Here are some Converting Curmudgeon bullet points:
“2016 Flexible Packaging Transition Advantages Study” by Brian Hall, principal with Gibbs-rbb:
- Methodology included 201 respondents to Packaging World survey of brand owners, and 2,093 respondents to online Harris Poll survey.
- Brand owners value flexible packaging for enhancing business operations performance and consumer appeal; more use of flex packs in the past five years lowered production costs, increased supply chain efficiencies, sales and competitive positioning; expect growth of flex packs to outpace that or rigid containers.
- 83% of brand owners are currently using flexible packaging; 26% either switched to a higher mix of flexibles or entirely to flex packs in the last five years; 59% have not changed their packaging formats.
- Challenges to adopting flexibles include durability, shelf appeal, perceptions of value from consumers, costs of changing machinery, and stackability.
- Consumer conclusions: 71% prefer flexibles over non-flexible packaging; 46% are willing to pay more (up to 10.3% more) for food stored in flexibles; 79% think there are benefits to having food stored in flexible packaging (ability to reseal – 47%, easy to store – 44%, easy to open – 35%).
- 60% of consumers have seen innovative packaging changes in the past five years; 55% see a need for more innovation in the next five years.
“Flexible Packaging Market Growth Opportunities” by Aric Saulka, dir. for North America,
Central America & the Caribbean, Euromonitor International:
- Of the seven packaging system types Euromonitor tracks, it breaks down flexible packaging by aluminum foil, blister & strip packs, flexible aluminum/plastic, flexible paper, standup pouches, and flexible paper/plastic.
- Retail flex packs number about 2 trillion units, with 1.12 trillion for food products; the total is growing about 2% CAGR to 2019.
- Flexibles unit growth is largely fueled by emerging markets in Asia (China, India, Indonesia), although it’s declining in Australia, Spain, Germany, Greece and Ukraine.
- Hottest retail flex-pack growth is in Middle East/Africa at 5.33% CAGR to 2019, followed by Asia-Pacific at 4% and Latin America at 2.5%.
- Single-serve and family sizes are growing, squeezing out the middle (down 4% by 2018).
- Value-pack sizes also appeal to consumers in mature food markets; sales of packs 2-5 kg each are growing 10.5% CAGR to 2019.
- Value also matters in home- and personal-care products in standup pouches; flexible plastics make up 85% of global market for these items; key countries include Thailand, Japan, Argentina, Singapore and South Korea.
- Lessons to learn: Tap into vast potential for volume growth in Asia; choose small flexible pack sizes to reach price-sensitive consumers; downsize packs in mature markets to convey greater portability and/or portion control; reflect value with larger flexible packs for commodities; make foods easier to use, dispense, reseal with a pouch.
“M&As and the Changing Landscape of Flexible Packaging” by Rick Weil, MD of Mesirow Financial:
- Global M&A total transaction value shows a 20% decrease in value for 2016 YOY compared to 2015;
but roughly seven-year cycle of M&A value growth continues.
- Global plastics & packaging M&A buyers last year were private equity (34%), private acquirer (24%), public acquirer (37%), and PE to PE (5%).
- Comparison of key US private-equity metrics in 2006 vs. 2015: 25% more deals; 24.4% higher value; 39.7% of PE funds hitting their targets.
- The top five US flex-pack converters in 2016 are Bemis, Sealed Air, Sigma Plastics, Berry Plastics
“Materials Recovery for the Future” by Susan Graff, principal/vp of RRS:
- Flexible packaging is currently present in residential recycling as a contaminant; acts like paper in a material recovery facility (MRF); positive sorting is expected to increase the quality of MRF paper products while reducing costs of further processing; creating new MRF flexible plastic bales.
- We don’t want landfills to be excavated in 50 years and our flexible plastic bags, bearing our company’s name, show up as “permanent branded litter.”
- MRFs are the processing elements of the sustainable recovery value chain; four key questions: 1. Access – bagged or loose?; 2. How can it be affordably sorted at the MRF?; 3. How can increased value be created for the material?; 4. What are the viable end markets for the range of materials?
- 2015-16 research results: 88% of flexible plastic packaging flowed to the fiber lines; optical sorters extracted a relatively clean stream of flexibles from the fiber; 89% of flexible plastic packaging captured by three passes of optical sorting.
- 2016-17 research goals: Refine MRF sorting efficiency, evaluate reprocessing cost/feasibility, and develop product bale for end markets.