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Recession can't contain growth in food packaging

If the forecast by The Freedonia Group is right, by 2013, Americans will use a staggering 300 billion food containers each year. The recent Freedonia study, Food Containers: Rigid & Flexible, predicts that U.S. demand for food containers will grow by 2.5 percent annually over the next five years to a total value of $25 billion versus $22 billion in 2008. Americans like their food.



Rigid containers are the predominant container type, with total sales of about $12.7 billion in 2008. However, the packaging material of choice is rapidly changing as plastic rigid containers, the use of which grew at 10.2 percent over the last five years, are expected slow down to a healthy 4.8 percent annual growth before 2013. Metals and glass, on the other hand, are expected to see gradual declines.

Demand for bags and pouches has grown by a robust 5.9 percent annually, from $6.9 billion a year in 2003 to $9.3 billion last year. Despite an anticipated drawnout economic recovery, the demand growth for bags and pouches is expected to be a steady 3.3 percent annually over the next five years.

Joe Iorillo, a packaging analyst at Freedonia, points to several related trends in the report. He says the proliferation of convenience and single-serving food packaging has been a trend that has been gathering steam. Several factors have made such packaging popular, including smaller average household sizes, the increasing maturity of the U.S. population and rising numbers of dual-income and single-parent households.

Meanwhile, Iorillo says, the recession has bolstered warehouse clubstores, which typically sell food products in larger packaging formats at more economical prices than traditional supermarkets.

While many packaging innovations have been imported, the analyst pointed to examples from U.S. companies, including a microwaveable steel can known as Fusion-Tek, developed by Ball Corp. in 2006 and Constar's Diamondclear monolayer oxygen-scavenger technology in 2007, which is being used in PET bottles. This technology allows lighter-weight bottles with strong barrier properties required for many perishable foods.

Since food is a necessity regardless of the economic climate, Iorillo says, the food packaging demand is insulated from macro-economic cycles. So, even if there's dramatic economic improvement, the effect on food packaging likely won't be equally dramatic. A surge in population growth would likely have a more beneficial effect upon packaging demand, he said, as an expansion of the customer base naturally leads to greater demand for food.

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