Responding to changes in market demand20 March 2012
Often seen only as basic items of packaging, sacks and bags exist in a market that is diverse in product, global in production and consumption, increasingly sophisticated, and largely defined by the choice of natural or man-made substrates. To get news of what is happening on the front line, Nick Coombes spoke with two leading suppliers to the market
Packaging in today’s fast-moving and dynamic consumer markets has long since moved on from its sole function as a protective device for transporting goods. Today, it’s seen as a vital element in the sales and marketing armoury of all brand owners, and suppliers to this diverse market have to adapt and respond to service their customers’ latest requirements. Like most industrial markets, it is largely governed by the ‘faster, cheaper, better’ mantra that underlines commerce today. This places pressure to deliver new levels of efficiencyn throughout the supply chain from material supplier, whether natural or man-made, to the packaging lines.
The market trends are familiar to anyone involved in the production of packaging: shorter runs; improved print quality; faster turnarounds; lower costs; and reduced waste levels being the major themes, and within them, a variety of sub plots that keep machinery manufacturers’ R&D departments and suppliers’ sales departments in a state of high readiness.
Segezha Packaging is one of the world’s largest manufacturers of paper sacks, with group annual output in excess of 1.3 billion sacks, manufactured in 10 converting plants located across Europe, Russia, and Turkey. Its largest customers are still the cement and building industries, but sales growth is coming from the food, animal feed, chemicals, and minerals markets.
Traditional valve sacks represent the largest type by volume, but the company also manufactures open mouth sacks, pinch sacks, refuse sacks, and consumer sacks – all of which are paper based. With a widespread production capability, and sales offices in 24 countries, Segezha is well placed to assess customer trends in its major markets of Europe, Russia, CIS, Turkey, the Middle East, and Africa.
Jim Krawczyk, director of business development & strategy at Segezha, comments: “We are noticing a strong move in the market towards consolidation from small local players into large regional and global groups.” Highlighting the cement industry as a case in point, he says that the market is now dominated by a relatively small number of global brands.
“We see this trend continuing and expanding into more sectors and industries,” he adds. Another trend the company notices is the move ‘eastwards’. With the markets of Western Europe becoming mature, growth is seen to be coming mainly from the developing markets of Central Europe, Russia, CIS, and Asia.
In addition to the geographical changes and customer consolidation, there is a marked progression towards lighter and smaller sacks, lighter grammages, and fewer plies. “We expect to see the emerging markets follow the trends of their mature counterparts in moving from 50kg to 35kg and eventually 25kg and even 20kg sacks in the future,” says Krawczyk. Other notable trends include the increasing importance of print on the sacks, both in quality and number of colours, as brand owners seek to differentiate their products from competitors and improve market share. A major and growing problem in certain markets, according to Krawczyk, is counterfeiting, so brand owners continue to work hard with their suppliers to build in increasingly sophisticated anti-counterfeit measures to protect product and consumer alike.
Where Segezha scores heavily in these areas is its ability to respond as a fully integrated supplier. The Segezha Packaging Group is a majority-owned subsidiary of CJSC Investlesprom, a Russian holding company with the country’s largest vertically integrated forestry, pulp, and paper industry structure.
“We are able to work directly with the Segezha Paper Mill to develop the products required by the changes in market demand,” explains Krawczyk. The group financial strength also provides the means to invest in the latest printing, converting and packaging equipment that is essential to keep pace with today’s speed and quality demands. “We also aggressively relocate and add capacity to optimise our production capability, and meet market growth,” he adds.
With its 100% use of only natural fibres, Segezha is proud of its ‘green credentials’, from the paper substrate to the natural starch glue and water-based inks. Although some products require a thin lining layer of PE as a moisture barrier, the company is already working with its customers on a biodegradable alternative for this purpose.
The market for bags and sacks produced from man-made substrates is more fragmented. A shortlist of bag types might include: carrier bags; anti-static and conductive bags; bubble bags; clear polyethylene bags; degradable and biodegradable bags; high tensile bags; mailing and courier bags; mini grip and slider bags; presentation and retail bags; and waste bags. And that list is far from comprehensive, and sub-divides into other categories, so for the purpose of this feature, I will confine myself to the market for sacks.
To find out what is happening in this market, I spoke with David Khanna, commercial director (construction sector) at bpi.visqueen, a UK-based company that has been involved in industrial packaging for 30 years, and is now one of Europe’s leading suppliers of polyethylene sacks, which it supplies to the animal feed, horticulture, building supplies, and aggregates sectors.
According to Khanna, the major trend that suppliers have to cope with is the move by customers towards automated packaging lines where sacks are formed, filled and sealed in one single process. “This places greater emphasis on high strength, tear-resistant co-extruded and mono FFS (form fill seal) films,” he explains. To cater for this, the company has recently invested £12 million in advanced automated production equipment at its facility at Ardeer in Scotland.
The new technology detects any issues with seal integrity and film consistency of the type that would likely cause downstream problems and machine stoppages. “If you are supplying sacks on a reel, inconsistent film thickness can cause expensive downtime, and likewise poor sealing integrity will also result in lower productivity,” he explains. By improving the production capability at Ardeer, the company has developed packaging solutions in the tubular film and sheet film on-the-reel formats, which allow customers to run higher speed packaging lines with less manual input.
Productivity goes up, and costs come down – simple!
It is this ongoing drive to reduce costs and boost productivity that has led bpi.visqueen to pioneer the concept of downgauging. Using advanced polymers and the latest extrusion techniques has allowed the company to offer its customers the performance of a heavier gauge from a lighter material – typically, 110 micron instead of 150 micron. “With most industrial product manufacturers facing rising material costs, it’s arguably more important than ever for packaging to play a part in reducing outgoings, and help to preserve tight margins,” explains Khanna. This is where downgauging comes into its own, because it allows users to create packaging that is 15-20% lighter, and also significantly cheaper. Its thinner profile means that more product can be wound onto a reel. This is important because it allows more sacks to be produced between time-costly reel changes, and maximises effective use of machine and operator time.
Compared with natural fibre, man-made substrates will always have a bigger battle to fight on the environmental front, but it is one that bpi.visqueen tackles head-on. For a start, its programme of downgauging means that less film is used by volume, with a consequent reduction in post-use disposal, while lighter weights also mean lower delivery costs. In addition, part of the recent investment at the Ardeer facility has been to allow 100% recycling of the packaging scrap in-house.
“It’s not just downgauging that sets us apart. Our ongoing investment policy provides us with the flexibility to manufacture bespoke products, and meet specific performance characteristics such as polymer blend and film slip differential,” says Khanna, who is only too aware that industrial packaging is now a key part of brand awareness. In a consumer-driven market, brand owners need to take every opportunity to maximise impact, and bpi.visqueen’s recent addition of an 8-colour flexo press is, in Khanna’s words “a benefit to our customers, because it will help their products stand out more at the point of purchase by having an enhanced visual impact.”
What is clear is that an industrial approach is the only route to success in this sector of the packaging market. For those willing to and capable of maintaining an ongoing investment programme, the rewards are there to be enjoyed, and on a global scale. But, as with other sectors of the packaging market, bag and sack makers face the squeeze of rising costs in raw materials from one end, and the increasing demands and price pressure from customers at the other.
Only the fittest will survive!
Extrusion for plastics sack production at bpi.visqueen Ardeer bpi.visqueen Sack delivery at Segezha Segezha Converting plastics sacks at bpi.visqueen Ardeer Ardeer Segezha produces more than 1.3 billion paper sacks annually Segezha