State of the Flexible Packaging Industry
Aggressive business management, technical innovation, and opportunities in sustainability are trademark strengths of the flexible packaging industry.March 2013 By Tom Polischuk
At the Flexible Packaging Association's (FPA) Annual Meeting in 2012, James Mize, VP, global sector—food packaging solutions for Sealed Air Corporation and 2012 FPA chairman, provided an overview of the association's annual state of the flexible packaging industry report. In his presentation, he listed several items as significant market opportunities:
- Overall economy slowly improving;
- Growth in emerging markets;
- Conversion from rigid to flexible packaging continuing;
- Sustainability advantages of flexible packaging;
- Ongoing industry innovation.
The economic environment in the U.S. is improving, albeit, just as described—slowly. The pre-election posturing in Washington that was highlighted (or low-lighted) by "bandaidsmanship" that avoided a number of economic calamities has evolved into the same thing (if you can evolve into the same thing)—now called post-election posturing. It makes for a very uncertain business environment, with a seemingly perpetual storm cloud hanging overhead. Despite this cloud of uncertainty the U.S. economy is making steady progress in the right direction, with GDP growth in 2012 estimated to be in the neighborhood of 2 percent.
Emerging markets will continue to present growth opportunities for years to come for the multi-national companies that can take advantage of them. The key growth driver in these markets comes from growth in spendable income from a growing number of people in these regions. However, risk and reward go hand-in-hand and investing to get a market position in emerging markets is not for the faint-of-heart or those with shallow pockets. Volatility and "bumps along the road" will be continuing issues in many of these regions.
A peek at annual results from several major companies in the flexible packaging market can provide a good snapshot of the overall 2012 business environment.
Sonoco reported a year-over-year sales increase of 6 percent (2011 to 2012). However, Chairman and CEO Harris E. DeLoach Jr. was disappointed with the overall performance. "Our performance in 2012 was not what we expected when we began the year. We did not fully anticipate the negative impact that rising commodity costs would have on consumers' spending for packaged food, or the extent to which the European recession and slowing emerging market economies would reduce demand in our industrial-related businesses."