The term almost begs for a pun: Flexible packaging materials continue to encroach upon other materials because of their flexibility, versatility and, in some cases, economics. Proof of that fact can be seen in the winning entries in the Flexible Packaging Association (www.fpa.org) Achievement Awards, starting on page 22. At the recent annual meeting of the FPA, the presentation of the "2006 State of the Industry" showed yet again the broad scope and global reach of the flexible packaging market.
As the second-largest materials segment in packaging, at 17 percent of the total market (corrugated is the largest, at 26 percent), flexible packaging has been growing at an average 3.2 percent per year from 1996 to 2005, although last year, the increase was 3.6 percent over 2004—just a tiny bit higher than the growth of the U.S. GDP. North America and Western Europe account for the two largest markets, at 29 percent each, followed by Japan and Asia at 13 percent and 14 percent, respectively. Latin America and Eastern Europe weigh in at 6 percent and 3 percent each. By far the single-largest market segment for flexible packaging is retail food, at $10.4 billion and 47 percent of total flexibles. Retail nonfood, at $3.3 billion and 15 percent, ranks a distant second.
According to the "State of the Industry" report, the industry outlook is generally optimistic but wary. Optimism is tempered by concerns over raw materials costs and uncertainty in the economy. However, expectations for this year are a 6-percent to 7-percent increase in sales revenues and a 7-percent to 8-percent increase in volume. Looking further ahead, the forecast shows a 5-percent to 6-percent increase in revenue, and slightly more than that in volume, over the next three to five years.
A recent study from Freedonia Group (www.freedoniagroup.com) is even a bit more optimistic. "Converted Flexible Packaging" predicts that demand will increase by more than 4 percent per year to $14.4 billion by 2009. The study's analyst attributes this growth to cost, performance and source-reduction advantages over most rigid packaging formats. Heightened barrier performance in many markets will drive increased demand for value-added materials to enhance shelf life or product protection. Technological advances such as breathable films and resealable standup pouches (both in evidence in the FPA awards), as well as manufacturers' needs for higher-performance packaging with enhanced graphics capability, will also spur growth. The study points to pouches, in particular, as the best opportunity, with that demand rising 6.6 percent per year to $5.8 billion by 2009. Gains in the food market will slightly outpace other market segments because of increased demand for convenient packages. The fastest advances are seen in produce, meat and related products and beverage applications.
Overall, not a bad outlook. Flexible packaging is looking good.