Paul Gaster, Wood Mackenzie Chemicals principal analyst, says, “The European market for converted flexible packaging showed modest growth in 2018, increasing by just over 2% to reach €14.5 billion last year. Sales in the European region, comprising 28 countries across Western and Eastern Europe - including Russia and Turkey - accounted for 16% of total global sales in 2018.
“There are still a significant number of smaller markets, largely in Eastern Europe, showing dynamism in the region. The European region as a whole exports nearly 10% of total production to non-European destinations.
German and Polish markets struggling
“Growth in Germany, Europe’s largest market for flexible packaging, slowed from 2% to 1.6% in 2018. Slight declines in the confectionary and struggling dairy sector were largely responsible for this deceleration in growth.
“Poland, for many years one of the strongest markets in Europe, has seen its growth rate drop from over 5% to 3.5% - although this is still above the regional average.”
Outlook for Eastern Europe is positive
2018 saw higher growth in Russia, as the country's flexible packaging industry looks to meet demand with domestic production rather than imports.
Recovery in the Italian and Ukrainian markets, growing at 3% and 4% respectively, illustrates a resurgence in both countries after several years of economic downturn.
Shrinking consumption of sugar and chocolate confectionery, cigarettes and tobacco in Western Europe was offset by continued growth in Eastern Europe for overall marginal increases in 2018.
Sustainability still a key issue
“While some major end markets - such as confectionery and dairy - have been struggling, value growth in flexible packaging has also been constrained by downward price pressures across the supply chain," Gaster adds. "This is primarily due to challenging commitments aimed at phasing out non-recyclable packaging materials in favor of sustainable, but more expensive, alternatives by 2025.
“Amcor's recent acquisition of Bemis will alter leading sales on a global level. However, Bemis' relatively small European footprint, as well as the recent divestment of its European healthcare packaging plants, will have little impact on Europe's top converter scene. Schur Flexibles has climbed regional rankings, however, significantly strengthening its position in Europe with the acquisition of France's Uni Packaging and a number of Clondalkin businesses."