2018: ‘A watershed year for flexible packaging M&A activity’

Robert Gilfillan, research analyst at Wood Mackenzie Chemicals, said: ‘As the saying goes, it's quality and not quantity that matters. 2018 won’t stand out for the number of M&A deals but rather the significance of transactions that did take place.

‘Amcor's $6.8 billion USD all-stock acquisition of the US-based converter Bemis is a deal that will shape the industry for many years to come. In addition, both Europe and North America have seen acquisitions of regional significance in the purchases made by Schur Flexibles and Transcontinental, respectively.’

Gilfillan continued: ‘Amcor's transformational acquisition of the US-based Bemis will create a global leader in consumer packaging, with by far the broadest product offering and global footprint, unmatched by any other supplier. Wood Mackenzie Chemicals estimates the combined group will account for approximately 10 percent of the global converted flexible packaging market. Canada's Transcontinental made its biggest move yet in extending its presence in the packaging industry with the acquisition of Coveris' Americas business, propelling the company into the top ten players in the North American market.’

Other economic and geopolitical developments altered the landscape in 2018, such as those in China. According to research, China now accounts for approximately 15 percent of the $90 billion USD global flexible packaging market. ‘How will the reported slowdown in the Chinese economy, coupled with the uncertainty surrounding US-China trade tariffs, impact the world's second largest flexible packaging market?’ asked Gilfillan. ‘Will the country's relatively low consumption per capita offer a potential opportunity for growth? And with China's plastic waste ban creating a domino effect in Southeast Asia, how are Western nations responding to sustainability pressures without an obvious export market?

‘These are all important questions that will shape the flexible packaging market throughout 2019.’

Additionally, the recent focus on sustainability, and the inherent difficulties in recycling flexible packaging, has brought the industry and its products into the glare of the mainstream global media.

Developments last year included: Bemis launching Encore, an ultra-clear recyclable film product claimed to provide the advantages of a standard stand-up pouch with improved recyclability; growth reported in the supply chain for renewable and compostable films; Coveris opening a sustainable packaging development center; and the launch of global initiatives the New Plastics Economy GlobaL Commitment and AEPW.

Sustainability remains a global issue, necessitating coordinated global action, stated Wood Mackenzie Chemicals. How are individual national legislatures and transnational bodies responding to calls for new laws and regulations on flexible packaging?

Gilfillan said: ‘Europe is currently leading the way in its approach to handling plastic packaging waste. A comprehensive new law that has recently come into effect in Germany, as well as new taxes in France and the UK, are a few examples of how member states are falling in line with the European Union’s directive on hitting more ambitious packaging waste recyclability targets. As a high consumption per capita region, Europe is setting a trend for other regions to follow.’