Covid-19 Crisis ‘boosts flexible packaging demand’ in US and Europe

News

2020/06/05 Covid-19 Crisis ‘boosts flexible packaging demand’ in US and Europe

Covid-19 | Crisis ‘boosts flexible packaging demand’ in US and Europe

Source from: https://www.packagingnews.co.uk/news/covid-19-crisis-boosts-flexible-packaging-demand-us-europe-16-04-2020

Market research firm Wood Mackenzie expects flexible packaging consumption in both Europe and the US to see a material uplift in the short-term.

Due to Coronavirus-era stockpiling, lockdowns and the increased need for medical supplies, flexible packaging is set to increase 5-10%.
After a disappointing 2019 in both regions, Wood Mackenzie forecasts US demand for consumer flexible packaging to increase by up to 10% this year, compared to 3% in 2019. In Europe, demand growth fell back to under 1.5% in 2019 but could climb to above 5% this year.

“New restrictions on daily life have had a huge impact on how we consume FMCG goods. The speed at which governments have introduced these measures is unprecedented, with many sectors of the food processing industry struggling to adapt,” said Rob Gilfillan, Wood Mackenzie head of fibres, films and flexible packaging. “This rapid change has caused a wave of panic buying and stockpiling across Europe and North America.

“In addition, the sudden lack of choice around how and where we consume food has forced huge volumes of food consumption away from the food service sector, such as restaurants and cafes. This has been pushed through the retail sector instead, which naturally favours pre-packaged food in smaller consumer-sized packaging.”

While end-use sectors for food have seen an increase in demand, the healthcare sector has also been heavily impacted. According to Wood Mackenzie’s analysis, demand for flexible packaging in medical supplies, such as gowns and swabs, has seen a growth in demand of over 10% since the start of March.

“This increase in demand has moved through the supply chain, with converters pre-ordering large volumes of plastic film because they are anticipating a shortage in flexible packaging raw materials. Biaxially-oriented PET (BOPET) film producers in both Europe and the US, for example, are reporting an uplift in bulk orders from packers looking to meet increased demand,” added Gilfillan.

In the US, coffee is in high demand. Consumption is estimated to be at least 50% higher than typical for this time of year. As such, growth in the country is focused in high-quality and high-value printed laminates for the retail coffee market. Converters manufacturing unprinted flexible packaging for the meat and cheese sector are also reporting higher than usual orders.
Demand for comfort foods, such as chocolate and confectionery, baked goods and biscuits, as well as alcohol and tobacco has risen across both regions.

It is, however, important to note that these estimates are dependent on the extent of the current lockdown measures. These could materially change if isolation periods are extended.

“One area of concern is the fragility of the supply chain. The sourcing of flexible packaging raw materials is currently holding up. Transportation costs have risen sharply and this was the main driver of an increase in European BOPET film prices in March. In terms of food supply, the impact on the workforce is a cause for concern.

“The key issue of packaging sustainability, which was a major talking point coming into 2020, has taken a back seat during this crisis but will obviously come back to prominence once the current situation eases. However, it is worth noting that if crude oil prices remain low, the use of virgin plastic will be a very attractive proposition compared to more expensive post-consumer-recycled content,” said Gilfillan.

Fast Link

TOP