Packaging?Outlook and Trends
Realistic expectations are pinned to steady economic growth, while tempered by the cloud of overseas manufacturing.
THE PACKAGING MARKET as a whole had extremely robust growth during most of the 1990s. But with the recession of 2000-2001 and relatively slow recovery, overall growth slowed markedly, with some packaging types even declining. As we head into a new year, the usual optimism appears to be firmly based in reality. U.S. economic growth in the second half of last year was extremely robust, the best in more than 20 years. With the consensus forecast calling for more than 4 percent real growth in 2004, packaging markets should be strong.
The strength of the label market will continue, although growth in pressure-sensitive labels has certainly slowed. We expect to see continued shifts in the market, reflecting both changes in the packaging market as well as dynamics internal to labels, particularly the shift from paper to film. The overall growth drivers will remain, as consumer products companies continue to introduce new foods and beverages, and change the packaging of existing products to cut costs and to drive consumer demand. New required product information will also drive label growth, as will growing demands for portion packs and single-serve.
Folding cartons are likely to remain flat, at best, having declined last year. Flexible packaging will still be the star, growing at 4.5-7 percent a year, according to Ernst & Young Corporate Finance. Some sub-segments will grow faster, with stand-up and retort pouches both expected to grow by double digits.
Changes in the economic and business environment will, however, make the year interesting, providing both challenges and opportunities. First, the challenges. I've alluded to the need to temper expectations for robust demand based on projections of strong economic growth. How many of you had your business grow by more than 8 percent in real terms last quarter?