Asian food growth to drive flexible packaging sales recovery
PCI Films Consulting predicts that average annual growth in the $58bn global flexible packaging market will be 3.2 per cent over the next five years. Food accounts for 75 to 80 per cent of flexible packaging demand, and is the main driver for industry trends, so the predictions for the overall market hold just as well for the food segment, said report author Paul Gastor.
Growth trends
This represents a significant slowdown on the last five years, when growth averaged 5.9 per cent, but Gastor the forecast figure includes 2009, which has been a slow year for flexible packaging.
Since the financial crisis hit last autumn, stock levels have shrunk and orders have been squeezed to the minimum. But this process is expected to ease as the world economy recovers, and India and China continue to develop economically.
Over the last five years China has delivered annual average growth of 17 per cent, and India has averaged 12 per cent. PCI expects both economies to drive the Asia-Pacific region to capture 55 per cent of world growth in the next five year period.
Eastern promise
Gastor said growth potential in these two countries is enormous because the packaged food market is still relatively small. As the retail system spreads on the back of years of economic development that scope for expansion is translating into a high long-term growth path for flexible packaging.
Domestic demand is the big driver for Asian growth, as food manufacturers in Europe and North America account for only a very small portion of demand.
It is a common perception that manufacturers rely on cheap labour in China and India to sell their goods at discount prices. But in the case of food, lead times have to be long and volume requirements high to justify buying from the markets so it is only really an option for the biggest manufacturers, and then only in certain situations.
This is reflected in the figures for inter-regional trade in converted flexible packaging. It currently amounts to $2bn, or 3 per cent of world production, with Western Europe accounting for nearly 50 per cent of the total. There is a slow movement in Europe towards production plants in Eastern Europe, and some of those plants are supply packaging back to Western Europe.
