on year. Japanese sales grew by just 1.5% per annum,
market grew at an annual rate of 2.6% over the
period 2003-2007 to €422 million, and was up just
Global Packaging Market by Region, 2003–2008 ($ billion, current prices)
1.2% in 2008 to €427 million.
Circles represent 15% South & Central
dollar value at Eastern
America
In current dollar terms the fastest growing regional current prices
14%
Europe

markets for packaging between 2003 and 2008 were

Eastern Europe and South & Central America. Aside 2003 2007 2008 13%

from strong growth in key national markets such as 12%

Russia and Brazil, value sales were also boosted over

Western
Australasia Europe
11%
the period by the strengthening of key currencies Middle
East
versus the US dollar – to some extent related to a 10%

recovery in currency values after the devaluations 9%

of the late 1990s. More recently this trend has been Asia

reversed with the strengthening of the US dollar in CAGR (%),

2003–2007
8% World
Africa

late 2008/early 2009. 7%

6% North
In real terms, many of the fastest growing markets America

World
for packaging are in Asia, including China and India. 5%
2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17%

China in particular has emerged as a major exporter

% change, 2007–2008
of a range of industrial and consumer products, the

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6 in part due to deflationary effects but also the high
degree of maturity of this market.

Material trends
Rigid plastic packaging has been the fastest
growing sector of the market, driven by continuing
replacement of metal cans and glass bottles by PET,
as well as by similar trends across other application
areas in food, cosmetics and healthcare.

The general growth in packaged food consumption

has also been a major driver in rigid plastics, as well as
in flexibles demand.

Across flexibles areas foil has been the fastest

growing, driven by rising demand for blister
packaging in healthcare applications, although more
recently demand growth for packaging foils has been
falling back in the US and other markets, losing share
to plastic laminates in food applications for reasons
of cost.
Plastic packaging industry as a whole remains
fragmented in comparison to other sectors, with
overcapacity within the industry often making it
difficult for suppliers to pass on price increases,
despite rising resin prices for much of the decade.
Board remains the single largest sector at over $200
billion in 2008, growing by around 1% per annum
lower than the overall market. Folding cartons
demand growing only steadily with corrugated
packaging output developing more strongly in
emerging markets.
Board remains
Metal cans losing share to plastics in drinks markets the single largest
but still seeing demand growth in many markets as sector at over $200
off-trade (take-home) sales of drinks rise and the billion in 2008.

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7 on trade (out of home) loses share. Industrial metal
packaging demand buoyant until 2008.
Glass also losing share to plastics in food, drink and
other markets, but significant growth in container
glass capacity seen in fast-growing markets such as
Russia during the current decade.
End-use trends
Food and drink packaging is likely to be
unaffected by the economic downturn in the
main, although issues with credit availability are
set to lead to lower investment in new machinery
lines in some cases, and demand for higher-value
packaging for higher-value products may fall back,
especially in emerging markets.
Healthcare packaging sales set to hold up well
in the short–medium term in developed markets.
Pressures on public finances may lead to a slowdown
in healthcare expenditure growth, but this is likely to
be offset by the effect of ageing populations.
Elsewhere in emerging and especially transitional
economies, demand for healthcare packaging may
be affected by declines in consumer spending,
especially in countries like Russia.
Impact of economic downturn most likely to Impact of
be felt in cosmetics packaging, especially in economic
the case of fragrances and high-end skin care downturn most
and make-up products. Early evidence suggests
sales declines for fragrances, although cosmetic
likely to be felt
preparations holding up fairly well in developed in cosmetics
markets. Demand for cosmetics overall set to fall packaging,
back most significantly in transitional economies especially in the
in Eastern Europe case of fragrances
and high-end skin
Despite moves to boost domestic demand,
Chinese packaging output likely to be affected
care and make-up
by falling demand for other consumer goods products.
(electricals, etc.) and industrial products in major
export markets.
European packaging trends
We expect that 2009 will prove to be a tough
year overall for the European packaging industry,
with industry revenues down by around six per
cent in Euro terms on 2008 levels to €160 billion.
All sectors of the market will be affected by the
downturn in the economy, albeit some to a greater
extent than others – industrial and transport
packaging areas will be the hardest hit in line
with the downturn in heavy industrial sectors
and decline in global trade.
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8 Across consumer areas meanwhile, we are seeing
sharp falls in expenditure on discretionary items
such as fragrances and some premium cosmetics
items, as well as other mid-big ticket items
including electricals and electronics – although
the greatest impact here is often being felt in Far
Eastern markets as the source of many of these
goods. Healthcare packaging demand, meanwhile,
appears to be holding up well by comparison,
Western European markets. It should be noted that
while we are predicting a decline of over nine per
cent in UK sales measured in Euro terms, this is in
large part a result of exchange rate trends since the
Trend in European packaging sales by region/country,
2008–09p (€ million, current prices)

