World packaging market will reach $1 trillion milestone in 2020
Booming packaging market global demand is impressive. Smithers Pira’s flagship report The Future of Global Packaging to 2020 – updated to 2018, but confirming the data emerged by many other previous reports, such as Quarterly Packaging Report by Havi (2016), Global Packaging Trends Report by PMMI (2017), Industrial Packaging Market Research Report By Market Research Future (2018) – attests a growing worldwide expansion of 3.5% year-on-year, starting from 2015, when the sector market value reached the $839 billion (€768billion) record. A trend that, forecasts and experts analysis confirm, will continue at least until 2020, when packaging market value will reach the $1 trillion milestone, proving to be one of the most stable and profitable for future investments.
Sector expansion is not proceeding uniformly: as expected, emerging countries will play a pivotal role in the packaging economy, by creating new opportunities for material suppliers and converters. Simultaneously more established regions are already undergoing significant business and demographic changes that will transform their value in the packaging industry. Let’s analyse, more in detail, how those changing will happen and which specific segments will influence
Rigid plastic packaging:
With a remarkable annual growth of 4.4% per year, this is the most influent sector of the whole market. Plastic is the most widespread, used, lightweight material, able to substitute heavier metal cans and glass bottles formats and to reduce material consumption and cost. Anyway, the global public request for environmental savings, cost optimization, and recyclability driven by technological developments is pushing brands to rethink their use of plastic and imposing different, more environmentally friendly solution. Coca-Cola is actually building its new marketing strategy in its effort to face this challenge and will launch, by 2020, a 100% bioplastic Plant Bottle 2.0. Moreover, while demand for rigid plastics has reached a saturation point in certain developed markets, it is in its greatest expansion in new regions like Africa, the Middle East and Asia, where both rigid plastic packaging and flexible plastic packaging for various food and beverage applications are highly requested.
According to forecasts, the market for flexibles will continue to boom over the next five years, even if at a slower rate than rigid one, after having expanded significantly over the past decade as technological changes have transformed the packaging type from a low-cost industrial-use option into consumer-grade containers with a vast variety of applications.
With a relative share of sales 42% to nearly 45% between 2015 and 2020, Asia will surely dominate the market of flexible plastics, which are mostly used for food lightweight packaging. And is right on food applications that innovations are focusing: companies are, indeed, looking for technologies able to improve the barrier properties of multilayer plastic and laminate formulations for food, or maintaining performance while reducing the thickness of the film. Simultaneously new high-speed filling equipment that holds containers by their neck fixtures will allow flexible formats to displace rigid PET in the beverage segment where its penetration has hitherto been limited.
Corrugated formats, folding cartons and liquid cartons value estimation in 2015 reached the outstanding amount of $261 billion in 2015 and its growth is expected to be stable until at least 2020.
It’s China, immediately followed by India and South Korea which will have the greatest relative annual expansion across the study period, after having overtaken US as the largest national market for paperboard packaging, of course due to the rise of online retail. E-commerce has, indeed, a strong need for this format for its business, which is increasing as always more consumers prefer digital shopping over physical retail experiences. This provides several key aspects of board packaging, as a 30–40% of online purchases that are returned, meaning that their packaging must be easily opened and resealed.
In the developed markets of Western Europe and North America, canned foods will suffer from competition from lighter weight, consumer friendly flexible and liquid paperboard materials: this is partly due to health consciousness consumers in developed regions demonstrating a preference for fresh, rather than canned, fruit and vegetables.
Thus, once again, is Asia and above all China, which will dominate this specific market for the next 5 years to come, where aerosol cans have seen an overall increase in demand as personal care, cosmetics, household and automotive care industries grow steadily. There will be scope for innovation too, looking to repeat the success of the likes of Unilever that has cut its aluminium use by 24 tonnes per year after moving its deodorants to a 50% smaller ‘compressed can’ format in 2013.
This is the bottom of the barrel in the packaging industry. Glass is, indeed, the slowest growing segment of the market 2015-2020. This reflects the longer-term transition of if from an essential commodity in packaging of beverages to a luxury material preferred to create a premium feel and sophisticated impression. As a matter of fact, many wine and champagne houses are now looking to pioneer isothermal packaging that keeps the product cold for around two hours after being removed from refrigeration.
Brewers meanwhile will continue to shift from traditional labels to premium-finish bottles using pressure-sensitive labels (PSL) to achieve a ‘no label’ look. At the same time they will investigate frosted glass, tactile effects and unique shapes to project a quality perception.
Our analysis shows that, according to the numbers and the analysis of experts, this is the right moment to invest in the packaging industry.
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