During the recent FPA Annual Meeting held in Naples, Florida, David Staker, President and CEO, Plastic Packaging Technologies, LLC, 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 $167 billion for 2017, with flexible packaging 19% of that, or $30.9 billion in sales. Flexible packaging is the second largest packaging segment behind corrugated paper, and just ahead of miscellaneous rigid plastic and bottles.

Industry Overview

Since 2000, the number of companies has been reduced from 665 to 420 in 2017, which follows the industry consolidation trend of the past few years. The number of manufacturing facilities from 2000 to 2017 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 2017. Even with the reduction of employees, the average sales per employee increased. In 2000, the average sales per employee was $221K versus $390K for 2017.

U.S. Flexible Packaging Industry Growth

The 10-year CAGR from 2007-2017 was about 1.6%, but from 2016 to 2017 it moved up to 2.4%, more in line with its longer-term historical growth rate. The historical pre-recession CAGR was about 3.4%, but the recession moved it lower. Revenues for 2017 are estimated to be nearly $31 billion. Overall, growth has been steady with the exceptions of 2008 and 2009, during the Great Recession, and a slight dip in 2015.

U.S. Census Bureau 2016 ASM Census
Source: U.S. Census Bureau 2016 ASM Census and FPA estimates for 2017 total revenue

 

U.S. Flexible Packaging M&A Activity

There were 22 domestic mergers and acquisitions in 2017, and FPA expects to see further consolidations for 2018. The majority of M&A activity is occurring with mid-size companies with their percent of the industry moving from 47% in 1997, to 26% in 2017.

Imports and Exports

Imports and exports continue to provide both challenges and opportunities for the industry. Imports into the U.S. continue to grow faster than exports out of the U.S. Approximately 84% of FPA members export their products. For 2016, around 5.4% of U.S. flexible packaging production was exported, and 14.3% of U.S. flexible packaging consumption was imported.

U.S. Flexible Packaging End-Use Markets

FPA recently partnered with Euromonitor International to take a different look at the industry. Euromonitor measures “pack units” at retail, versus sales or pounds. The total number of packaging units sold in 2017 was 506 billion, and flexible packaging was 31% of that, suggesting that the use of flexibles, on a unit basis, is greater than its portion of packaging sales. Using current Euromonitor data, measured in “packaging units,” 42% of all packaging goes towards beverages, but only 5% of flexible packaging goes to beverages. For food packaging, all packaging accounts for 41%, while 68% of flexible packaging units go towards food packaging.

Euromonitor International Passport Data
Source: Euromonitor International Passport Data – the number of packaging units sold to consumers through all retail channels.

 

The Road Ahead

The road ahead looks very good for flexible packaging. The transition to flexibles will continue; use of flexibles is expected to grow in most market segments and all food categories; and industry consolidation will continue. The industry must communicate the sustainability benefits and work towards a solution for recyclability. Industry trade is uncertain with the imposed aluminum duties and tariffs. While the challenges are great, the opportunities are greater, 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 and View Videos from the FPA Annual Meeting” in the “Spotlight” section on the homepage. The final report and data will be available in the second quarter of 2018. For information on FPA membership, please visit the “Membership” section of our website. 

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