o
although the increasing pressure on public finances
is likely to lead to a slowdown in growth in
-2.5%
healthcare markets in the short-medium term.
-3.1%
As for food packaging, aside from foodservice
markets demand is holding up quite well, as one -2.2%
might expect. There appears though to be lower
investment in new machinery and equipment and -8.2%
so we’re seeing less innovation coming through and
basically the market is pretty flat. In the case of -6.4%

drinks packaging, after a difficult start to the year

-9.3%
we think we have seen something of a pick-up in
activity into the summer period, although it is still
to soon to say for certain what effect this will have
-10.0% -9.0% -8.0% -7.0% -6.0% -5.0% -4.0% -3.0% -2.0% -1.0% 0.0%
on figures for the year as a whole.
Note: p = projection
Typically we are expecting declines of between Source: Pira International Ltd
three to five per cent in local packaging revenues in

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9 beginning of the year – in local currency (sterling)
terms, we believe that the market will decline by Disruptive technologies analysis
around three per cent. Eastern Europe, meanwhile,
has been hit particularly hard by the economic
downturn, with its impact extending to areas Natural polymers

such as toiletries, packaged foods and alcoholic/

soft drinks.
Retort and
aseptic packaging
Trading conditions are likely to remain difficult
into 2010 for the industry. Much though will
of course depend on whether we are in for a Engineered polymer
additives, films, polymer
smooth recovery or a double-dip into a second blends, layered structures
recession. Whatever the outcome, expenditure
on discretionary items is likely to be subdued for
Tamper-resistant
some time as governments in many countries technologies
(including the UK) resort to austerity measures to

o
bring the public finances into line.
Absorbers/emitters
Technology trends
To fully understand industry trends, our expert
team also track technology developments and
Conductive coatings
innovations in the global packaging markets. One
example is active packaging – packaging that
performs an active function after the contents
are packaged by interacting with the contents to Plateless digital printing

deliver improvements in quality, shelf life, safety

and usability.
Integrated
communications

0 2 4 6 8 10

Likelihood of success Possible impact

Source: Pira International Ltd

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10 Active packaging technologies were initially
considered to offer huge market potential
and benefits for producers and consumers.
Undoubtedly, there has been good growth in
active packaging technologies over the past five
years, but several factors have restrained market
growth: its relatively high cost, consumer resistance
and restrictions imposed by food safety legislation,
particularly in the EU.
However, the trend for consumers to demand
more convenient packaged foods will drive
sales of MAP and active packaging, including
use of moisture scavengers, self-venting films
and microwave susceptors. The growing demand
for organic food has encouraged development
of MAP solutions that suit an extended
distribution chain. Finally, consumer demand
for environment-friendly packaging is driving
the introduction of MAP packaging using
renewable resources.
Disruptive technologies
We also track potentially disruptive technologies.
A disruptive technology is one that upends an
existing technology and eventually replaces it
or at least becomes accepted as equivalent.
In our report Ten-year Forecast of Disruptive
Technologies in Consumer Packaging, packaging
experts considered more than 200 potential
disruptive technologies, eventually producing a
rating for the 25 top technologies in terms of i)
likelihood of success/acceptance, and ii) potential
impact on the consumer packaging industry by 2017.
Natural polymers were ranked as the number
one disruptive technology (in respect of both
acceptance and impact), considered to have
significant potential in fast food/grocery packaging.
Aside from PLA, most biopolymers are at an
early stage of R&D due to issues with cost and
properties such as heat & moisture resistance.
While aseptic packaging has already reached maturity,
it is possible retort packaging will make inroads into
areas like sauces, assisted by developments in barrier The trend for
materials, etc. and also by the fact that it requires less consumers to
expensive food-processing equipment than is the demand more
case for aseptic packaging. New engineered polymers convenient
also represent an area of great potential, in the form
packaged foods
of laminates, blends, composites and molecularly
engineered polymers. The main market will be will drive
barriers for bottles and jars and to reduce the cross- sales of MAP and
section of rigid containers. active packaging.
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11

Pira International Contact us

Established in 1930, Pira is the first choice Stephen Hill
for packaging, printing and paper industry Global Head of
professionals when addressing technical and Sales and Project
market issues. Development

If you have a technical or market related question +44 (0) 1372 802 025
about the packaging, printing or paper industries, stephen.hill@pira-
challenge our experts to find you the answer. international.com

UK office US office
Pira International
Cleeve Road 19 Northbrook Drive
Leatherhead Portland
Surrey Maine 04105
KT22 7RU USA
United Kingdom
Tel: 00 1 (207) 781 9800
Tel: +44 (0) 1372 802000 Fax: 00 1 (207) 781 2150

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