Flexible Packaging Market in North America- Industry Outlook and Forecast 2019-2024

INDUSTRY INSIGHTS

Environmental impact and expenditure are the major factors for the high demand for lightweight, flexible packaging material

Strict adherence to FDA regulations for packaging materials is driving the pharmaceutical packaging market in recent years. FDA regulations necessitate the use of packaging materials that have high barrier power and are resistant to chemicals, heat, and other solvents. Bags, pouches, and films are the major products in demand in North America, with the PE, PET, paper, Tyvek, and PA being the materials of choice in healthcare packaging in North America. The wide adoption of blister packaging, replacing the glass and rigid plastics, has resulted in the increased usage of lidding films. Also, the adoption of advanced packaging, which removes dispensing errors, is expected to drive the market. Anti-counterfeiting with the use of barcodes is an essential factor driving the use of blister packs in the North America's flexible packaging market.

The increasing demand for lightweight packaging from food, pharmaceuticals, and other end-users is another major driver for the growth of the North America flexible packaging market. Flexible packaging is a solution that has successfully replaced rigid packaging products at many levels. Cost and environmental impact are the major factors for the high demand for lightweight, packing material. Significant R&D is being carried out to improve the overall benefits associated with the usage of flexible packaging products. The objectives to reduce production costs and decrease energy consumption during the production process and lower wastage of the packaging material can be achieved through flexible packaging. Paper, aluminum foil, bio-based polymers, and mono-polymers are the major lightweight packaging materials currently used in the packaging of various products.

The increased 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 material, but also extends to the production process, logistics, functionality, and end-user of the product. The need to positively impact the environment is high among both buyers and suppliers. Sustainable flexible packaging is currently more dependent on recovering plastic products and recycling them. The North America flexible packaging market is expected to reach over $42 billion by 2024.

NORTH AMERICA FLEXIBLE PACKAGING MARKET: SEGMENTATION

The market research report includes detailed market segmentation by

• Material
• Product
• End-user
• Printing
• Packaging
• Geography

NORTH AMERICA FLEXIBLE PACKAGING MARKET: MATERIAL

The usage of paper wraps in the foodservice industry is growing at an annual rate of 8−10%

The food industry is the major revenue generator in the flexible plastic segment. With respect to flat pouches, four-side seal pouches are expected to witness the highest growth rate driven by packaging application of meat, poultry, and seafood items. Most food items are packaged in flexible plastic pouches that are fitted with closures of some form (spouts and zippers). Given their high barrier properties, a high number of food products are packaged in flexible plastic, however, from a recycling perspective, the segment is facing several challenges.

Flexible paper packaging has wide applications in the healthcare sector and tobacco and CPG packaging. In North America, the usage of paper wraps in the foodservice industry is growing at an annual rate of 8−10%, which is largely driven by the demand from pet food and dry food sectors. The recyclability rate of flexible paper is higher than flexible plastic as pulp, which is used to manufacture paper, is derived from natural sources such as wood.

The Y-O-Y growth rate of the aluminum foil segment is low in the North American market. The imposition of anti-dumping and countervailing duties on the import of aluminum foil from China by the US has not affected the market. The quality and quantity of aluminum foil required for flexible packaging are not produced in the US. Hence, the imposition of tariffs by the US could affect the price structure of aluminum foil in the US, thereby posing a barrier to the flexible packaging market.

NORTH AMERICA FLEXIBLE PACKAGING MARKET: APPLICATION

The demand for bulk packaging is driving the industrial flexible packaging market

The consumer packaging segment accounts for a major share in the North America flexible packaging market. The consumer packaging segment is expected to grow at a faster rate than industrial packaging during the forecast period. The F&B industry dominates the consumer packaging segment in North America.

The industrial flexible packaging market in North America is expected to cross $2 billion by 2024. The growing bulk packaging demand is driving the market. Chemicals, F&B, and construction industries are the major end-users of industrial packaging. The presence of low packaging cost and durability features is boosting the flexible intermediate bulk packaging(FIBC) demand across diverse industries. The growth rate of FIBC usage is expected to be high due to the increasing adoption during the forecast period.

NORTH AMERICA FLEXIBLE PACKAGING MARKET: END-USER

The increase in quick-service restaurants and the growth of retail sectors have boosted the packaging sector

The F&B industry dominated the North America flexible packaging market. Cost-effectiveness is an important driver for the wide adoption of flexible packaging in the F&B segment. The increase in quick-service restaurants and retail sectors has boosted the consumption of food items, thereby driving the packaging sector. The US, along with China and India, is expected to drive the market demand by the food industry during the forecast period. The growth of several F&B outlets such as quick-service restaurants, coffee and ice cream shops, and full-service restaurants has provided new impetus to the flexible packaging industry.

The demand for flexible packaging is driven by blister packaging adoption. Blister packs have successfully replaced rigid plastic bottles for unit dose drugs as they help in monitoring the dosage.  Pharmaceutical blister packaging constitutes around 20% of the global pharmaceutical packaging market. The flexible packaging market by healthcare is expected to grow due to the increased demand for child-resistance packaging and senior-friendly functionalities.

Skincare, hair care, and bathing products are driving the demand for flexible packaging in the personal care industry. The usage of flexible plastic as secondary packaging has increased in recent years. Although the usage of rigid plastics is high in the personal care industry, the growth of e-commerce in North America is expected to fuel the demand for flexible plastic pouches. The adoption of flexible packing for consumer goods and personal care packaging is driven by the need to have better displays on products and occupy less shelf space in retail stores.

