Billerud offers the global packaging market innovative and sustainable
products and services. The Group has a leading position in primary
fibre-based packaging paper and a growing share of the bioplastic market.
Packaging is a growth market and its importance to brand owners and
consumers is on the rise.
MARKET AND TRENDS
Around 10% of the fruit and vegetables transported in Europe
never reach the end-consumer and one reason for this wastage is
inferior packaging. Effective management of resources is becoming
increasingly important and packaging plays a significant role in
ensuring that the contents are protected. High-quality packaging
has both financial and sustainability benefits.
The global packaging market saw an upturn
in 2010 after falling back in 2009. Billerud
estimates that the market grew by 3% to
around USD 580 billion.
According to Pira International Ltd, the
market is expect to rise to USD 740 billion
by 2014, representing forecast growth of
about 6% year on year. Since 2004, the market
has shown annual growth in real terms of
around 4%.
Steady growth for packaging
The packaging market is expanding faster in
growth regions such as Asia and the Middle
East than in Europe and North America.
Figures from the World Packaging Organisation
show that packaging consumption in the
growth regions has risen by about 7% per
year since 2003. China is the third largest
packaging market after the USA and Japan,
accounting for almost a 10th of the global
market. Growth in Europe and North
America is more modest, at an average of
around 3% per year, with major variations
between countries and regions. Since 2003,
the annual growth for packaging consumption
in Eastern Europe has been more than
double that of Western Europe.
Three drivers
There are three main drivers affecting the
development of the packaging market: globalisation,
increased prosperity and changing
patterns of consumption.
With production and consumption taking
place in very different locations, globalisation
has brought about a rise in transport
needs. Optimum transportation of goods
depends on good packaging that is fit for
purpose.
Global prosperity is increasing and
growth economies are approaching the levels
of consumption and demand in the Western
world. According to the OECD, the global
middle class in the Asia-Pacific region is
expected to increase from 0.5 billion people
in 2009 to 3.2 billion in 2030. Increased
production and consumption also brings an
increased need for packaging.
Finally, patterns of consumption and
purchasing are changing in the Western
world. Take-out food and drink as well as
online shopping are further increasing
demand for packaging.
Strong trend for paper
Demand for packaging paper is driven
primarily by four trends: increased demand
for sustainability and product optimisation,
plus an increased focus on product differentiation
and product safety. Demand for bioplastics
is driven mainly by an increased
awareness of the negative environmental
impact of fossil plastics and a desire to
convert to degradable materials.
Renewable material attractive
Today’s customers and consumers are
increasingly keen on a sustainable society and
prefer packaging made from sustainable materials.
According to an IPSOS survey from
2007, 87% of consumers in Europe preferred
paper to plastic in their packaging. And yet
paper accounts for only 12% of the flexible
packaging market in Europe, making the difference
between supply and demand for paper and
plastic the reverse of what it should be.
Political moves are promoting renewable
alternatives. Many countries are taking
strong action to reduce the amount of plastic,
above all the use of fossil plastic carrier
bags, which is increasing demand for paper
and bioplastics.
Particularly in Asia, there is very large
potential for the sale of packaging paper and
bioplastics, since fossil plastics currently
have a dominant position as a packaging
material.
Right quality crucial
More and more packaging manufacturers,
brand owners and food retailers are appreciating
the value of high-quality packaging to
protect their products. Around 10% of the
fruit and vegetables transported in Europe
never reaches the end-consumer and one
reason for this wastage is inferior packaging.
Both the financial and environmental cost
will be high if packaging cannot carry out its
most fundamental task of protecting goods.
Using primary fibre in paper makes packaging
strong enough to survive the stresses to
which it is exposed. A primary fibre-based
box can also be made lighter, with the same
or better function and strength, compared
with packaging made from recovered fibrebased
paper. Good packaging quality also
brings with it increased profitability for the
various players in the chain – the packaging
manufacturers, logistics companies, brand
owners, retailers and consumers.
Packaging communicates
The battle for consumer attention in store is
becoming ever tougher, with more and more
brand owners seeing packaging as an effective
marketing channel. Packaging innovation is thus becoming increasingly important
to brand owners as a way of differentiating
their products from the competition. The
performance of the packaging material is
critical for sales, since consumers reject broken
or damaged packaging on the shelves.
Product safety critical
Packaging that comes into close contact with
food and medicine has long required certification
in order to be sold within the EU. It is
generally the case that the paper has to be
made from primary fibre. Europe is driving
the Asian trend towards similar safety requirements,
particularly with regard to medical
items manufactured in Asia for export to the EU.
Billerud is well placed to benefit from increasing demand for sustainable packaging. According to an IPSOS
survey from 2007, 87% of consumers in Europe preferred paper to plastic in their packaging.
And yet, paper accounts for only 12% of the flexible packaging market in Europe.
The trends favour Billerud
As a supplier of primary fibre-based packaging
paper, Billerud is well placed to benefit
from the underlying drivers in the packaging
market and the trend for renewable packaging
materials. There is also much greater
quality awareness in the packaging market.
An increasing number of companies are
demanding strong, primary fibre-based materials
that form sustainable packaging,
reduce losses along the logistics chain and
contribute to increased profitability.
A strong position in a growing market
Western Europe is Billerud’s biggest market,
and Asia the second largest. A large part of
Billerud’s brown sack paper heads to growth
markets in Asia and North Africa, and the
company is also serving a growing market
for containerboard in South America.
Billerud is a quality leader for several
products, including sack paper, where the
company is a market leader in high-porosity
brown sack paper to Asia, and primary fibrebased
fluting, where Billerud is the biggest
player in Europe. The market for kraft paper,
which is used for consumer products among
other things, is relatively consolidated when
it comes to carrier bags, sugar and flour
packaging, but is more fragmented for MG
paper, where Billerud for uncoated white
MG has a market-leading position.
Overview – Billerud’s product markets