The study from the sector analysts describes the Alcan acquisition by the Australia-based company as “one of the major events of the last year”.
The US$1.9bn deal, which was completed in February, saw Amcor emerge as by far the most powerful flexible packing converter in Europe with a market share approaching 25 per cent.
“At the same time a number of other European top ten converters have not yet achieved the critical mass at which they can most effectively challenge the newly enlarged Amcor,” said the report 'The European Flexible Packaging Market 2010'.
Consolidation
This factor will contribute to a continuing trend of consolidation within the sector within Europe as more medium-sized converters look set to be swallowed up by the leading players, it predicted.
In June, Peter Brues, president of Amcor Flexibles Europe & America, served notice that the acquisition had changed the commercial landscape in the sector. In an exclusive interview with FoodProductionDaily.com he said the new company would use its dominant position to out-innovate rivals, maximise supply scales and cut its cost base.
The report also details the emergence of a number fast growing medium sized converters that are taking share from the leading players in some national markets, particularly in the UK and, to a lesser extent, in Turkey.
It forecasts that the 2010 European flexible packaging market for converted material will grow by 4 – 5% per cent to just under €11bn in value terms as converters see some stock building, higher selling prices and some real volume growth. Longer term value growth is expected to be around 2.5 per cent per annum up to 2014.
“The robustness of flexible packaging demand is to a great extent underpinned by the strong recession-resistant nature of its end use markets, especially food, pharmaceuticals and pet food, which between them account for around 90 per cent of total European flexible packaging demand,” said study author Paul Gaster. “However, raw material costs have risen very strongly this year, reversing the declines in 2009, and this is again putting greater pressure on converter margins.”
Prices for polyester were estimated to have risen by around 50 per cent between the first and third quarters of this year, spurred on by a global shortage and over-buying by some. BOPP film is believed to have seen price rises of about 16 per cent.
The research confirmed that total demand for flexible packaging in the region for 2009 reached €11.8bn for both converted and unconverted materials – with the former accounting for €10.4bn, while the latter amounted to €1.4bn. The fall in raw material prices for converted materials saw a drop in sales in terms of value by 3 per cent - even though volumes were up. This occurred especially in the first half of the year, which was reflected in lower prices to customers.
The European Flexible Packaging Market 2010 is available from PCI Films Consulting