The flexible packaging market is rising to unprecedented heights – and 2016 looks to be another big year. To get an idea of what to expect over the course of the next year, we picked the brains of equipment manufacturers, suppliers and converters for our annual executive forecast.


Flexible Packaging: Briefly recap 2015 for your company. Did it live up to your original expectations? What do you expect for your company in 2016?

Dun: 2015 exceeded our original expectations, and we expect continued positive momentum moving into 2016. Looking back on 2015, we had many first-in-category product launches for standup pouches (i.e. Dukes Mayonnaise in a shaped spouted pouch, Mentos gum in a shaped, reclosable stand up pouch, White Lily Flour in a reclosable box pouch utilizing an Aplix closure, just to name just a few).  A successful idea session with a well-known brand held this past summer should yield a future commercial launch in a new category for ProAmpac.

Jozwiak: Improving packaging sustainability through innovation and collaboration across the value chain was at the forefront of Dow Packaging and Specialty Plastics’ 2015 strategy. In 2015, Dow continued to collaborate with customers to bring innovative packaging solutions to market. Through our depth of knowledge in both flexible and rigid packaging technologies, we aimed to help our converter partners succeed and to facilitate broader growth within the packaging industry. These new technologies addressed product needs like high performance, sustainability and processing efficiency. The success of Dow’s collaborations, driven by our dynamic innovation center Pack Studios, is evidenced by our new INNATE family of precision packaging resins and award-winning technologies. Our PacXpert Packaging Technology won a Silver Edison award and both PacXpert and our Recycle Ready Standup Pouch received R&D 100 awards.

In 2016, our innovation will deliver growth for both Dow and our customers, delivering on our innovations and collaborations from 2015, and launching new technologies in 2016 with our customers, positioning them to be successful. We will commercialize INNATE across multiple applications and expand the Recycle Ready technology. We will also continue to drive our PacXpert Packaging Technology by assisting customers to commercialize the technology, enabling further adoption of flexible packaging formats throughout the value chain.

Pavone, Blumsack: Overall business activity of Bobst’s Business Unit Web-Fed has been on the up by comparison to 2014 in North America, Mexico and Latin America, Mexico and Latin America, Eastern Europe, Africa, the Middle East and India. Volumes in Western Europe and South East Asia have remained stable, in line with 2014, while China has been at a low level of activity. More specifically in North America, we recorded major investments in technologically advanced gravure pressing and laminating lines.

2015 has seen the continuation of considerable investments by Bobst in new developments across all product lines, including digital printing. Novelties will be presented in 2016, which is poised to be a very busy year, marked by the two major exhibitions in our market sector - drupa and K.

Gotsick: 2015 was a good year for MacDermid. Business growth was healthy overall, although there was regional weakness due to slow or slowing growth in some regions, notably Europe and Asia. 2015 marked our first full year of operation of a new manufacturing line, and our manufacturing organization exceeded expectations with this new resource. We are even more confident about our ability to serve the industry’s future growth, and to create new products that will expand flexography in packaging applications.

We expect 2016 will see solid growth for MacDermid. The management, logistics and investment capabilities of our parent company, Platform Specialty Products, have given us a solid operations infrastructure base. The industry’s embrace of flat-top dots as a platemaking standard has put us in a technology leadership position with our LUX portfolio of flat-top dot solutions. And we are making investments in personnel and training that will allow us to understand and serve customer’s needs even better.

Cros: 2015 started slower than what we had anticipated, for various reasons, going from the unfavorable exchange rates overseas to higher oil prices early in the year. This pushed us to get closer to our distribution channels and become more assertive in promoting our products. The second half of the year was tremendous and we look forward to bringing this great momentum into 2016, which we think will be our best year ever.


FP: About every forecast for the flexible packaging industry is seemingly overwhelmingly positive. How do you assess the current market as it stands today? How do you think it will change – if at all – over the next year?

Cros: Our assessment of the market is positive and we expect the good trends to continue on in 2016. Resin prices are the No. 1 expense of most of our customers, and with the oil prices at a historic low and planned to remain at those levels for the foreseeable future, we believe (customers) will have the capital to spend on equipment and services.

