The pace of consolidation through mergers and acquisitions in the European flexible packaging industry has accelerated over the past two years, with the top 20 converted flexible packaging suppliers estimated to account for around 60% of the European market (valued at around €11.6 billion in 2011). Following its acquisition of Alcan’s European flexible packaging operations in 2010, Amcor now accounts for around 25% of the market, with the number two player Constantia accounting for less than 10%.
According to the latest quarterly report from PCI Films Consulting, these developments are having repercussions for packers. The consolidation of the European Amcor and Alcan operations resulted in a number of multi-national brand owners having only one major flexible packaging supplier rather than two. This has seen consumer goods packers looking to other second source suppliers for some of their high volume brands. In some cases, however, this has proved difficult as these potential new suppliers have often lacked sufficient capacity and are unable to deliver cost effectively across all a customer’s European packing plants. At the same time, there has been a trend for major brand owner packers to rationalise their packaging sourcing, which represents another threat to medium sized flexible packaging producers, especially those operating from single production sites.
As the big flexible packaging suppliers grow still larger, competition issues are being increasingly raised by both their competitors and customers, resulting in newly consolidated flexible packaging converters being forced to divest operations to meet competition concerns.
PCI, however, reports that, running counter to this concentration at the top end of the industry has been the emergence of growing numbers of medium sized groupings, often themselves products of smaller acquisitions. These companies have been able to carve out profitable positions at the regional and national level by supplying short run, low cost and niche offerings to both large and small consumer goods packers, and successfully gain business by being more flexible. Examples include Ultimate Packaging, Roberts Mart and Excelsior in the UK, Maria Soell and Maag in Germany, and Italy’s Di Mauro Officine Grafiche. So it looks like there will always be a place for these companies, not least to provide a strong competitive alternative to the major flexible packaging suppliers as the larger groups continue to reduce brand owners’ sourcing options.
This month, we report on the growth in popularity of all forms of stand-up pouches across multiple FMCG market sectors.