Diverse prospects for consumer packaging films.

* Extruders of consumer packaging films continue to be very optimistic about market growth in 2004 and 2005, according to Mastio & Company's most recent polyethylene film market study. However, growth rates differ widely among various segments. Consumer packaging films include applications such as baked goods, meat, seafood, poultry, candy, frozen foods, cheese, and snack foods. Also included are bags for fresh produce and ice, boil-in bags, bag-in-box packaging, deli bags and wrap, carton liners and slug wrap, multi-wall sacks for pet food, newspaper bags, pouches, towel and tissue overwrap, medical packaging, magazine overwrap, and envelopes. During 2003, the North American market for all these uses reached 3.4 billion lb, or about 20% of total PE film resin consumption. With an average annual growth rate (AAGR) of 5.5% over the next two years, these markets will reach 4.4 billion lb by 2006.

More value-added films

Higher-end, value-added flexible packaging is taking market share away from cardboard packaging and low-end commodity films. For example, the area of highest growth in consumer packaging--20% to 30% AAGR--is polypropylene retort pouches, which are needed to keep food fresh for the military. Retort packaging is being used in brand-new applications, such as rice, tuna fish, yogurt, puddings, and even per foods. The market is quickly moving from standard polyethylene pouches to PP retort pouches. PE pouches will grow only 9% annually.

Several companies produce specialty films that extend the shelf-life of fresh fruits and vegetables. Fresh-produce bags will see a 7.0% AAGR, raising usage to 309.7 million lb by 2006.

Bag-in-box packaging uses nearly 200 million lb and will grow 6% annually due to benefits in waste reduction, lower transportation costs, and reduced container storage space.

Medical packaging consumed 252 million lb in 2003. It will see a 7% AAGR through 2006.

Snack-food packaging consumed 163 million lb of PE resin and is projected to have lackluster growth of around 3% annually through 2004 and 2005. Baked goods represent 455.5 million lb of resin consumption and grow 4.0% through 2006. Demand for both salted snacks and some baked goods has been hurt by the low-carb diet craze. But one growth area in snack-food packaging is in "nutriceuticals" such as so-called "power bars." Growth in this area is expected to be around 12%/yr.

Meat, seafood, and poultry packaging reached 542 million lb in 2003, and its AAGR is pegged at 4% through 2006. Boil-in bags represent only 25 million lb and are also a low-growth market (4.0% AAGR), expected to reach 28 million lb in 2006. Their market share is dwindling due to increased popularity of frozen entrees. Frozen-food packaging is estimated at 300.7 million lb and is growing steadily at 5%/yr.

Ice bags are growing at 5.1%/yr. Newspaper bags are estimated to grow 4% annually and reach 120.4 million lb in 2006.

Cheese packaging, at 132.6 million lb, has a healthy AAGR of 8%. Deli bags and wrap consumed 41.3 million lb and are expected to increase about 3%/yr. Despite the rapid proliferation of deli departments within supermarkets, use of competitive packaging such as wax-coated paper retards plastics' growth.

Carton liner and slug wrap represents 223 million lb and will grow 5%/yr to 258.2 million lb in 2006.

Towel and tissue overwrap consumed 282.6 million lb but will grow only around 3%/yr, as the products packaged with overwrap are generally low-growth items. Meanwhile, envelopes and magazine overwrap consume 152.8 million lb and will continue to grow 6% annually.

Bart Thedinger Managing Partner Mastio & Company

Mastio & Company, based in St. Joseph, Mo., is a consulting firm specializing in industrial-consumer opinion research and market trends in the plastics industry. Tel: [phone] or visit www.mastio.com/pt/outlook.html.