Jozwiak: From a supply/demand perspective, 2016 is looking a lot like 2015. GDP is expected to grow from 2.6 percent in 2015 to 3 percent in 2016 driving further demand for PE, pressuring already low inventories and helping support already high operating rates. Demand for PE is increasing faster (1.3x) than global GDP without regard for low or high oil prices, and is the primary reason for the higher operating rates we’re seeing across the industry as well as volume growth. Integrated polyethylene and elastomer balances are tight today and the outlook indicates these balances will stay tight for at least the next several years. Longer term, we see fewer derivative capacity additions announced as compared to monomers and therefore tighter polymer balances – especially in North America.

Global market trends like population growth, a rising middle class and on-the-go lifestyles are driving demand for high-performance plastic packaging. Flexible and rigid plastic packaging are helping to improve product safety through tougher packaging, which helps withstand handling and abuse throughout the entire supply chain, and secure and hermetic seals, which safeguard the product from its environment as it moves through the supply chain. These properties extend food freshness while providing the convenience benefits consumers are seeking like easy storage, reclosability and microwaveability.

While we broadly agree with others in the industry on both demand and supply in the long-term, we view the speed and operating rates with which new plants in China, Iran and Latin America come online as taking longer than estimates provided by some industry analysts. We are projecting 4.2 million metric tons of new capacity for 2016 vs 7.6 MMT as projected by IHS – a 3.4 MMT delta. Dow has a different view on the timing and rate of impact of new capacity starting in 2016, driven by ramp-up rate; integration and infrastructure limitations; and construction schedules/forecasted startup timing.

Gotsick: The flexible packaging market seems strong, with regular increases in print capability and press speeds only making it a more competitive option for packaging buyers. We expect (and have already seen) continued consolidation in the flexible packaging industry, but that doesn’t really change our approach as a key supplier. If anything, we expect quality and productivity standards to rise even faster as these companies seek ways of differentiating themselves both to their customers and the financial backers that enable the consolidation. Our investments have been aimed at being prepared to serve these demands in advance of their appearance.

Pavone, Blumsack: The growth of flexible packaging is steady worldwide with the exception of Russia and the Middle East, benefitting from the shift from rigid packaging made of plastics glass and metal towards pouches and single serves, which offer the benefits of lower cost and high convenience for the users. The scale of growth follows the worldwide demographic trends, namely averaging 2 percent/year in North America and Western Europe and 5 percent in Asia, India and Africa.

Bobst’s focus continues to be on developing equipment adapted to the needs of the growing emerging economies, while also following the needs of customers in mature markets.

Dun: The market outlook is positive, and there are many opportunities across a broad array of markets and products. The trends that drive this positive outlook will not change. However, we think that we will see these trends expand to more markets and with larger customers. In 2016, flexible packaging will continue to benefit from consumer trends of convenience, busy on-the-go lifestyles, desire for premium products in smaller pack sizes and healthy snacking.


FP: Despite positivity, no industry is without its challenges. What are some of the biggest challenges this industry currently faces? How do you think those challenges will change in 2016?

Gotsick: The biggest challenges will come from macroeconomic factors. The slow growth in the European market will continue to make business conditions tough there. This region has some of the highest quality expectations in the world, but the fight for market share in a static economy means pitched battles, with only the strongest firms prospering. Despite slowed growth in China, flexography still has a value proposition that will permit increased print market share in this enormous and increasingly sophisticated market.

Pavone, Blumsack: One of the major challenges in our industry is the ability to offer efficient, sustainable and profitable equipment for increasingly shorter run production, as well as shortest time to market and strong reduction of waste, energy consumption and consumables. Also, the need of the hour relates to film manufacturing technology, which is constantly evolving in regards to the material thickness, multi-layered structure and the barrier effect. This obviously requires adaptation and flexibility on the part of printing and converting equipment, which must be able to handle the whole range of new materials.

Cros: The industry is consolidating and a lot of smaller players are being acquired by larger groups. Staying on the forefront of those organizations is key. Also, our customers are being asked to be more innovative with new products entering the markets. Being able to support them technically in those efforts is also very important.

