At the recent FPA Annual Meeting held in Boca Raton, Florida, Rob Tiede, Executive Vice President and Chief Operating Officer of Sonoco Products Company, and FPA Chairman of the Board of Directors, presented preliminary data on the State of the Flexible Packaging Industry. The FPA State of the Industry presentation and report is based on data collected from FPA member surveys, an industry-wide converter survey (non-member), the U.S. Census Bureau, and third party research.
U.S. Packaging Industry
In the United States, the total packaging industry is estimated to be $164 billion for 2016, with flexible packaging 19% of that, or $30.2 billion in sales. Flexible packaging is the second largest packaging segment behind corrugated paper and just ahead of miscellaneous rigid plastic and bottles.
Since 2000, the number of companies has been reduced from 665 to 426 in 2016, which follows the industry consolidation trend of the past few years. The number of manufacturing facilities from 2000 to 2016 has not been greatly reduced, but the number of employees has been reduced by about 10,000, or 12%, with 79,000 employees estimated for 2016. Even with the reduction of employees, the average sales per employee increased. In 2000, the average sales per employee was $221K versus $383K for 2016.
U.S. Flexible Packaging Industry Growth
The 10-year CAGR from 2006-2016 was about 1.9%. Historical pre-recession CAGR was about 3.4%, but the recession moved it lower. The latest U.S. Census Bureau data, the 2015 Annual Survey of Manufacturers, indicated an industry revenue decline for 2015 (only the fourth annual downturn since 1982), and revised the 2014 numbers lower. This accounts for the 2016 revenue estimate of $30.2 billion versus last year’s estimate of $31.0 billion.
U.S. Flexible Packaging M&A Activity
There were 20 domestic mergers and acquisitions in 2016, and FPA expects to see further consolidations for 2017. The majority of M&A activity is occurring with mid-size companies with their percent of the industry moving from 47% in 1996, to 29% in 2016.
U.S. Flexible Packaging End-Use Markets
Food (both retail and institutional combined) continues to be the largest flexible packaging end-use market at 49%. Medical and pharmaceutical follows at 11%, then both beverages and consumer products at 9%.
The Road Ahead
The road ahead looks very good for flexible packaging. The industry is well ahead of pre-recession levels in sales; industry consolidation is expected to continue; flexible packaging’s convenience features will continue to fuel growth; and the FPA will continue to promote and protect the industry and respond to industry challenges as they arise.
For More Information
FPA members can view the presentation at
www.flexpack.org by clicking on “Download Presentations from the FPA 2017 Annual Meeting” in the Spotlight section on the homepage. The final report and data will be available in the second quarter of 2017.