Market overview

The economic downturn has had its effect on the sector, but it has escaped relatively lightly. According to Freedonia Group’s report “World Food Containers to 2013”, western Europe alone consumed $26 billion worth of food containers in 2009. In addition, $5 billion worth of food containers were used in eastern Europe. Together, this constitutes a quarter of the worldwide market for food packaging.

Demand for food containers in western Europe is projected to advance 2.4 percent per annum through to 2013 to $29.3 billion, a much slower growth rate than in previous years, according to Freedonia’s report. This projection is due to below average economic and population growth, environmental legislation limiting packaging use, and a mature food industry. There will however be gains through growth of convenience food and eating away from home, as well as above- average food shipment growth in countries such as Belgium, France and the Netherlands.

The situation looks better for the food market in eastern Europe, with double-digit growth in the 2003-20008 period set to continue due to strong economic growth and foreign investment in the region. The growth has been led by Russia, the largest national market.

Through 2013, Freedonia Group’s report projects demand to advance 7.1 percent per annum to $7.1 billion, supported by continued growth in food output and economic expansion. This will be supported by increases in food expenditures by an expanding middle class. As in western Europe, ‘green’ products have a higher growth potential, so recyclability is important.

Plastics take the lead

In the area of compound annual growth rate, plastics lead the way .The Compound Annual Growth Rate for rigid plastics food packaging is projected to increase by 4 percent between 2009 and 2014. Flexible plastics come a close second with 3.8 percent, followed by glass with 2.45 percent, paper and board with 2.3 percent and metals (excluding beverage cans) by 1.9 percent.

According to a study commissioned by Rexam including data from PIRA International and Euromonitor, global food packaging consumption value shrunk whereas consumption levels remained stable, with consumers still buying the same amount of goods, but choosing budget options and economy brands over standard brands. Discounters on the whole outperformed small grocers. However, people still show interest in organic foods and are willing to pay more in this field. PIRA predicts that the industry’s sales value will increase in 2010 and grow at an annual rate of 3 percent each year in the next five years.

Another noticeable trend, especially in western Europe, according to Rexam’s report, is the reduction of ‘on trade’ sales in bars and restaurants. People are staying at home more and eating in. So products that replicate the restaurant or bar experience at home are becoming more popular, and this opens up new opportunities for innovative packaging solutions.

Within the different types of food packaging, plastics enjoys a high popularity, which is set to grow further with growing popularity of convenience food and single serve packaging. With time being an important commodity nowadays, convenience is key. Multiplicity of use, ease of storage and portability are important factors for consumers in making a buying decision.

Considering the environment

According to Rexam’s report, environmental issues and sustainability are still important, despite the economic downturn. Ethical consumption still is a priority for many consumers, who are concerned about the impact that packaging and waste may have on the environment. The industry has reacted to this by improving recyclability and make communication on what can be recycled and what cannot be recycled easier.

Another important factor is lightweighting. On average, the weight of a plastic bottle has dropped by a quarter since 1997, Rexam points out. Blow-moulded plastic bottles are 60 percent lighter than in the 1970s. Plastics

One example for companies making products lighter is Amcor Rigid Plastics. The company, a major producer of PET packaging, has developed of the lightest 16oz PET salad dressing bottle in North America. The 16oz Curve, a stock oblong container, weighs in at just 29.5g, almost 20 percent lighter than the industry standard (35.3g). Amcor has also launched a 12oz ring neck PET bottle as a glass replacement option for premium food and beverage brands including sauces, dressings, condiments, and ready-to-drink teas and juices. The stock hot fill container breaks new ground because it offers a PET alternative that delivers performance and cost advantages including portability (no breakage), light weight, and reduced transportation costs. “Consumers are drawn to the attractive, lightweight, and breakage-resistant features of the PET bottle compared to traditional glass containers,” the company claims.

Metal

The metal industry has also been busy reducing food packaging weight. “Our industry has been reducing weight for many years. In fact, a can nowadays is 30 percent lighter than it was in previous days,” explains Steve Thomas, Marketing Manager of Crown Foods. He is also keen to point out that metal is a prime material for recycling. “Other materials get downgraded during recycling, but this is not the case with metal. When a can is put into a furnace to be recycled, it comes out as metal that can be used for any metal products.” Recycling rates for metal food packaging vary in Europe, but are steadily on the up, he explains. “In Germany, 94 percent of cans are already recycled. In the UK the number is at 62 percent, and local authorities and councils are pushing heavily to increase this number.” Mr Thomas is keen to point out that food packaging can actually help reduce waste, since one of the biggest culprits in the area of domestic waste is food waste. “Packaging can actually help reducing food waste by making food keep for longer, provide handy portion sizes and better storage” he says.