The increased demand for premium pet food products requires high-barrier protection, which has been catered by flexible pouches with multi-layers of plastic, aluminum, and paper by way extrusion, lamination, and/or a combination. The increase in pet ownership and the emergence of new products with higher nutrition are likely to drive driving the pet food packaging market.

NORTH AMERICA FLEXIBLE PACKAGING MARKET: PRODUCT

Blister packs lower the production cost by up to 45% in the drug industry

The market by bags and sacks consist of numerous products. The market is primarily influenced by monolayer PE films that do not require advanced packaging machinery. Retail carry bags, storage bags, bread bags, diaper bags, and produce bags are the major growth drivers of the segment. The North America flexible packaging market by bags and sacks is expected to grow at a CAGR of 3.01%. The food industry accounts for the highest share in pouch usage in both the US and Canada. The increased automation of the food industry is driving the demand for pouches with high run capacity. Stretch and shrink films, wraps, flexible lidding solutions, sacks, blister, and FIBC are other products in the flexible packaging market. However, market opportunities for lidding are declining as aluminum foil is a high-cost material and is being replaced by advanced plastic films that exhibit the same properties as foils. Blister packs lower the production cost by up to 45% in the drug industry. The ease of use has enabled blister packs to emerge as the fastest-growing segment in the pharmaceutical sector, with over 60% share in the solid drugs category.

NORTH AMERICA FLEXIBLE PACKAGING MARKET: PRINTING

Low operational expenditure and excellent print capabilities can be attributed to the high adaptability of flexographic printing

In North America, there is a slight decline in the offset printing inks market, while the market for packaging inks, such as flexographic and gravure inks is expected to increase during the forecast period. Flexographic printing is widely adopted in North America and South America, whereas rotogravure has a significant share in the APAC market. The high adaptability of flexographic printing can be attributed to factors such as low operational cost and excellent print capabilities. 

Rotogravure printing is extensively used for printing on packaging items such as polythene packs, soap wrappers, bread wrappers, milk pouches, and other materials. The North America flexible packaging market by rotogravure and other printing type is expected to reach over 36 billion units by 2024.

NORTH AMERICA FLEXIBLE PACKAGING MARKET: GEOGRAPHY

Challenges related to regulatory compliance are influencing the dynamics of the North America market

Challenges related to regulatory compliance are influencing the dynamics of the North America flexible packaging market. The market witnessed consolidation with leading vendors opting for inorganic growth in 2017. The market in the US exports 5% of its volume to other countries, valued at over $1.5 billion. The major export destinations include Mexico and Canada with 70% export volume. The market in the US also imports around 14% of the flexible packaging products for its consumption. The North America flexible packaging market is expected to witness moderate growth. The North American economy has performed well over the years, thereby increasing the per capita consumer spend. The flexible packaging market in North America is at a mature stage.

The flexible packaging market in the US reported a total pack sale of more than 142 billion units in 2018. With an absolute growth of 6%, the market is expected to grow during the forecast period, driven mainly by bags and sacks segments with diverse applications. From the procurement perspective, films and resins constitute up to 65% of the cost, followed by foil, paper, adhesives, ink, and others. The foil and inks together account for around 15% of the purchase cost. The ability to pass on the increase in raw material cost will have a significant bearing on the margins of vendors operating in the market. However, vertical integration by vendors is not highly prevalent. The revenue from exports was driven by strong upward momentum in pricing across all major product segments. However, the revenue increase was offset by unfavorable currency fluctuations. Although raw material costs are high and have been fluctuating, there exists a short-term impact if the cost varies at frequent intervals.

The demand scenario in Canada is similar to the US, with the F&B industry dominating the flexible packaging market. However, frequent changes in packaging designs and portion sizes impact the operational efficiency of vendors. Flexible packaging is yet to make a major dent in the personal care industry; however, the demand from sachets and stick packs, along with differentiation needs for its products, will accelerate growth in the medium term. The market is largely driven by the growing conversion from rigid to flexible packaging. The value-added differentiation in the form of printing, barrier protection, and design is more in demand as the shift from rigid to flexible necessitates a completely new branding.

KEY VENDORS ANALYSIS

With the presence of a few vendors, the flexible packaging market has breached the $1 billion mark in revenue. SMEs dominate the majority of segments of the market. Major players have been aggressively adopting inorganic growth strategies to expand their operations. Larger players’ technological strength and high-volume product lines have helped to offset cost variations. Smaller companies are focusing on customization as the competition in the market is mainly based on two aspects − features and price.

The industry has witnessed several M&A transactions in the last few years; the consolidation is expected to further grow during 2020−2024. Globally, more than 80% of the companies in the flexible packaging market have revenues of less than $200 million. Large companies with more than $800 million in the revenue account for around 50% of the market. Regulatory policies for recycling and reusing packaging materials will be favorable to vendors. Currently, the market lacks advanced infrastructure for recycling. However, many vendors are expected to shift entirely to green packaging materials by 2025. The penetration of bioplastic packaging in several end-user categories is expected to increase and favorably influence early movers in the industry. Amcor, Berry Global, Huhtamaki, Mondi, Sealed Air, Sonoco, TC Transcontinental Packaging are the leading vendors in the market.

The North America Flexible Packaging market research report includes in-depth coverage of the industry analysis with revenue and forecast insights for the following segments:

Market Segmentation by Material

• Flexible Plastic
• Flexible Paper
• Foils

By Application

• Consumer Packaging
• Industrial Packaging

By End-user

• Food and Beverages
• Petfood
• Healthcare
• Personal Care
• Other End-users

By Product Type

• Bags and Sacks
• Pouches
• Others

By Printing Type

• Flexography
• Rotogravure and others

By Geography

• North America
  • US
  • Canada