Packaging market growth to continue despite pandemic

printing packaging

While packaging print market growth will be limited this year, it will continue to expand over the next five years, according to new research from Smithers.

In its latest report, The Future of Package Printing to 2025, the market report publisher and consultancy for the print, paper and packaging industries said the total value for printed packaging and labels will reach $431.6bn (£325.5bn) in 2020, up slightly from $426.4bn in 2019.

The coronavirus pandemic and the global lockdown has affected printed packaging volumes, but to a much lesser extent than publications or graphics work, Smithers said.

However, the packaging print market will continue to expand at a compound annual growth rate (CAGR) of 2.6% and reach $491.1bn in 2025 according to research for the new study.

Cartonboard and corrugated are the two largest packaging segments, representing 24.9% and 30.1% of the market by value in 2020.

In the short term these two areas will benefit from Covid-19 and shifts in packaging demand, while in the medium term other trends, such as sustainability goals, will foster further growth and innovation.

Smithers information division director of research and reports Adam Page told Printweek the overall market “will weather the headwinds of the pandemic”.

“As an industry packaging and labels is generally quite resilient, at least in developed markets, we saw this during the 2008 recession.

“In 2020, the specific conditions of Covid-19 have helped packaging and labels further. Lockdown (shelter-in-place) orders have not affected overall consumption but have switched the retail channel.

“In Q2 2020 there was a surge in demand, particularly for food and other essentials, as many consumers stocked up ahead of the initial stay-at-home orders. The widespread closure of many hospitality venues has helped sustain this, with a corresponding rise in packaged food and beverages for consumption at home.”

He added: “E-commerce has also boomed. Smithers’ data show that e-commerce packaging demand is up around 40% in 2020, relative to 2019. This is good news as e-commerce delivery uses more packaging per unit than retail selling, and these each need individual shipping labels.

“Where there have been declines in packaging volumes, these have been in transit and industrial packaging which requires the least printing.”

Smithers said that while some trade will return to physical channels, much of the switch to e-commerce will be permanent as more consumers gain experience and confidence in carrying out transactions online.

“Demand for e-commerce will continue to grow into the 2020s. Covid-19 will cause an unprecedented spike in 2020, but the e-commerce packaging segment will continue to expand at a CAGR of 16.9% through to 2025, and beyond,” said Page.

Smithers said global corrugated print output has grown from $114.5bn in 2015 to $129.8bn in 2020, with the growth underpinned by the increasing use of printed corrugated in retail-ready packaging, as well as in e-commerce.

Flexo accounts for 73.8% of the value of corrugated print output in 2020, and 79.6% of all output by volume. Inkjet, however, is the fastest growing print technology.

Smithers added the development of a wider range of functional and barrier coatings for corrugated is extending its use, with coatings to impart protection against water, oil and grease while not compromising the recyclability of the final pack.

The folding cartons sectors, like corrugated print, is also benefitting from an increased focus on sustainability.

Printed cartonboard, which can be readily recycled, is being used to replace plastic in some packaging applications, such as plastic shrink wrap for beverage multipacks, and plastic trays in food packaging.

The development of new barrier coatings and new uses of film technology is also opening opportunities to use printed cartons in different ways.

While sheetfed litho is the dominant print process used on cartons, accounting for 74.7% of the total value in 2020, digital print for cartons has grown from $0.43bn in 2015 to $1.96bn in 2020 and is forecast to reach $3.67bn in 2025, a 2020–2025 CAGR of 13.3%.

“Folding cartons will be a fast-growing segment for inkjet and toner across the next five years. As more new dedicated presses are installed, they will take more of this market,” said Page.

“Cartons are generally used in higher end packaging, which demands superior print quality. This has historically favoured litho. The quality achievable on the latest generation of inkjet presses is now comparable to good flexo and typical litho process colour on surface treated or primed substrates.

“This will continue to improve and erode the competitive advantage of litho. The print quality of inkjet will be indistinguishable from litho, gravure, or HD flexo on standard coated papers and board by 2025.”

He added the other issue is cost, as inkjet is most economical at lower runs.

“Print ordering is moving in this direction anyway, and speed improvements are progressively making inkjet more price competitive at longer runs. An opportunity as packaging buyers look to cut costs in the future is using inkjet for print-on-demand services, which minimises the threat of large printed inventories and product obsolescence.

“E-commerce in particular is interesting, as PSPs can offer new services based on fast turnaround for small-to-medium run length packs with variable data elements.

“With online selling the identity of the customer is known before shipping, so there is additional scope for value-adding elements – such as personalised messages or discount codes – to communicate with him or her in a tailored way.”