Paper and Board

Recyclability is also a key feature in the paper and board food packaging industry. 84 percent of all corrugated packaging is currently recycled, and 75 percent of every corrugated box is made of recycled paper fibres. In order to respond to recycling demands, Smurfit Kappa, a major corrugated packaging manufacturers has developed PackExpert, a tool for sustainable design, Martin Ferrari, Smurfit Kappa’s sales and marketing director for the UK and Ireland, explains.

“PackExpert is the most precise method of automating the complex calculations necessary to determine the level of strength required by an individual piece of paper-based food packaging. It takes into account all physical constraints and processes in the supply chain such as transport, storage, handling, temperature conditions and humidity levels. Resulting calculations help deliver packaging that is ‘right-weighted’ - as light as possible to perform effectively whilst using the minimum amount of practical material.”

Innovations across the industry

Like other paper and board companies, Smurfit Kappa has been working to develop new technologies in order to achieve optimum product freshness with environmentally friendly packaging and use paper and board in new, innovative ways.

“Smurfit Kappa Bag-in-Box water boxes are a rapidly growing niche market that is ideally placed to capitalise on consumers increasing environmental awareness. Whilst liquids can be difficult and costly to hygienically bottle and transport, innovative solutions such as Bag-in-Box technology offer cost effective low carbon solutions to brand owners and consumers,” explains Kevin Heath, Sales Director from Smurfit Kappa Bag in Box, Ireland and UK.

Glass manufacturers have worked hard to keep up and have pushed glass’s benefits such as recyclability. Leading glass-packaging manufacturer, Beatson Clark, is now developing the future of glass packaging following valuable visitor feedback to its new design concepts at the Food & Drink Expo 2010.

With glass being a natural choice for anyone wanting to position their product as a premium brand, as well as being environmentally friendly, visitors were eager to see the future of glass packaging. Dawn Pugh, Beatson Clark’s marketing manager said: “We commissioned Blue Marlin to research current product offerings, analyse the latest market trends and devise innovative designs that capitalise on Beatson Clark’s flexible and niche manufacturing capabilities.”

Meanwhile, metal cans have seen a number of innovations in functionality. “We have been working on new products with easy-open ends significantly improve tab access,” observes Steve Thomas from Crown. “The end's improved tab access makes it easier and faster for consumers, including seniors, children and the physically impaired, to open canned food products without using a can opener or other tools. Another innovation is the PeelSeam™ - it is ideal for a variety of products including pet food, fish salads, meat recipes, fruits and vegetables and dry powders, the PeelSeam™ opening system consists of a thin, flexible panel, heat-sealed to a rigid steel or aluminium ring which is conventionally flanged for the usual double seaming process.”

Convenience is key

Time is an important commodity nowadays. Retail Ready Packaging (RRP) offers important growth potential in corrugated food packaging. It drives down costs and improves sales through better in shelf-branding and visibility. According to Phil Husband, Smurfit Kappa’s UK Packaging Development Manager, successful RRP has to fulfil five key criteria – it has to be easy to recognise, easy to open, easy to put on the shelf, easy for the customer to shop for, and easy to dispose of.

As another example, Sealed Air Cryovac has launched a new anti-theft solution. Tamper-proof functionality is a major factor in the food packaging industry. SmartPak® tags are certified for direct food contact and inserted inside the Cryovac® shrink bags at the manufacturing stage, thus making tampering impossible: the tag cannot be removed without destroying the entire pack.

Design and the look of a package are becoming even more important in the future. The battle to influence shoppers has now progressed to the shelves, so product presentation and display can make the difference between a sale and no sale. This new focus will drive the secondary packaging industry to implement greater controls within its operations for ensuring quality of both the materials its uses and the print it applies.

In order to optimise this, Smurfit Kappa has developed ‘Insider Printing’. “This is a unique Retail Ready Packaging application developed by Smurfit Kappa that allows a brand asset, brand colour, graphic or promotional message to be printed on the inside of the RRP maintaining brand presence and minimising the threat of a lost sale to competitive brands or ‘me-too’ packaging,” says Phil Husband from Smurfit Kappa.

Companies in the food packaging industry have been working hard to face the various challenges the last decade gave them - recyclability, food safety, as well as presentation, design and shelf appeal have been the major factors that have to be dealt with now and also in the years to come.