Resilient flexible packaging market to underpin volume growth in North America

The North American converted flexible packaging market is vast, accounting for nearly 30 percent of global consumption and an annual spend of US$18.3 billion in 2010, according to a new report from PCI Films Consulting.
 
PCI Films, a supplier of market intelligence and consultancy services to the global flexible packaging industry, said just under 90 percent of sales in the countries that are signatories to the North American Free Trade Agreement (NAFTA) are concentrated in the US, with Canada and Mexico accounting for six percent and five percent respectively.
 
Its North American Flexible Packaging Market to 2015 reports that the value of the North American flexible packaging market grew by over four percent per annum between 2005 and 2008 but with the onset of the global financial crisis fell back by six to seven percent in 2009. However, 2010 saw a strong recovery in the value of flexible packaging sales as the supply chain restocked and raw material prices were passed on through the supply chain. While the market has been volatile in value terms over the past few years, flexible packaging demand in area/unit volume has shown continuing growth. Nevertheless, converter margins have been squeezed, which has resulted in a significant amount of rationalization and plant closures.
 
For the future, converted flexible packaging growth in North America is forecast to average around 3.5 percent per annum reaching nearly US$22 billion by 2015, with Mexico set to grow by five percent per annum. Per capita consumption of flexible packaging in Mexico is only around a fifth of the US figure, underlining its emerging market status. NAFTA also continues to provide extra impetus behind growth in Mexico, with many US packaged food companies manufacturing in Mexico to take advantage of lower labor rates.
 
PCI Films consultant Paul Gaster said: ‘The resilience of flexible packaging demand is to a great extent underpinned by the recession-resistant nature of its end use markets, especially food, pharmaceuticals and pet food, which between them account for approaching 85 percent of total North American flexible packaging demand. Moreover, strong population growth in the region of nearly one percent per annum has helped to maintain volume growth and will continue to do so over the coming years.’