Pouches boom drives flexibles
The market for flexible plastics packaging is buoyant. Driven by a number of high performance factors such as good barrier protective qualities and the ability to enhance a brand, this sector of the packaging industry has a lot to offer.
It is a vast sector – covering snack food, confectionery, baked goods, dried and dehydrated food markets amongst others and in many different formats, ranging from films to pouches. PCI Films Consulting values the UK converted flexible packaging market at around €1.5bn in 2013, accounting for around 12% of the total European market of €12.3bn.
So what’s driving the success of flexible plastics packaging? One of the most significant factors is lightweighting and the switch from the traditional heavier types of packaging. According to Smithers Pira the bottled water sector is an example of a market in which materials have become lighter over time, but manufacturers have now reached the stage where PET bottles cannot be made much lighter. It states that the next step in this process could replace bottles with lightweight, flexible pouches.
A key issue regarding sustainability for 2015 will be the push for more widespread recycling systems for flexible packaging containing aluminium – often found in coffee refill pouches and pet food sachets.
According to LRS Consultancy (LRS) and based on figures from MarketsandMarkets published last year, the sector is substantial, with 160,000 tonnes of flexible laminate packaging containing aluminium entering the UK marketplace each year.
But this brings its own problems as aluminium and other recyclable plastics are difficult to separate and recycle.
Nestlé UK & Ireland, in partnership with Enval, SITA UK, LRS, Coca-Cola Enterprises and Tesco UK recently received funding from the Department for Environment, Food and Rural Affairs (DEFRA) to research and trial viable options for collecting flexible packaging materials containing aluminium.
LRS says the initial scoping study will explore ways to increase the amount of flexible laminate packaging that is collected and recycled in England and assess the feasibility of a range of collection and approaches for households and commercial premises within different regions of the country.
Depending on the results of the scoping study, the consortium may go on to implement trials to test collection solutions for flexible packaging and provide an insight as to how consumer behaviour and attitudes influence collection. The planned outcomes of the research would enable SITA, Enval and other industry stakeholders to evaluate the potential to include flexible packaging in mainstream recycling collections.
Debbie Hitchen, director of LRS, says that the study is particularly important because flexible plastic packaging of this type will become more prevalent in the future, but the wider picture is an increasing commitment to sustainability from brand owners and retailers.
Hitchen explains: “Many retailers have a clear commitment to corporate social responsibility. We are hoping that through the power of communication and by using hero brands such as having Nestlé behind us we are leading the way and helping consumers. It also fits in with the circular economy ethos of keeping the resources moving.”
The fast moving consumer goods (FMCG) sector is a driving force behind the growth of flexible plastics packaging. According to Euromonitor’s international packaging analyst James Maddock, with its expected growth rate of 0.7 per cent over 2015, flexible plastics will mirror the performance of packaging overall. “Flexible plastic will account for around 30% of all the packs added in the UK over the year helped by the fact that it is the most used packaging over all of FMCG products in the UK covering food, beverage, pet care, beauty and home care sectors.”
This increase in growth, according to Maddock is partly fuelled by the UK’s love of crisps, with sweet and savoury snacks expected to see the biggest volume growth in 2015. According to Euromonitor statistics, snack bars will be the next best performing product growing at a rate of 6% in 2015. Maddock explains: “Snack bars are benefitting from the increasingly frantic lives UK consumers are leading with breakfast on the go and quick bursts of nutrition proving popular.”
Pack functionality also plays a big part in the growth. A new survey by Canadean shows that one in five (22%) consumers consider tinned food difficult to open. According to the company, with British consumers spending more than £8bn on the most convenient food products, manufacturers will start to opt for pouches for vegetables, soups, meat and fish.
Although we are living in a society with an ageing population, the survey surprisingly showed that young adults are the most frustrated with 28% of 25- to 34-year-olds finding tinned food difficult to open, compared to 16% of over-55s.
Ronan Stafford, senior analyst at Canadean said: “While there’s a minimal amount of time saved between opening a food can, and opening a bag or a pouch, young consumers simply don’t want the hassle of finding a tin opener or struggling with a ring pull.”
Canadean also identified that ambient fish is one category where demand for easy-to-open packaging will move towards pouch-style packs. Demand for pouches in this market will grow from 8.7m packs in 2013 to 15.1m packs by 2018. Stafford adds: “While pouches’ market share will still be niche compared to the share held by food cans, their rapid growth shows how offering a more convenient pack format can revitalise sales among younger consumer groups. Brands such as Heinz and John West have led the way in developing new pack formats for tinned food; others will quickly follow.”
Next year could also herald major flexible merger and acquisition (M&A) packaging deals – to a great extent driven by interest in packaging companies from private equity investors. This is due both to the availability of debt and the fact that packaging in general has performed well throught the recession, says Nicholas Mockett, head of packaging M&A at Moorgate Capital.
But trade buyers are also making moves to consolidate the sector by absorbing competitors, he says. “This is partly driven by the size of their customers such as big retailers and FMCG manufacturers and the size of their suppliers, such as the major petro-chemicals companies. The flexible packaging industry needs to consolidate to improve its bargaining power.”
According to Mockett, add this on to the high growth rates in flexible packaging and the long-term positive fundamentals – such as the growing population and the middle class demanding more food, more protein and more convenience – and you can see the attractions of flexible packaging M&A to strategic and financial investors.
Barry Pamplin, technology director at packaging consultancy the PackHub, says flexible plastics with barrier properties against moisture and aroma will continue to be a huge selling point with brands. He cites flexible packaging with antimicrobial properties for chicken packaging and easy open and peel systems that add value.
The nature of the production environment for flexible plastics is also changing. Although still predominately flexo-led, the future use of digital printing will allow greater personalisation while giving shorter-run capability so often needed from brand owners and retailers for special promotions and seasonal offers. Pamplin adds: “Short runs are the nature of the beast now. Digital will shape what brands can offer, although it is still fairly restricted.”
Experts in confectionery packaging have told Packaging News that increasing digital printing with flexibles will give brands instant start up on certain product lines and allow them to also have the flexibility of lower stock inventories.
Functionality, meanwhile, remains top of the agenda with leading brands. Alison Ingle, group packaging manager, Nestlé UK & Ireland, says: “There is always going to be a need for rigid-type packaging but there is a place for aluminium laminates in our business.
“We are very interested in functionality and we are always working on openability issues but there are definitely benefits for this type of packaging format if the right technology is added to the pack – especially cuts in the side of the packs and easy to open systems.”
Flexible plastics packaging is also about to go through a design evolution, according to packaging design company PI Global, with a more creative approach to the structural element of flexible plastics on the horizon.
Structural production director Eric Connolly says the company has noticed a number of trends in this sector that are happening now and will be ongoing over 2015. “We have noticed the change in direction with some of our clients. Strategically more and more companies have been moving the flexible packaging for environmental and cost reasons – this has been happening over a time period of five years or so.”
He adds: “The converting industry has done a great job at offering different print finishes and from a graphics view flexible packs are excellent.”
However, he feels that currently there is a ‘sameness’ on the skyline on-shelf – all the packs structurally look the same with graphics being the only form of differentiation.
“Some of our clients are looking to introduce brand-relevant shapes to the packaging. We are seeing an increasing push for shaped flexible packaging, which builds on structural brand equities whilst maintaining material conversion efficiencies. In a way it is going back to using the best of rigid packaging performance but in a flexible format.”