Europe Flexible Packaging Market - Industry Outlook & Forecast 2023-2028

MARKET OUTLOOK

The Europe flexible packaging market was valued at USD 60.20 billion in 2022 and is expected to reach USD 81.28 billion by 2028, growing at a CAGR of 5.13%. Germany is the leading region in the Europe flexible packaging market. The growing pharmaceutical and food industries are the major drivers for the market in Germany. The packaging demand in Western European countries, which are considered mature packaging markets with higher disposable personal income, has a higher demand for flexible packaging. The demand in Eastern Europe is expected to increase due to customers' higher real income and purchasing power.

In Europe, all the market segments are experiencing notable growth in flexible packaging. Smaller households need more single-serve options, and consumers constantly demand more product varieties. This supports the general trend from rigid to flexible packaging, providing greater convenience and fitting in better with the current lifestyle needs. Innovative, flexible packaging styles are meeting the trend for more convenience and a greater variety of formats. The main reason for the higher usage of flexible packaging is to eliminate raw materials, making it typically the most resource-efficient packaging option available.

IMPACT OF COVID-19

Due to the COVID-19 pandemic, the Europe flexible packaging market has witnessed a supply chain disruption due to a voluntary shutdown of authorities or factories enforcing lockdowns. More than 70% of the demand for flexible packaging arises from the F&B industry. However, the rise in prices of luxury categories of F&B products is expected to be highly affected. In contrast, the daily-need or essential food & beverages products are expected to observe higher demand.

Moreover, post-covid, the market is again expected to regain its growth. Nowadays, consumers are shifting their preferences as they are expected to be price sensitive, inclined towards price and value brands, engage, maintain, and accelerate with online shopping, and focus more on health & hygiene. Post-pandemic, the value chain is also adapted to digitization leading to a reduction in production & supply-chain risk. With digitization & real-time analytics & reporting, customers can track their supply chain more closely weekly compared to quarterly and annual reports. Thus, many companies are strategizing their plan and adapting to the change due to COVID-19.

MARKET TRENDS & DRIVERS

Increase In Pouch Packaging Across End-Users
In the Europe flexible packaging market, some major driving factors are boosting a shift toward flexible packaging. Flexible pouch packaging replaces metal, glass, and rigid plastic packaging. Compared to rigid packaging products, the demand for packaged food and drinks combined with the ease of use and cost-effectiveness of pouches mainly fuels demand for the product in the region. Moreover, pouches are expected to witness the fastest growth rate of 5.41% by product segment in the Europe flexible packaging market during the forecast period.

Pouches consume less space and are also light in weight. Further, pouches decrease transport-related costs relative to rigid packagings such as metal cans and glass bottles. Pouches are widely used for packing various food items, including dairy, candy, confectionery, smoothies, and baby foods, due to their lightweight, and convenient reseal ability. Pouches use less material, electricity, and water during processing and occupy lower space after being disposable in landfills. This enhances sustainability compared to rigid packaging items such as plastic cups, trays, and containers. The push for pouches is mainly because of the technological advancements on the supplier front. The machinery used to produce pouches has significantly improved and can manufacture a greater number of pouches at a faster rate.

Increased Focus On Sustainable Flexible Packaging
Since plastic packaging has a higher share in the overall Europe flexible packaging market, the environmental impact associated with using plastic as a packaging material is also high. The pressure on F&B, consumer goods, and pharmaceutical companies to reduce dependency on plastic is regularly increasing, and the same has been passed on to packaging vendors. Sustainability is not limited to materials but extends to the production process, logistics, functionality, and end-use of expired products. Both the buyers and suppliers of flexible packaging products are looking to impact the environment positively. By 2030, the European Commission plans to ensure that all plastic-based packaging will be either reusable or recyclable. Sustainable, flexible packaging is currently more heavily dependent on recovering plastic products and recycling them and less on the processes. The advantages associated with process changes have not been fully realized, and the industry is more tilted toward material sustainability. Also, the industry is still facing challenges concerning recycling multi-layer plastic products (especially premium pouches that have a laminated film apart from PE film).

INDUSTRY RESTRAINTS

Fragmented Marketplace
With the government in many countries across the globe, especially in the European region, insisting on sustainable packaging, the players that have invested in newer infrastructure or upgraded the machinery will have the upper hand in the market. The emergence of bioplastics - aliphatic polyesters (PLA), starch polymers (Mater-bi), cellulosic and whole-crop polymers (cellophane), and microbially synthesized polyhydroxy alkanoates (PHB) have ensured that the competition would further intensify during the forecast period.

