Plastics offer a large gamut of possibilities for the food packaging market
Plastics enable extended shelf life, thereby assisting food retailers in logistics management and providing tremendous growth opportunities.
21/02/06 Valued at more than EUR40 billion, the European food packaging industry offers considerable potential for suppliers of plastics in functional food packaging.
Plastics enable extended shelf life, thereby assisting food retailers in logistics management and providing tremendous growth opportunities. Representing almost 30 per cent of the global food packaging market, plastics are expected to enjoy increased demand in flexible food packaging across Western Europe.
"Plastics are emerging as a vital tool for packaging manufacturers in reducing packaging weight, eliminating design constraints and promoting new packaging solutions, while also assisting food manufacturers in preserving their products longer", states Dr. Lucia Castro Diaz, Research Analyst at Frost & Sullivan (http://chemicals.frost.com). The wide range of properties of different plastics - polyethylene (PE), polypropylene (PP), polyethylene terephthalate (PET), polyamide and ethylene-vinyl alcohol (EVOH) - permit the use of flexible food packaging that helps achieve extended shelf life without the use of preservatives.
Flexible food packaging offers improved filling rates, which significantly influences the operations of food providers leading to enhanced output rates that are likely to result in greater demand for plastic. Consequentially, market revenues are projected to witness an increase in revenues from EUR1,491.7 million in 2005 to EUR1,926.7 million by 2012.
The enlargement of the European Union has encouraged the foray of western companies into Eastern Europe. In contrast to the competition prevailing in the mature Western European food packaging market, penetrating into this market will require less investments by companies, allowing them to expand their operations and increase their market presence.
Changing consumer habits are leading to greater demand for pre-processed foods, which is augmenting the growing need for plastic packaging with emphasis on multi-layer structures and vacuum packaging. Low-weight stand-up pouches are rapidly replacing alternatives such as cans and glass jars. Currently, less than a billion stand-up pouches are present in the market, but this is expected to increase with the growing use of pouches in pet food, detergents and pre-processed foods packaging.
At present, the SuperRegulation is affecting the market, regulating the use of plastics in food contact applications. However, the compliance requirements of this regulation are also expected to positively influence public perception of the safety of materials used in such applications.
A large number of polymers used in food packaging are becoming commoditised, thereby affecting profit margins of plastic producers. "Further, increasing prices of raw materials are hindering plastic producers' profits", says Dr. Diaz. "Hence, it will become essential to adopt a more structured approach that involves widening the product portfolio to include value-added products. To sustain their profit margins, packaging producers will need to focus on increasing system automation to obtain longer production runs and reduce maintenance time."
Improvements in the properties of PE, the largest selling segment, achieved by new synthesis methods, will contribute to its sustained growth. Moreover, producers should include linear low-density polyethylene (LLDPE) in their portfolios to fuel demand in this segment. PP, which currently represents 30 per cent of the sales volume in the market, is also likely to exhibit growth due to the price advantage it offers. PP producers are investing in research and development (R&D) efforts for catalysis development, aiming at commercialising new grades, which are expected to reach the market by 2006-2007, thereby reinforcing rising demand for PP. Apart from this, the PET, polyamide and EVOH segments are likely to contribute to overall market revenues.
While most plastic suppliers are active in the food packaging market, new products will have to compete with more established resins in this price-sensitive market. Intensifying competition is increasingly leading to market consolidation and key participants such as Amcor and Alcan have acquired smaller companies with speciality products that offer good revenue potential.
"As the food packaging market is extremely price-sensitive, plastic producers will need to create product differentiation and promote client loyalty", remarks Dr. Diaz. "Packaging producers will need to redesign their products in collaboration with food companies and retailers. In addition, companies will also benefit from establishing an effective distribution system to ensure adequate geographical coverage."
If you are interested in a virtual brochure, which provides manufacturers, end users, and other industry participants with an overview of the latest analysis of the Western European Markets for Plastics in Flexible Food Packaging (B687-39), please send an e-mail to Janina Hillgrub, Corporate Communications, at Janina.Hillgrub@frost.com, with the following information: your full name, company name, title, telephone number, e-mail address, city, state and country. We will send you the information via e-mail upon receipt of the above information.
Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services, and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community, by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics.
Frost & Sullivan Chemicals and Food Group is the strategic market consultant delivering insight and understanding to support business growth internationally. We identify and analyse the critical market challenges companies must address to become successful competitors in their industry. Our work is focused on these challenges in order to provide our clients with market strategies that enable them to increase revenues, market share and profitability.
The Group continuously monitors a comprehensive spectrum of chemical and food markets for trends, market measurements and strategies, and delivers powerful data via research publications, bespoke market intelligence projects and customised consulting.
