Manager of marketing at Lemo Maschinenbau Volker Fritz looks at European trends in plastics bag converting
We are currently witnessing large scale change in the European flexible packaging scene. New technologies for packaging and preservation of food drive the business and, as many traditional packaging solutions change over to flexible materials, a very high percentage will use plastics films.
We have seen one overwhelming change in industry structure. The flexible packaging producers, a few years ago mainly medium size and often family owned companies, are rapidly being concentrated into a few pan-European and often internationally active converting groups, gaining an ever increasing share of the cake. In addition, growing capabilities for packaging production in Asia and other areas with low labour costs make a further impact on flexible packaging production in Europe.
The European population pyramid is also influential, with the number of elderly people growing quickly within a stagnating population. Young people more frequently live in one-person households. Both trends lead to more and smaller consumer packs.
But what does all this mean for plastics bag making? First of all one must differentiate between primary packaging (such as bread bags, diaper bags, pouches and other bags for industrial packaging) and secondary or service packaging (for example, carrier bags, and household waste and garden bags and sacks).
The primary part of the business is moving directly parallel to innovative new packaging processes and new material solutions. In many cases, material demands are high, not only with regard to material strength to price ratio. High bag quality and quality consistency through the run are of premium importance – no user wants downtime on the filling line, or returns of packs from retailers or consumers caused by failed bags.
So packer fillers want reliable bag suppliers with assured quality, capable of quickly moving when bag designs are changed. The supply partners mostly have highly integrated converting plants to meet the specs, including premium quality film production and flexo printing. Naturally, prices for the bags are very important, but are not the only reason for buyers’ decisions.
Pre-made bags are losing some customers to form, fill and seal lines in a slow but steady drain. Once a filling and packaging concept has successfully been run on FFS instead of pre-made plastics bags, it is likely it will stay there.
Bags, sacks and carriers for secondary use are not directly bound to product consumption. They are sold as packs or rolls to stores, to consumers for household use and to communities or private organizations for waste collection. Their overall quality level, including printing, shows a wide variation. High quality and high advertising appeal for boutique style bags and carriers with CI flexo printing can be seen alongside the simplest one or two colour stack type prints on recycled PE film. Low cost mass consumption bags, sacks and carriers are extremely price sensitive.
Film material developments for this kind of use focus mainly on increased strength, aiming at decreased film thickness and thus cost reduction.
The technical and cost advantages of plastics carriers and sacks over flexible paper solutions for the same use led to a drastic change to poly bags over the last two decades. Today we see a stabilized situation, where paper bags and carriers have an assured field of use for specific purposes such as the classic one-ply paper gusseted bag for bakery products.
There have been several waves of mainly environmental movements in the past to ban or reduce plastics bag consumption, but in the main Europeans have decided to use what they think is best for their needs. And this is usually the plastics bag, sack and carrier in all its designs. No one ever seems to mention it, but nearly always the humble carrier bag has a secondary use. This most commonly is as the lining of a waste bucket or bin.
We have already seen a large impact in Europe by imports from Asia. European converters have taken action to keep their production costs down, slimmed and changed their product portfolios. Weaker players have gone out of business or have been sold to competitors. This continues to happen.
The trend to larger groups also results in cost advantages when buying raw materials. Some converters of commodity bags are defending against imports by reducing their own labour costs. They are investing in automatic handling and packaging systems which fill the bags and carriers directly from the delivery station of the bag maker into shipping cartons. Others keep their supply lines to customers open, but produce or buy an increasing part of their commodity business in cheaper production geo-graphical areas instead of making them at home. This will increase.
Converters are also increasing their production of speciality bags or carriers – going for niche areas without too much competition and so gaining better profits. Typical examples are reclosable freezer bags and the thermo-protective, clip reclosable, carry-out bags for frozen foods sold by retailers. Here the consumer is prepared to pay good money for added value and convenience. Compared with North America, “convenience” is still a rarity in Europe. There are still many options available offering good potential for the bag making industry.
A further interesting field is the production of high class advertising carriers for brand marketing. Cosmetics, perfumes, textiles and shoes are all advertised through the high quality print on the carriers. Research in Germany has indicated that these quality carriers are the number one advertising media. On average more than 70 pairs of eyes see the message on the surface of a carrier during its life. So for the few euro cents it costs, this carrier is by far the most cost effective brand marketing tool.
The higher quality advertising carrier sector remains attractive for European converters, even if competition is getting stronger as more hungry ‘eaters’ try to cut the pie into pieces. Here, too, production costs for bag making can be reduced by using automatic in-line handling and packaging systems and by exchanging older machinery for the latest bag lines.
Another very important aspect is the change-over time for the bag maker. All new machines have improved abilities for quick adjustments. This will increase in importance with order sizes reducing still further. The investment in new bag making systems may pay off just by gaining more effective production hours or more smaller order runs a day than with the older model.
A converter’s commercial success may depend on how far it is able to execute small orders profitably.