State of the Industry-Flexible Packaging
April 2003
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FLEXIBLE PACKAGING CONTINUES to be an area for growth opportunities in the package printing industry, even in an economic recovery that is spotty at best. Several market drivers for this growth potential were identified in a study done in 2002 by The Freedonia Group titled, "World Converted Flexible Packaging." These drivers include: the expansion of end-use markets such as snack foods, pet and prepared foods, and pharmaceuticals; the continuing trend for conversion of rigid packaging to new flexible packaging alternatives; the need to reduce packaging costs and volume; and the increased use of stand-up pouches and liquid flexible packaging.
The Flexible Packaging Association's (FPA) "2002 State of the Industry Report" identified the flexible packaging market as a $20 billion industry. This amounts to 17% of a $114 billion total packaging market and makes it the second largest category. While the U.S. market for converted flexible packaging is by far the largest, The Freedonia Group predicts that China will replace Japan as the second largest market by 2005.
Economic pressures
The National Association of Printing Leadership's "NAPL 2002 - 2003 State of the Industry Report," published annually by NAPL's Printing Economics Research Center (PERC), provides a broad analysis of the printing industry, including a wide spectrum of commercial and package printing. Chapter 1 starts off: "There are a lot of ways to describe our industry's business environment. 'Erratic' is the kindest."
Of the markets in the NAPL survey, package printers were the most positive in terms of what they saw for growth potential. Nearly 53 percent rated packaging's growth potential as being above average, double the 25 percent that saw it as below average. According to those surveyed, their confidence comes from the fact "that they are prepared for a market that increasingly requires a more complex job, produced faster, and on shorter runs."
Bill Klein, executive director of the Packaging and Label Gravure Association (PLGA), saw 2002 as being down more in dollars than in unit volume. He believes this is partly due to the impact from reverse auction bidding, which is making its impact felt throughout all segments of package printing.
Even with 2002 being a down year, Klein said that about one third of the converters he contacts had a good year, with a good portion of these posting record numbers. "These successful converters were generally more aggressive and creative," says Klein.
For 2003, Klein sees a gradual upturn with overall unit volume growing 3 to 5 percent. "A lot of converters and suppliers are noticing improved sales; very few are not seeing some evidence of an upturn," he reports.
The Flexible Packaging Association's (FPA) "2002 State of the Industry Report" identified the flexible packaging market as a $20 billion industry. This amounts to 17% of a $114 billion total packaging market and makes it the second largest category. While the U.S. market for converted flexible packaging is by far the largest, The Freedonia Group predicts that China will replace Japan as the second largest market by 2005.
Economic pressures
The National Association of Printing Leadership's "NAPL 2002 - 2003 State of the Industry Report," published annually by NAPL's Printing Economics Research Center (PERC), provides a broad analysis of the printing industry, including a wide spectrum of commercial and package printing. Chapter 1 starts off: "There are a lot of ways to describe our industry's business environment. 'Erratic' is the kindest."
Of the markets in the NAPL survey, package printers were the most positive in terms of what they saw for growth potential. Nearly 53 percent rated packaging's growth potential as being above average, double the 25 percent that saw it as below average. According to those surveyed, their confidence comes from the fact "that they are prepared for a market that increasingly requires a more complex job, produced faster, and on shorter runs."
Bill Klein, executive director of the Packaging and Label Gravure Association (PLGA), saw 2002 as being down more in dollars than in unit volume. He believes this is partly due to the impact from reverse auction bidding, which is making its impact felt throughout all segments of package printing.
Even with 2002 being a down year, Klein said that about one third of the converters he contacts had a good year, with a good portion of these posting record numbers. "These successful converters were generally more aggressive and creative," says Klein.
For 2003, Klein sees a gradual upturn with overall unit volume growing 3 to 5 percent. "A lot of converters and suppliers are noticing improved sales; very few are not seeing some evidence of an upturn," he reports.
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