LONDON/HOUSTON/SINGAPORE – PCI Wood Mackenzie's latest review of the European marketplace, 'Flexible Packaging Supply Demand Study - Europe to 2021', reveals the fastest growing major flexible packaging markets in Europe in 2016 were Italy, Poland and Turkey, each growing by more than 3% during the year. This compares with growth in European flexible packaging of 2.1% overall.
According to the report, Europe’s €13.8 billion flexible packaging market remains one of the largest and most sophisticated in the world, accounting for around 18% of the global total in 2016.
Looking forward, PCI Wood Mackenzie forecasts that flexible packaging demand will pick up slightly in Europe in 2017, subsequently growing by 2.2% p.a. to reach €15.5 billion in 2021.
PCI Wood Mackenzie's Paul Gaster, said: “For the third year in succession there have been few inflationary pressures with volume consumption growth in most European countries broadly tracking that of value. Poland, in particular, stands out as a major market where demand has continued to grow strongly, underpinned by robust domestic demand and a successful focus on packaged food exports, especially into Western Europe."
Poland’s flexible packaging industry has achieved success by supporting the high levels of inward direct investment made by multinational food brand owners in recent years, keen to take advantage of growing packaged food markets in Eastern Europe and lower production costs available in the Polish market.
In Italy, demand grew by 3% underpinned by the growing importance of supermarket retailing and changing consumer buying habits.
Growth in Turkey, while significantly lower than earlier in the decade, continues to be boosted by a growing national economy, urbanisation, and relatively rapid population growth, including the influx of more than 3 million refugees fleeing the civil war in Syria, many of whom have now put down roots in Turkey.
There has been some significant M&A activity in flexible packaging over the past year - 26 converters with more than €100 million of flexible packaging sales now account for nearly 70% of the total market.
The most significant development has been the rapid emergence of Spanish international paper group SAICA as a leading player in flexible packaging, having acquired Centroplast (Italy), Americk Packaging (UK) and three Netherlands based businesses - Schut Flexible Packaging, Hellema Verpakkingen, and Lemapack Flexible Packaging.
Mondi has also been very active, having concluded three significant bolt-on acquisitions, buying Uralplast (Russia), Kalenobel (Turkey) and Excelsior Technologies (UK).
According to the report, end uses are growing faster than the market as a whole include coffee, snack foods, fresh produce, ready meals and pet food. However, flexible packaging sales for sugar and chocolate confectionery, one of the largest categories, were broadly unchanged. Tobacco products was the only category to register a contraction: in a very mature market, flexible packaging sales are in slow long term decline having been adversely impacted by anti-smoking legislation, growth of the illicit tobacco trade, and the rapidly growing popularity of e-cigarettes.