Global trends in packaging printing – Part One

If there is one industry that has seen its fair share of changes over the past few centuries, it’s the printing industry. And while there are some types of printing that have become less common, there has been significant growth in other parts of the industry, for instance packaging printing. So while there will always be a few Henny Pennys and Chicken Littles in our midst, you don’t have to look far to see evidence that printing, in one form or another, has a bright future.

This article about package printing trends was written by Rebecca Watson and appeared in its original form in the 2016-1 issue of Flexo Gravure Global. This version includes updates.

Smithers Pira released a new report forecasting the global packaging industry to grow at an annual rate of 3.5% over the period 2015-20 and is expected to reach USD 998 billion at today’s prices. Flexible plastic packaging is predicted to continue as the fastest growing packaging category, followed by rigid plastic packaging and finally board packaging as the third fastest growing sector. Another report by Technavio forecasts the global corrugated box packaging market to grow at a CAGR of around 5% through 2020, mostly because of a significant rise in e-commerce. The growth in niche packaging seems to be even more encouraging. Anti-counterfeit packaging, although a smaller segment of the market at USD 82 billion is expected to grow at an astounding rate of 13.4%, reaching almost USD 154 billion by 2020, according to another report from Marketsandmarkets.

01_Events_Smithers pira_Global packaging trends
Smithers Pira
Flexible and rigid plastic packaging will increase market share as the world market approaches USD 1 trillion at the end of the decade

This forecast growth is expected to be driven mostly by Asia and stronger performances in regions that have struggled in recent years, particularly Western and Eastern Europe. PCI Films Consulting’s report, Emerging Flexible Packaging Markets to 2016, identified 13 emerging flexible packaging markets that have grown by almost 70% since 2006 and now account for 20% of total world demand. These markets are Poland, Russia, Turkey, Mexico, Brazil, India, Indonesia, Thailand, Vietnam, Saudi Arabia, UAE, Nigeria and South Africa.

Smithers Pira’s report, The Future of Global Packaging to 2020, focused on 17 major and 33 smaller markets, so in addition to its wider focus, it’s definitely more inclusive. The market for global packaging amounted to USD 812 billion in 2014, with an annual growth rate of 4.2% forecast over the period 2010-14, according to the report. Flexible plastic packaging was the fastest growing market worldwide in 2014, followed by rigid plastic packaging, and board packaging as the third fastest growing sector. Asia accounted for the largest share of the packaging market in 2014, followed by North America and Western Europe. In flexible packaging, the top markets in terms of annual consumption were Germany, followed by the USA and Japan. For corrugated board in 2015, the consumption was led by the country of Japan with the USA and Germany following.

Reports backed by reality

The reports seem to be backed up by other numbers as well. Just this March, Bobst announced its organic sales in 2015 had increased 6.8%. According to its financial conference in December 2015, the company released at least 11 new developments and innovations in the past year for folding carton, flexible material and corrugated printing. Uteco reached EUR 120 million in sales and was recognized by Italian investors as performing well in exports, growth and profitability. The company also invested in its internal structure, purchasing a new CNC work station for its main plant and hiring 20 mechatronic engineers in the USA and Italy for R&D. It hopes to reach EUR 150 million by 2018. Windmöller & Hölscher has also seen growth for the past several years and has also set its sights high for the future. Its last W&H Expo was a huge success – with more than 1000 attendees from 61 different countries, the company said it has never had as many visitors during a two day event. By comparison, its last expo, in 2012, attracted 650 visitors. The company also increased its shares in Bag Solutions Worldwide Machinery, with the hope of building a stronger presence in the poly-woven packaging segment.

Let us take a look at the trends in the market and whether companies are bucking them, following them or somewhere in between.

Rise of emerging markets

All the reports state that growth in packaging consumption has remained positive and reliably strong for the Asian region. There is still a lot of potential, as consumer spending habits evolve and grow. It seems that every niche of packaging printing has a future in these emerging markets. The global consumption of polyethylene terephthalate (PET) packaging is forecast to reach 20.8 million tonnes by 2021, according to another Smithers Pira market report. Driven mainly by increasing demand in emerging and transitional economies, the market will increase 3.6% annually during the period 2016–21. E-commerce is also part of this trend and expanded at a large rate globally, by 23% from 2013 to 2014 according to Technavio, with the Asian and Pacific Coasts responsible for the lion’s share. Extrapolating that into the report’s prediction of the expected 5% global corrugated packaging increase, it can be safely assumed that much of this growth will continue in the Asian markets. In 2015, China overtook the USA as the largest national market for paperboard packaging and will account for nearly a quarter of global consumption in 2020, commented Smithers Pira.

02_Events_PCI Films Consulting report graphic
PCI Films Consulting
PCI’s study profiled more than 150 converters. In general, all emerging markets illustrated strong growth over the past five years, with only three of the thirteen posting overall growth of less than 30% between 2006 and 2011

However with potential also comes volatility, as Bobst has predicted. In its financial outlook for 2016, it told its investors to expect volatile quarters. And while the reports paint a rosy picture, the reality is this growth hinges on things like increased GDP growth, political stability and consumption by a large consumer base, which if we use history as a guide, are certainly not guaranteed. While Bobst has made strong investments in the corrugated markets throughout its global reach, it has struggled in Brazil, Russia, India and China, and it does foresee some slowdown for 2017. The company will continue to invest in and expand its presence in Asia and in particular, China, but expects lower growth from this region.

W&H said that there are definitely areas that are growing at an above average rate and are worth paying attention to, among them emerging markets. It has noticed a growing demand for hygiene films for items like baby diapers due to increasing standard of living in these areas. The company expects growing demands and more challenging applications because of this issue.

The second half of this article, which first appeared in the 2016-1 issue of Flexo Gravure Global, will be published next Tuesday.

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