Packaging industry needs to consolidate and innovate

A report on the flexible packaging market in Europe by ING Wholesale Banking and consultancy group Edge predicts industry consolidation and the need for innovation over the next ten years.

In the consumer packaging sector, plastics demand is expected to grow by 5.9% per annum up to 2009, while paper and board growth is expected to be 5.3%, according to the report The market for flexibles and folding carton in Europe.

Further consolidation is likely, with private equity owners continuing to participate, but the report also suggests other options for packaging groups – partnerships, open innovation, joint ventures, vertical integration and spin-offs.

Greg Wood, managing director of Edge, said: “Packaging converter business models are all too often dominated by the build it bigger, faster, economies of scale and efficient production mentality. Sure, cash-cow, low-margin high-volume is a valuable business model, but what of the smaller volume and shorter life-time added-value market, which seems to be somewhat neglected.”

Speaking to PRW.com, he said that more innovation is needed by packaging converters. He acknowledged that some innovative plastics packaging is in the market, such as stand-up pouches and reseal features, but it is often slow in coming through.

Opportunities are growing for converters as retail channels diversify, pack lifecycles are shortening and retailers seek differentiation.

Wood said: “The way forward has got to be adding value in the marketplace.”

The report also contains company analysis on the top 15 packaging converters active in Europe. Among the plastics-oriented groups are BPI, Huhtamaki and Amcor.