UK packaging markets expected to show growth in plastics, paper

Published: August 01, 1995, By Wolpert, Vladimir

A PIRA international market report on UK packaging markets includes the chapter Industry Forecast, which states, "The overall market for packaging in the UK is forecast to show growth in the future, particularly in plastics - and paper-based sectors."

It's forecast that the apparent consumption of plastic packaging products will increase from [pounds]2.84 billion in 1995 to [pounds]3.03 billion in 1996 and will reach [pounds]3.25 billion in 1997. Afterward, polyethylene terephthalate is forecast to exhibit the fastest growth patterns, followed by high-density polyethylene. Polystyrene, including expanded PS and polyvinyl chloride, is particularly vulnerable.

The apparent consumption of pulp, paper and board packaging products is expected to increase from [pounds]3.65 billion in 1995 to [pounds]3.82 billion in 1996 and to [pounds]4.02 billion in 1997.

Total paper-based packaging consumption will increase to more than [pounds]4 billion in 1997, with corrugated board accounting for the majority and exhibiting the strongest growth trends. Heavy-weight solid board will continue its decline.

Cartons are so versatile that although they aren't a growing market, there is no danger of serious decline. Other forms of paper-based packaging show static or low growth patterns.

"Recovery and recycling of paper is a fundamental component of the industry, and there will be significant growth in this area," the report states. "The use of more recycled paper in packaging need not result in a reduction in total consumption since the performance might fall, producing a need to use a greater quantity overall.

"The paper-based packaging materials fulfill such a wide range of applications that they are unlikely to lose out due to shortcomings in their properties or perceived environmental image. Quantitatively, there could be a reduction due to greater efficiency of pack design and to the elimination of certain components of packaging."

To some extent, these comments apply to the plastics sector, which the report describes as "too diverse and too useful to suffer a major change to its status. However, the industry will continue to actively promote reductions in materials consumption. There will be declining demand for new materials, and efforts will concentrate on the principle of the fewer the better"

The total apparent consumption of packaging products is expected to increase this year by 4.9% to [pounds]9.79 billion, in 1996 by 4.8% to [pounds]10.25 billion, and, in 1997 by about 5.4% to [pounds]10.8 billion.

The PIRA report contains a chapter on the organization's top 20 UK packaging companies with profiles.

David Guest, director of operations management, PIRA International, writes in the report's forward, "The packaging industry is a major industrial sector in the UK with production and apparent consumption values of approximately [pounds]8.7 billion and [pounds]9 billion respectively. The 20 leading UK companies accounted for a turnover of [pounds]5 billion in 1994, with a large number of smaller companies accounting for at least another [pounds]4 billion in sales.

"After some difficult years, when the recession was at its worst, the corner now has been turned. The prospects for the future depend on how the industry will manage the rapidly rising raw material prices and tackle the environmental issues."

* The Papierweke Waldhof-Aschaffenburg (PWA) 1994 Annual Report states that group sales increased DM 4.45 billion in 1994 from DM 3.86 billion the previous year.

The 1994 figure includes sales in Germany of DM 2.02 billion, in Europe of DM 1.64 billion and in other countries of DM 786 million. In 1994 profits before taxes amounted to DM 58 million as compared to a loss of DM 234 million the previous year.

The report adds, "All the product groups contributed to this steep increase in sales. With a 37% increase, it was graphic papers that experienced the highest growth rate. They were followed by corrugated board and packaging with a plus of 15%. Specialty papers increased their sales by 8% and hygiene papers by 3%.

"This marked expansion was sustained by substantial non-German business, which now accounts for 55% of the group sales. Exports to the European Union developed gratifyingly and increased by 15% to a total of DM 1.6 billion. Exports to other countries showed a dynamic growth by 25% to DM 786 million."

According to the report, "The corrugated board- and packaging-product group increased sales by 15%, with different figures in the two business sectors. While volumes developed gratifyingly in the corrugated-board packaging sector, proceeds remain at an unsatisfactory level. Output increased by 10% to 565,000 tons. The increase in volume, together with substantial price increases, caused customer sales proceeds for board papers to increase by 38%. A vigorous demand made it possible to pass on waste-paper purchase prices, which had exploded. (In the course of the year, they had increased tenfold.)

In the corrugated-board packaging sector revenue industrywide, with gratifying development of volumes, continued at an unsatisfactory level. Owing to tough competition, procurement costs for corrugated-board papers, which had risen drastically, could only be passed on to customers with a time lag and not to their full extent. Depending on the grade, raw material costs were between 50% and 110% above the previous year, which meant that the industry had to weather one of its most difficult years. Exclusively due to volume, PWA increased its sales in packaging by 9%."