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Escalating demand from Asia Pacific to drive growth of global flexible packaging till decade-end

Escalating demand from Asia Pacific to drive growth of global flexible packaging till decade-end

29-Jun-15

Aided by escalating demand from Asia Pacific and rest of the world, the global flexible packaging market is anticipated to reach US$99.1 bln by 2019, according to a report by Transparency Market Research. Based on volume, the demand for flexible packaging is expected to reach 24,728 kilo tons (KT) by 2019 from 18,666 KT in 2012. In the last couple of years, flexible packaging has led the food packaging industry from the forefront. Touted by leading analysts to be the fastest growing segment in the packaging industry, flexible packaging is poised to develop at a steady 4.4% CAGR.
Flexible packaging is a package that is made of yielding materials which when filled or closed in a container can be readily changed in shape. Flexible packaging also refers to materials such as paper, foil, plastic, or any other combination of these. This kind of packaging is often used to manufacture different packaging items such as pouches, sachets, bags, envelopes, labels/wraps, shrink sleeves, lidding, and stretch film which are used for all-kinds of purposes. Flexible packaging is highly popular due to its durable, light-weight and highly aesthetic flexible packaging materials. Plastics are highly preferred by the consumers due to its durability, cost effectiveness, and high barrier properties. Plastics accounted for over 70% of the market share in 2012, and the growth trend for this market will rise significantly in the next coming years. However, now-a-days due to the growing awareness for ecology conservation in the industry, the consumer demand for packaging materials in biodegradable form has boosted the demand for cellulose. Cellulosic is the fastest growing material posing great potential growth in the future. It is projected to grow at a CAGR of 8.2% in the given forecast period. Cellulose is extremely environmentally friendly because of its high durability and protection from external environmental physical properties. Different research and development activities on flexible packaging technologies exhibit profitable opportunities for nanotechnology in the formation and processing of films and printing.
The flexible packaging market is amongst the most dynamic packaging markets presenting various types of materials and packaging used across several regions in the world. In addition, the most lucrative end-users in the flexible packaging segment include personal care products, food & beverage, and pharmaceutical industries. According to a market study analysis by Transparency Market Research, healthcare is the most demanding industry for flexible packaging across the globe. Furthermore, the food & beverages market, which is accounted to be the largest application market for flexible packaging is also expected to contribute major growth to the overall market. Demand for flexible packaging was recorded to be the highest from this sector in 2012. Today, food packaging stands to be the major end user segment in terms of value and volume. Polyethylene dominated the flexible packaging market and accounted for nearly 32% of the total market share. It is now projected to grow at a high CAGR during the forecast period 2012 to 2019. Owing to major regulations in the pharmaceutical packaging sector such as maintenance of hygiene, reduction of fraudulent drugs in the retail market, and retention of the medicinal properties of the drug, flexible packaging will witness rapid growth in the pharmaceutical segment within the forecast period, and by 2019 its market value will reach US$ 11.09 bln globally. One of the major factors in the expansion of flexible packaging market has been the expanding economy and shift from the traditional packaging materials to the flexible packaging materials. Amongst all the geographic regions, there was rapid economic development seen in the Asia-Pacific regions which accounted for the highest demand in 2012. Nevertheless, it is still expected to be fastest growing region rising at a CAGR of 4.4% from 2013 to 2019. The growth of various industries such as personal care products, food & beverages, and pharmaceuticals among others is majorly seen in the locales of this region. However, other places present in rest of the world (RoW) are expected to witness a rising growth in consumption of packaging due to the economic development in countries such as Brazil.

As per PCI Films, global flexible packaging consumption is growing. Globally, the past decade flexible packaging has emerged as arguably the most dynamic and innovative of packaging formats. As a sector which is broadly resistant to economic cycles, the global flexible packaging market has been growing by around 5% p a, reaching over US$74 bln in 2013. With the exception of the broadly mature West European market, all other world regions have experienced growth ranging from around 4% pa in North America to 10% in South East Asia and Oceania. By far the most dynamic individual markets have been China and India, currently growing by around 12% and over 15% pa respectively in value terms. Much of the growth in flexible packaging has been underpinned by the rapid globalisation of the food processing industry, with dramatic growth for processed and packaged food in the developing world.
Food packers in developing regions are likely to significantly increase the proportion of locally sourced materials in the medium to longer term. Meanwhile, global players are already changing their supply strategies: targeting acquisitions of local converters or investing in local greenfield plants to shorten lead times. The end result is that multinational converters have started to switch their growth plans away from traditional but mature flexible packaging markets to emerging markets where higher growth potential exists. It is worth noting, however, that while the flexible packaging industry is expected to continue to consolidate at both the global and the regional level, there will still be a place for smaller regionally based short run, lower cost, and niche converters supplying both major brand owners and smaller packers. Technical advances, particularly in the development of high barrier materials and the rapidly growing popularity of flexible formats such as the stand-up pouch, has seen flexible packaging successfully challenge metal, glass, board and composite rigid formats. It is seen as an increasingly viable, cost effective, consumer friendly and environmentally acceptable alternative in a growing number of applications, with demand continuing to grow at a steady pace. PCI forecasts that global flexible packaging demand, will continue to experience average growth of around 5% pa to reach around US$95 bln by 2018.

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