There was a slowdown in the European converted flexible packaging market's value growth last year, according to PCI's latest annual report on the €12.1 billion sector. Weaker demand across a number of national markets and lower raw material inflationary pressures were the two main factors blamed. Last year annual value growth in flexible packaging slowed to 2.1%, down from more than 5% in 2011.
Weaker demand from flexible packaging buyers as they responded to static sales of packaged food by reducing stock levels was one contributory factor, says the report. Another was that last year the industry was able to avoid a repeat of the inflationary pressures experienced in 2011, when the cost of plastics films, foils and papers, inks and adhesives rose significantly and converters had to pass these increases on to customers.
A similar modest increase is expected to emerge for 2013. Report author Paul Gaster notes, "While value growth has slowed, European consumption of flexible packaging in volume terms approached 2% in 2012, confirming that flexible packaging continues to perform better than many other industries in the current economic climate."
Consolidation continues to be another important factor changing the structure of the industry, with Mondi's acquisition of Nordenia International and the enlargement of Schur Flexible through a series of medium sized acquisitions, being significant developments last year. Private equity firms again played a prominent role in flexible packaging, notably Sun Capital, which made a series of acquisitions in Europe and North America to form Exopack Holdings - now one of the top 10 players in Europe. Gaster notes that, "20% of the flexible packaging industry's sales in Europe are currently generated by private equity portfolio companies".
