"Global Packaging
Industry CEO Business Outlook Survey 2012–2013" is a new report by
Canadean that analyzes how global packaging industry companies' procurement
expenditure, business strategies, and practices are set to change in 2012–2013.
What is the current market landscape and what is changing?
C-level respondents from
the global packaging industry expect increased levels of consolidation, with
61% of respondents anticipating that there will be either a 'significant
increase' or an 'increase' in merger and acquisition (M&A) activities over
the next 12 months.
What are the key drivers behind recent market changes?
Large packaging companies
are seeking small and specialized companies to strengthen their core
competencies, reduce costs, and resist competition with their enriched product
mix. The higher expected levels of consolidation in the global packaging
industry is also due to new cost or demand pressures, repayment of debts, the
potential need to meet new compliance procedures, or gain quick access to new
markets, business expansion, and attempts to increase market share.
Key
Market Issues
Global packaging industry
C-level respondents identify China to
be the most important region for growth among emerging markets, along with India and
the Middle East.
Strong growth of semiconductor wafer fabrication and domestic electronics
markets is further aiding growth expectations in China.
There has been significant growth in the aseptic packaging sector in the
country, driven by a rise in technological sophistication.
According to the survey,
56% of C-level respondents rate 'raw material prices' as the most important
business concern in 2012, while 54% and 46% highlight 'responding to pricing
pressure' and 'cost containment' respectively.
The average size of the
global annual procurement budget among packaging industry C-level respondents
is forecast at US$85 million for 2012. In
addition, the Canadean industry survey reveals that C-level respondents'
procurement expenditure is projected to rise by 11.5% over the next 12 months.
'Quality', 'level of
service', and 'price' are considered very important factors for C-level
respondents while selecting a supplier, whereas 'supplier's environmental
record', 'supplier's CSR reputation', and 'proximity of supplier operations'
are considered the least important factors.
The main reasons for an
expected increase in the level of consolidation in the global packaging
industry have changed to new equipment acquisition, increase operational
efficiency, and to acquire growth opportunities.
Key
Highlights
An analysis of responses
by packaging C-level respondents reveals that 'new product development', 'IT
infrastructure development', and 'machinery and equipment purchase' will record
a significant increase in capital expenditure over the next 12 months.
As global packaging demand
is projected to increase in the next 12 months, packaging C-level respondents
plan to significantly increase their capital expenditure on 'new product
development'.
According to the survey,
67% of C-level respondents project an increase in investment toward 'IT
infrastructure development'. For example, in November 2011,
Omni Systems, a private label converter based in the US, announced that it will
invest in new MIS and ERP software. A senior executive from the company states,
"We have selected the Radius ERP solution because of its specific focus on
the labeling industry, its robustness, and the ability to cover the complete
workflow, from quoting to printing to shipping."
Global packaging industry
C-level respondents plan to increase capital expenditure on 'machinery and
equipment purchase' over the next 12 months. For example, in March 2012,
Beatson Clark, a glass packaging manufacturer based in the UK, decided to
invest US$15.6 million in furnace
improvements and new equipment at its Rotherham plant, and plans a complete
reconstruction of its white flint furnace in July 2012.
A senior executive from Beatson Clark states: "Our company sees growth in
the food, beverage, and pharmaceutical sectors in the UK over the next 12 to 18
months. Therefore, we expect to invest in new design technology by updating its
computer-aided design system to the 3D visualization software."
'Email and newsletters',
'social media and networking sites', and 'public relations' are expected to
register the highest investment, as identified by 47%, 44%, and 36% of
respective C-level respondents. Conversely, 'television and video', 'outdoor',
'radio', and 'newspaper' advertisement are expected to attract the least
investment.
The food packaging company was
challenged with developing a product which significantly reduced the amount of
moisture lost and thereby increasing the shelf-life of sponge and pastry-based
products without using additional food preservatives. Current cake and bun
containers allow a high level of moisture to escape from the pack meaning that
products turn stale within a couple of days.