Although the price of petroleum-based polymers is lower than biobased polymers, in the long run, with increased volumes, the prices of biobased polymers are expected to decrease. Also, fragmentation exists in the flexible packaging segments – flexible plastic, paper, and foil. The competition is intense as vertical integration is possible in the industry. Further, rigid packaging vendors can move into flexible packaging products. Such factors make the marketplace very fragmented. Numerous competitors have led to the frequent launch of differentiated packaging products, changes in pricing, and the upgradation of printing technologies. The flexible packaging industry has been growing on par with the packaging sector. Therefore, there has been a major challenge for the upcoming and existing vendors in this fragmented and highly competitive Europe flexible packaging market. Therefore, the increasing demand for longer storage times for food products and lower procurement costs have pushed packaging vendors to opt for flexible packaging.

SEGMENTATION INSIGHTS

• Flexible plastic held the largest material share in the Europe flexible packaging market and was valued at USD 42.62 billion in 2022.
• In European countries, polyethylene is in high demand and is one of the market leaders in plastic packaging polymers. It is used for making reusable bags, trays and containers, agricultural film, film for food packaging, and more.
• The consumer packaging segment is growing moderately due to increased consumption. The uneven growth is expected to continue; however, the emerging markets in European countries will exhibit around three times higher growth than the other regional markets.
• Bakery & confectionery segment in Europe's flexible packaging market was valued at USD 10.10 billion in 2022. Modified atmospheric packaging technology is adopted in bakery packaging, which has three types: thermoforming systems, pre-formed container machinery, and HFFS or VFFS systems.
• In Germany, the frozen food market has a good infrastructure and a large consumer base with high buying power. Globally, the region is the biggest consumer and exporter of frozen vegetables. The Europe frozen food flexible packaging market is anticipated to grow at a CAGR of 6.00% during the forecast period.
• In the Europe flexible packaging market, the flexographic printing segment is estimated at over 187.43 billion units in 2022. The key driving factors in the segment included the demand for more packaging colors and line screen values.

REGIONAL ANALYSIS

Germany dominates the Europe flexible packaging market with the highest industry share. Germany's well-established pharmaceutical market participants include Bayer, BASF, and Hoechst. Apart from drugs, the demand for sterile plastic packaging for medical devices is also driving the region’s flexible packaging market. Due to COVID-19, pharmaceutical and F&B packaged food demand has tremendously increased, driving flexible packaging demand. With over 80 million customers, the F&B industry is the largest in Europe and generated around 220 billion in 2020. This increase in the production of food and beverage products is fuelling the demand for flexible packaging, which require ease in logistics and longer shelf life during exports. The German market is highly responsive to consumer demand, regulatory measures, and sustainability demands. Hence, the demand for flexible packaging in Germany is expected to rise during the forecast period.

The flexible packaging market in the UK is projected to grow at a CAGR of 2.27% during the forecast period. The packaging industry in the region is thriving, with approximately $13.90 billion in sales annually as of June 2018. The packaging industry has been a major contributor to the country's GDP. Food and pharmaceutical companies are driving the growth of the flexible packaging market. Blister packs and pouches for medical devices witnessed the highest demand because of the aging population, self-use medical devices, and increased OTC drugs, vitamins, and other supplementary intakes.

COMPETITIVE LANDSCAPE

The key vendors in the Europe flexible packaging market players include Amcor, Berry Global, Mondi, Sealed Air, TC Transcontinental, Sonoco, Huhtamaki, Constantia Flexibles, Ahlstrom, Greif, WestRock, Smurfit Kappa, Alu Flex Pack, Aptar Group. Small and medium enterprises dominate a vast segment of the market. The larger players have adopted an inorganic growth strategy to expand their operations in many regions.

Stretch films, protective wraps, and pouches have seen a huge demand in the last few years. The Europe flexible packaging market has witnessed many M&A transactions in the last few years; the consolidation is expected to grow further in the region. During August 2022, Amcor focused on growing its presence in the Czech Republic by investment and acquisition of one of the world-class flexible packaging plants. The company focused on expanding its European segments, especially for coffee and pet food.