By Neil Farmer
I have been undertaking much work in recent months in the packaging equipment sector. Corporate activity, including company evaluations and acquisition targeting has been at the forefront of discussions.
The outlook for the global packaging market has improved substantially over the last few months. Economic fundamentals in the USA and Europe are encouraging this positive outlook for many sectors.
Nowhere is this statement more true than in the packaging machinery market, with improved confidence levels and, in the last quarter of 2017 and the first quarter of 2018, an upturn in the global demand for equipment and services.
The global packaging machinery market is worth over $40 billion and, after a period of stagnant growth, is poised to expand at 4.0% per annum over the next five years. The main end-use market continues to be food and beverages, accounting for over 62% of the total, followed by pharmaceutical and personal care, chemical products and other sectors. As regards growth by region, Asia and Latin America are showing signs of being the territories with the largest potential over the period to 2023. Forecasts indicate that demand for packaging machinery in Asia could expand by as much as 6% per annum over this time.
Much of my focus has been on the plastics machinery sector, where in the USA there is considerable optimism. The US Plastics Industry Association’s Committee on Equipment Statistics reported that plastics machinery shipments by companies, including injection moulding and extrusion equipment ,were worth $350.8 million in the third quarter of 2017. This compares with a total of $291.3 million in the same quarter in the previous year. A survey which the Association regularly undertakes showed that respondents expected packaging machinery to be the strongest market in 2018. We therefore have cause for optimism as the year progresses.
The importance of machinery with enhanced features and technology will be a key factor in the future market growth. Amongst many other things new developments in packaging machinery will result in equipment that produces packages that further enhance product shelf life, ensure greater product protection and security, and provide improved traceability with enhanced data and information. The growing environmental awareness which is transforming our world and our industry will encourage companies to upgrade their production equipment and offer improved performance in many key areas, including the continuing growth of lightweight packaging solutions. Similarly greater demand for lighter case and carton packaging with increased use of recycled materials will create growth opportunities for robotic packaging machinery. All these complex demands will require machinery with advanced electronics, computing technology and automated functionality. As a result integrated packaging solutions will be embraced by more industry sectors.
Increased Investment in Handling Systems
Increased investment in sophisticated technology and handling systems will be a priority over the period to 2023. We must include here the important development of the automated robotic warehouse and the handling and processing of orders. This is all linked, of course, to the burgeoning demand for the delivery of online grocery and other merchandise. Commercialised to an advanced and sophisticated degree by companies such as Ocado, Amazon and others, this technology will continue to revolutionise our world. The UK has been slow to fully embrace the benefits of robotic equipment. We have a lot of work to do to catch up with the USA, Asia and Western Europe. Investment in this sector will be a key driver over the next five years, with speed of delivery, same day service and an extended range of product offerings all part of a future which is already upon us.
Add to all this the growing demand for single serve and smaller size packages and the equipment to fill them, the continuing demand for bottled and canned beverages requiring more sophisticated liquid filling and capping machinery, you can see why I’m optimistic about the future of the machinery and equipment sector.