Future of flexible packaging in UK

12-Sep-06

The imminent closure of a significant amount of UK production capacity announced by two of Europe's leading suppliers of flexible packaging is in direct response to extreme competitive pressures shaping the UK flexible packaging industry, notes a new study from market intelligence firm PCI Films Consulting Ltd. "The European Flexible Packaging Market 2006" concludes that in spite of continuing plant rationalisation, the €9.3 billion West European converted flexible packaging market continues to be oversupplied. Much of it is deemed uncompetitive, due to its high cost base. In addition, a trend by leading brand owners to switch food production and packing out of the UK, often to plants in the new member countries of the EU, is forcing suppliers of flexible packaging to follow suit. While the leading multi-plant converters in Western Europe are in a position to rationalise and relocate their capacity to meet these changes, many small and medium sized West European converters cannot and are expected to suffer. Study author Paul Gaster comments, "While these changes are impacting on most West European countries especially in northern Europe, of most concern is the future for flexible packaging in the UK where both market demand and production are forecast to decline significantly over the next five years". Overall, the study forecasts European demand for converted flexible packaging growing at 1.4% per annum from €9.3 billion in 2005 to approaching €10.0 billion by 2010 but expects growth in Western Europe to remain at less than 1% per annum over this period. In contrast, demand growth in Central and Eastern Europe is forecast at approaching 7% per annum as packaging applications continue to evolve. In terms of the supplier base, Alcan Packaging and Amcor continue to retain their market leadership in 2005, accounting for around 30% of the European market (see attached table) but PCI notes increased interest in industry rationalisation and additional plant closures are expected to balance supply and demand. (Press Release)