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US global flexible packaging share to shrink on Asian growth

By Mark Astley , 12-Jan-2012

The US share of the global flexible packaging market will decrease as emerging markets such as India and China continue to grow at a “staggering” rate, according to an industry analyst.

Although the US market will continue to grow steadily, flexible packaging growth in BRIC nations such as China, India, Brazil and Russia, will eat into the 30% global share currently held by the US, an industry expert told FoodProductionDaily.com.

The global flexible packaging market is valued at around $65bn, of which the North American market accounts $18.3bn, according to a PCI Films report on the region.

Food packaging applications accounts for around two-thirds of the sector.

Market grows, share declines

The report, The North American Flexible Packaging Market to 2015, expects that the North American market will to continue to experience growth, with the US and Canada forecast to grow at about 3.5% per annum and Mexico at 5%.

This would see the regional market reach $22bn by 2015.

“The US flexible packaging market accounts for just under 30% of the global total, and what is certain to happen, is that the American market will continue to grow,” report author Paul Gaster told FoodProductionDaily.com.

“But markets in Asia, particularly India and China, will be growing a lot faster. Those markets are growing at a staggering rate, at more than 15% each year in India - maybe not quite as much as that in China.”

“The North American market will continue to grow at a steady rate but its share of the global flexible packaging market will decline because of much more rapid growth elsewhere, especially in emerging markets in Asia.”

Import increase

The region’s flexible packaging market is fairly self-contained, although imports, which account for nearly 2% of demand, are expected to increase.

“Imports of converted flexible packaging into North America are going to grow, particularly from India and China, but will continue to account for a relatively small proportion of the overall total over the medium to longer term,” said Gaster.

The same can be said about North American exports, which stand at less than 1% of regional production.

Exports of flexible packaging from North America are relatively small; it’s a very self-contained region. Most of the trading that is done is intra-regional, between the three countries,” Gaster added.

Mexican growth

According to the report, around 90% of sales are concentrated in the US, with Canada accounting for 6% and Mexico for 5%

Mexico, which has benefitted from its recent accession to the North American Free Trade Agreement (NAFTA), is expected to experience growth at a rate of around 5% per year, said the report.

However, much of what is produced is exported to the US by packaged food companies taking advantage of lower labour rates in the country.

“A number of leading US-based converters have Mexican production plants, and a significant proportion of what they produce is going to supply some of the big US-based food processors with factories in Mexico,” Gaster added.

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