Dun: I think the biggest challenge this industry faces is selling the value of flexible packaging versus the lowest price. The industry needs to better articulate the benefits of flexible packaging across the value chain of consumers, retailers, manufacturers and brand owners. The industry also does not invest sufficient resources in a holistic, total system approach to deliver a successful result with the customer in the shortest possible time. Acknowledging these challenges, ProAmpac’s Design and Sample Lab fills a gap for our customers with prototypes that are both suitable for marketing and for testing. Many brands look to their suppliers to aid them with package design (sizing, features and materials). Our lab’s capabilities accelerate the go-to-market timeline for new product introductions.

Jozwiak: Plastics packaging is a sustainable choice that delivers advantages for numerous applications. With rising demand for plastics, we look at the entire lifecycle of our products – improving performance and sustainability via innovation and collaboration throughout the value chain. We measure sustainability by both the benefits provided by a material as well as the resources consumed, with the goal being the highest ratio of benefits to costs. Dow is a leading and engaged voice for policies and programs that advance the vision of a circular economy for plastics, an important focus of the 2025 sustainability goals Dow set earlier this year. As part of this objective, Dow will continue to collaborate with industry leaders to demonstrate how principles of re-use and recovery can be economically applied to close resource loops in key markets to benefit society and the environment, with key demonstrations within plastics packaging.

It is estimated that 1.3 billion tons of food is wasted globally and an estimated 30 to 40 percent of food produced is lost even before it reaches the market. Flexible packaging can help reduce food waste. Flexible packaging also helps provide consumers with the right portion size, delivers resealability and offers ready-made options for people living on-the-go lifestyles. Although a variety of groups are addressing this multifaceted issue, many are missing an important component to the solution – which is the use of high-performance flexible plastic packaging. That is why it is so important for the packaging industry to continue advocating for high-performing packaging.


FP: What do you think 2016 will be the “year of” when it comes to flexible packaging (i.e. resource recovery, new pouch formats, etc.)? Why?

Jozwiak: Demand for PE is increasing faster (1.3x) than global GDP. This will continue to fuel strong year-on-year volume momentum. In 2016, with a continuance of on-the-go, faster-paced lifestyles, flexible packaging will aim to satisfy the demand for convenience, increased speed to market and efficiency of resources and processes for more sustainable alternatives. In addition, flexible packaging will continue to be a great way to enhance shelf appeal through new packaging design and materials that improve optics and graphics.

Gotsick: As flexography continues its rapid increase in print quality, it will become an ever more desirable print technology option. Its productivity and sustainability advantages were already well-established, but the increasingly simple adoption of flat-top dot technology has made high flexo print quality accessible. We are seeing increased interest in flexography from Asian printers, and so we are making sure we have the resources and co-supplier relationships needed to support this emerging interest. This could be the year when we see a major shift from gravure to flexo in this key region.

Dun: 2016 will be the year of new pouch formats with different shapes, fitments and filling systems as brand owners seek to differentiate. Environmental concerns will also remain in the forefront with continued interest in technologies that improve recyclability.

Cros: We believe that 2016 will be the year of recovery, with a large amount of new lines and systems installed, especially in North America.

Pavone, Blumsack: We expect for 2016 a strong growth of pouches – 100 percent polyethylene and recyclable, which is already a well-established trend in a number of countries in Asia. Also the growth of the demand for clear barrier film for the packaging of food products, due to the lower production costs and the advantages of the high-barrier effect for food protection combined with the visibility of the packaged item for the end consumer.


FP: Are there any factors outside of the packaging industry that you foresee as possible roadblocks to the continued ascent of flexible packaging?

Dun: The continued consolidation of the food industry and resulting layoffs could delay projects and place more focus on cost reductions and leveraging existing production assets.

Pavone, Blumsack: Flexible packaging is certainly one of the most economic ways to package both food and non-food items, and to protect food through to points of sales (amounting to over >30 percent decrease in food waste in some emerging countries). Disposal and recycling are important challenges  that must be met efficiently at global level across the whole value chain.

Gotsick: Innovation in flexible packaging materials, formats and converting technology seems poised to make this a growth area for many years to come. There are always “black swan” events that could change the competitive profile of this packaging options (e.g., a rapid and sustained increase in oil prices), but these seem unlikely based on current conditions.

Cros: Other than a large shift in energy prices, as discussed, which we think is unlikely next year, we do not see immediate threats to the industry disrupting the current trends.


Past Executive Forecast Articles

2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008