Europe’s converted flexible packaging market declined by 3% in value terms to around €10.4bn in 2009, equivalent to 44.2 billion m² of materials, according to a report by PCI Films Consulting.
The decline in sales value was primarily associated with the fall in raw material costs, especially in the first half of the year, which was reflected in lower prices to customers. Contrary to some expectations, however, demand in area terms actually increased, albeit by a marginal 1%, as a result of real growth in a number of end use markets in both Western and Eastern Europe.
Study author Paul Gaster says: “The robustness of flexible packaging demand is to a great extent underpinned by the strong recession-resistant nature of its end use markets, especially food, pharmaceuticals and pet food, which between them account for around 90% of total European flexible packaging demand. However, raw material costs have risen very strongly this year, reversing the declines in 2009, and this is again putting greater pressure on converter margins.”One of the major events of the last year has been Amcor completing its acquisition of certain parts of Alcan Packaging, which sees Amcor emerging as by far the largest flexible packaging converter in Europe with approaching 25% overall market share. At the same time a number of other European top ten converters have not yet achieved the critical mass at which they can most effectively challenge the newly enlarged Amcor.
The report notes that the conjunction of these trends is expected to result in still further consolidation of the European flexible packaging industry as more medium sized converters are likely to be acquired by the leading players. The report also details the emergence of a number fast growing medium sized converters that are taking share from the leading players in some national markets. The report forecasts that Europe’s flexible packaging market will grow by 4-5% in value terms in 2010 as converters see some stock building, higher selling prices and some real volume growth. Longer term value growth is expected to be around 2.5% pa up to 2014.