The Flexible Packaging Association (FPA), Annapolis, Md., released its “2019 State of the Flexible Packaging Industry Report,” which provides industry converters, suppliers, investors and analysts with insight into the performance (i.e. growth, revenue/volume expectations, profitability and capital spending) of the U.S. flexible packaging industry over the past year.
The total U.S. flexible packaging industry is estimated to be $31.8 billion in annual sales for 2018. The flexible packaging industry includes packaging for retail and institutional food and non-food, medical and pharmaceutical, industrial materials, shrink and stretch films, retail shopping bags, consumer storage bags and wraps and trash bags.
The focus of this report is on the segment of the industry that adds significant value to the flexible materials, usually by performing multiple processes, such as printing, laminating, coating, extrusion and bag/pouch manufacturing. This segment of the industry is estimated to be $24.8 billion for 2018, and does not include retail shopping bags, consumer storage bags or trash bags.
Flexible packaging represents approximately 19% of the total $170 billion U.S. packaging industry, and is the second largest packaging segment behind corrugated paper, but just ahead of bottles and miscellaneous rigid plastics packaging. Flexible packaging’s solid long-term strength coupled with flexible packaging’s ability to replace other packaging formats has resulted in the growth of flexible packaging, increasing from 17% in 2000 to the current level of 19% in 2018.
The industry has shown steady growth over the last 20 years with two exceptions—the downturn of 2001 due to the 9/11 terrorist attacks and the Great Recession of 2009. This steady growth and expansion have been aided by innovation in technology and products, growth in new and existing markets and an ability to adapt to the ever-changing environment of today’s marketplace.
For 2017-2018, FPA estimates a solid annual growth rate for total U.S. flexible packaging of 2.7%. This projection is in line with the long-term trend line of flexible packaging growth for 2003-2018, as the industry continues to improve from the low level experienced in 2009. The estimated growth rate of 2.7% is lower than the projected gross domestic product (GDP) growth for the full year 2018, which the latest data indicates an overall U.S. economic growth of 2.9%.
The U.S. flexible packaging industry employs close to 79,000 people in the United States, and encompasses a wide variety of manufacturing methods, materials and resources. The average flexible packaging converter is a small to medium-size company with annual sales totaling approximately $76-$78 million.
The Top 100 flexible packaging companies (out of an estimated 408) account for almost 77% of the total industry revenue with an average size of about $245 million. The Top 10 flexible packaging companies account for just over half (53%) of flexible packaging industry revenue and maintain average sales of around $1.6-1.7 billion. The majority of flexible packaging plants are concentrated in the Midwest, although many plants exist in the Southeast and California.