Flexible Packaging Trends: M&A, Thinner Films, Cold Seal and Waste Rules

Consolidation is moving quickly through the flexible packaging value chain. Wal Mart, North America's largest food retailer, acquired UK supermarket giant ASDA last year, extending its reach into Europe and creating major ripple effects for flexible packaging suppliers. In May this year, Huntsman Corporation—one of the world's largest packaging companies, with sales of USD 1.5 billion—announced it would be acquired by a Citigroup investment fund for USD 1.1 billion. Earlier this year, Alcan merged with Alusuisse, owner of Lawson Mardon Packaging. Dixie Toga/ltap, a flexible packaging supplier with sales of USD 250 million, also had one third of its shares held by Bemis C; the new company is named ltap/Bemis.

The broader pattern is clear: well-capitalized large flexible packaging manufacturers are acquiring mid-sized players step by step to become exclusive regional suppliers. Who will be next remains an open question.

The following sections examine how environmental rules, material developments and packaging trends continue to shape the flexible packaging industry.

1. Packaging waste regulations

In some countries, taxes or penalties on packaging waste are being reduced. In the UK, for example, the rate has fallen from 11% to 9%. Food producers are putting most of their investment into packaging lines that can run thinner films, helping them avoid overpackaging. From an environmental standpoint, the overall shift is from rigid to flexible packaging. Compared with flexible packaging makers, rigid packaging manufacturers are seeing lower investment.

Even so, market development ideas occasionally surface in other areas. In the UK, for instance, Mc Vities biscuits and Jaffa pastries adopted a composite can format.

1. Material trends

Films are moving toward thinner gauges and greater strength. Many snack products use 15-micron/15-micron adhesive lamination film. Polymer engineering, including metallization, has advanced and further progress is expected. With strong investment growth in metallizing plants, prices for standard metallized film will continue to decline. Metallization advances are driving wider use of metallized films with higher barrier performance, especially in snack packaging.

Low-temperature heat seal (L.T.S.) films can seal at 65°C. Unlike cold-seal films, L.T.S. films have no shelf-life restrictions and do not create registration or contamination issues during packaging. Despite these advantages from flexible packaging producers, food companies running inline packaging still tend to choose cold-seal films. Cold-seal films offer advantages over L.T.S. films in packaging speed, ease of use and avoiding damage to chocolate products; flexible packaging producers also enable precise registered cold sealing at high speeds, making it a highly effective process.

When latex-based cold-seal coatings are used for chocolate, odors can affect the chocolate's taste. Synthetic cold-seal adhesives address this problem at the root. Synthetic cold-seal adhesives have matured, and Mars Foods has decided to use synthetic cold-seal adhesive for food packaging going forward.

1. Packaging trends

Overall, the flexible packaging market continues to grow by more than 5% per year. Growth in packaging for fresh-keeping products was previously forecast at 30%, but in the past two years some portions of this category have reached 50%. As breathable film technology improves, this packaging segment will become a growing market for packaging converters.

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