A market to watch

Vacuum-coated products offer three key properties – the same functional barrier as alternative materials, excellent aesthetics for retail shelf ‘stand out’ and sound environmental credentials.

Around the globe, most of the volumes in vacuum-coated products are in films, the functional benefits of which have given them the lead in flexible packaging applications. Metallised PP dominates, with snack food packaging and wraparound labels for soft drinks the main markets for metallised BOPP.

Vacuum-coated PET films offer the broadest application opportunities – from high-barrier metallised and oxide-coated flexible packaging (for powdered foods, liquids, and snacks), to components in industrial and medical products.

Metallised label papers – stalwarts of the North American and European beer markets – have suffered reducing demand as a result of a shift to clear, film-based pressure-sensitive labels, and a downgrade to ‘white paper’ labels on commodity beers. Metallised paper packaging is also reducing overall as demand in the tobacco sector in western countries declines.

Transfer-metallised board, however, remains a successful niche product. Metallised paper/board laminates generally offer better environmental credentials than metallised film/board or aluminium foil/board laminates – a feature on which there are opportunities to capitalise.

The Asia Pacific region commands the greatest share of the market, 49%, with Europe in second place at 25%, and North America third with 18%. Europe and North America experienced the greatest demand downturn during the financial crisis, while demand in developing regions was buffered by the relative strength of local economic growth – most notably in China, India and Brazil. However, in 2009 global demand for vacuum-coated products still grew by 7% over the prior year.

While in Europe metallised paper volumes are declining, barrier packaging for foods is the key market for vacuum-coated products. PP films are preferred – although PET films are showing stronger growth. Competition from imported materials from lower-cost production areas is driving European producers to innovate by developing higher levels of functionality.

North American metallised paper volumes are similarly declining. BOPP materials dominate, particularly for flexible packaging, with a focus on extrusion laminations in the snack packaging sector.

The world’s largest regional market, Asia Pacific, is led by China and India – both for domestic regional production, and for exports to Europe and North America. Key end-use market segments are foods, beverage, tobacco, and personal care products. China and India are major producers and exporters of vacuummetallised films, and India has the highest concentration of metallised PET usage of any market. In China, metallised paper demand for labels and cigarette packaging remains strong. The mature Japanese market is in decline.

South America is advancing quickly in vacuum-coated materials production and use – albeit from a low base. Demand for metallised papers is increasing annually at a rate of 20% in the Brazilian market alone. Indeed, South American demand for metallised label papers outstrips local production capacity, and is supplemented by imports from North America and Europe. Metallised OPP dominates the market – with around 84% of the total – and is growing at 3-5% per annum. Indigenous manufacturers have made significant investments in film production and metallising, and are major exporters within the region and beyond – with North America a focus. Metallised OPP is widely used in flexible packaging and in wraparound labels for beverages. Metallised PET has shown slow growth, but we believe it has a strong future, particularly in barrier laminates for flexible packaging.

The proven functional benefits for brand owners and converters will ensure that vacuum-coated products, particularly films, will continue to thrive in the global packaging market, both for established uses and in innovative applications. It is certainly a lively marketplace and, as we have seen, it is becoming increasingly global.

In the medium term, market growth will continue to be driven by demand for vacuum-coated films in India and China (with a modest contribution from South America), with flexible packaging and labels involving metallised OPP films and papers the main end uses.

There is still plenty of opportunity to innovate in this versatile technology, both functionally and aesthetically. Transparent oxide barrier coating is a key area; and the drive to sustainability will encourage the use of biopolymers such as PLA for barrier coating on flexible packaging.

The vacuum-coated and metallised products market is unquestionably one to watch for the future, and a real opportunity for business development in the converting industry.

Views expressed on this page are those of the author and may not be shared by this publication.