Since 2005, the Central and South American flexible packaging market has grown by an average of 5.3 percent per annum to US$4,300 million, driven by growing economies and a burgeoning middle class, driving improvements in supply chain infrastructure and food processing. Brazil alone accounts for around 48 percent of regional flexible packaging demand. If you add in Colombia and Argentina, that figure goes up to two-thirds (67 percent). The Brazilian food industry is described as ‘modern’ by international standards, for example, and 40 percent of food supplied to Brazil’s 200 million population now comes through the supermarket channel. That demand will only increase in the run up to global high-profile events such as the FIFA 2014 World Cup and 2016 Olympic Games.
Most of the flexible packaging demand is satisfied by internal producers, with only 1 percent imported and 2 percent exported outside the Region though some raw materials, notably PET film, still come in from China and India. There is substantial BOPP and PE film production, though only one Regional PET film producer. As the flexible packaging market has continued to develop, demand for higher barrier, higher specification packaging has increased and local converters have made investments to substitute the volumes previously imported. PCI consultant Paul Gaster says, “The Central and South American Flexible Packaging Market is now well served by local production so any multinational converter still planning to grow its business in the Region would do well to consider forging alliances with or acquiring local converters.”
American group Bemis, through its subsidiary Itap Bemis Ltda, is the largest flexible packaging converter present in the Region. Strong previously, it was able to take a more dominant position with the purchase of Alcan Packaging’s Brazilian flexible packaging interests, and now the company has sales of US$280 million in Brazil alone.
PCI Film Consulting predicts continuing growth in flexible packaging output by regional converters at an average of 4.6 percent per annum, to reach US$5,347 million by 2015. The spread of supermarket retailing, growing populations and increasing numbers of single person households, working women and young consumers will contribute towards flexible packaging growth. There are prospects for further consolidation among producers, and environmental considerations will tend to benefit flexible packaging as pressure is applied to manufacturers to reduce packaging volumes and post-packaging waste.
The new report, The Central and South American Flexible Packaging Market to 2015, is essential reading for any investor or flexible packaging company considering supplying to, investing in or expanding into this vibrant and dynamic area of the world. The report is available from PCI Films Consulting and more information is at www.pcifilms.com