REPORT HIGHLIGHTS

• The average annual growth rate (AAGR) for resins will be about 4.2%.
• By 2007, the total resin volume should grow to 13 billion pounds.
• Polyethylenes, the most widely used resins, are expected to grow at an AAGR of 4.2%.
• Specialty film resins, the smallest in volume, will have the fastest growth, featuring an AAGR of 7% through the period.

REPORT SCOPE

INTRODUCTION

Flexible packaging, and flexible plastic packaging (FPP) in particular, is a very large, multibillion-dollar within the $100 billion-plus total U.S. packaging market (the total global packaging market is estimated to be more than $400 billion). A large percentage of the total volume of thermoplastic resins produced and consumed in the United States goes into packaging, estimated by the American Plastics Council to be about 29% of the total in 2001. And flexible packaging of all types constitutes close to 20% of the total packaging market for all materials.

STUDY GOALS AND OBJECTIVES

It is our goal in this report, an update on a 1998 BCC report on this specific subject by the same author, to give the reader a comprehensive update on several aspects of the U.S. flexible plastic packaging industry, including (1) the state of the industry, (2) the plastic materials from which such packaging is made, and (3) where BCC believes it is headed at the beginning of the 21st century.  These objectives include:

• To describe the flexible plastic packaging industry, its importance to the functioning and quality of life, and its future prospects.
• To describe many different types of flexible plastic packaging products and their major end-use markets in the United States.  We describe, discuss, and forecast markets for major types of flexible plastic packaging, both by type of plastic resin used, and by several of the important major applications. 
• To analyze industry production and shipments in base year 2002 and forecast growth to 2007 for several of the major flexible plastic packaging materials and applications markets.  In addition to forecasts in pounds of bulk resins used to produce plastic films and flexible plastic packaging structures, we also analyze and forecast the larger and more definable markets by area of plastic film consumed, based on average film thicknesses and/or typical thickness ranges. 
• To describe manufacturing and application methods used to make and apply the important types of flexible plastic packaging materials, both the base resins and important packaging structures.
• To identify some of the major suppliers of materials for the flexible plastic packaging industry.  Our primary focus is on compounders/converters who produce the flexible plastic packaging rollstock and finished packaging structure.  We also include some major suppliers of bulk plastic resins that are also active in some important aspects of flexible plastic packaging, such as production of barrier film resins.
• To describe flexible plastic packaging technology and trends.  This includes both resin and flexible plastic packaging structure production technology.  Our emphasis is on technology to produce flexible plastic packaging structures.
• To note and discuss come of the major dynamics in the industry, including supplier strategies; industry changes such as consolidation and mergers/acquisitions; marketing and competitive factors; and some international effects on the U.S. industry, such as activities of foreign firms and imports/exports.  Since our first report in 1998 there have been quite a few changes in the chemical, plastics, and packaging industries, and many of the companies profiled then have changed name, owner, or otherwise have become different.
• To discuss public, environmental, and governmental regulatory issues and factors that affect the flexible plastic packaging industry.  Public perceptions are an important factor in these issues, since packaging is under constant public scrutiny.  This is a very dynamic issue, with perceptions and opinions capable of almost instant change in these days of 24/7 media (especially television) coverage.

This study focuses primarily in the United States but also, as noted above in our objectives, has some international observations, given the global nature of business and trade these days, when no nation or region can operate without consideration of the rest of the world.  However, given the sheer volume of flexible plastic packaging in the U.S., most of the products covered are American in nature and production.

REASONS FOR DOING THE STUDY

The flexible plastic packaging industry is in actuality a very dynamic industry, despite the rather staid general impression of snack bags and other everyday flexible plastic packaging products. New products and applications are constantly coming on the market, ranging from new packages for new products to new resins and packaging structures. This is a very competitive industry, and a new innovation, such as a thinner let stronger packaging structure or a better barrier, can change packaging (and consumer) choices.

BCC performed this study to provide a comprehensive and updated reference for those interested and/or involved in the flexible plastic packaging industry. This wide and varied group of personnel are involved with the following types of companies: materials, chemical, polymer, mechanical equipment and parts (including original equipment manufacturers [OEM] and for those concerned with maintenance and replacement parts). We have sorted through, organized, and condensed information from large quantities of literature and other reference materials to compile this report.

Major changes have taken place in the past few years and continue to take place today (and probably for the foreseeable future) as both newer and older materials compete for places in the flexible plastic packaging market. The major competitive factors in the market are those between materials and different packaging methods and technologies. Inter-material competition is a way of life in a technologically advancing society, and plastic packaging is no exception. For example, metallocene and other single-site catalysts are producing new polyolefins with enhanced properties such as better strength and clarity; incorporating these new resins in flexible plastic packaging films allows significant downgauging with no loss of properties.

CONTRIBUTIONS OF THE STUDY AND FOR WHOM

Because of the size and diversity of flexible plastic packaging, this report should be of interest to a wide group of organizations and individuals, including:

• People who are involved in the development, design, manufacture, sale, and use of flexible plastic packaging and flexible plastic packaging materials, as well as the general public. 

BCC feels that this report will be of value to technical and business personnel in the following areas, among others:

• Marketing and management personnel in companies which produce, market, and sell all types of flexible plastic packaging, as well as those involved in installing equipment and parts, components, maintenance materials, and chemicals for cleaning and other uses.
• Companies that supply, or want to supply equipment and services to flexible plastic packaging materials and equipment supply companies.
• Financial institutions that supply money for such facilities and systems, including banks, merchant bankers, venture capitalists, and others.
• Personnel in end-user companies, communities, and industries that purchase and use flexible plastic packaging.
• Personnel in government, primarily those involved with protection of public health and safety in consumer packaged goods.  Local, state, and federal officials are all involved in writing and enforcing standards to ensure and protect public health and safety and the environment.  For example, state and local packaging recycling regulations can affect the choice and use of flexible plastic packaging structures.

SCOPE AND FORMAT

This BCC study covers in depth many of the most important economic, technological, political, regulatory, and environmental considerations in U.S. markets for the use of materials in the flexible plastic packaging. Such packaging is made from several different polymer substrates (the base material from which a package is made) for different packaging applications.

Most flexible packaging is produced from commodity polymers, but an increasing percentage of packaging, especially food packaging, is made with sophisticated multilayer structures (MLS), which can include some quite sophisticated combination substrates. These MLS often use specialty resins, usually to add gas and/or moisture barrier to the structure. Thus this study is in large part a review and analysis of materials and structures, not specific packages.

Our focus in this study is discussion and analysis from the viewpoint of the flexible plastic packaging structures produced from plastic materials. In order to cover the subject thoroughly, we discuss and describe some basic thermoplastic resin production technology; this way we can also describe some of the basic characteristics of each resin that make it appropriate for certain types of flexible packaging. However, our primary intent is to cover this from the aspect of the flexible plastic packaging structures that are produced from these plastics. For example, as noted above, an important dynamic in today's flexible plastic packaging industry is the effect of new metallocene/single-site catalyst technologies on production of flexible plastic packaging structures, especially using polyolefins.

Our study includes key technologies (and new technologies), the markets, and key player companies that make up the U.S. flexible plastic packaging industry in all its ramifications. This is primarily a study of activities and markets in the United States, but because of the global nature of most industries these days, it touches on some noteworthy international activities. These are primarily those that can have an impact on the U.S. and markets, such as the activities of foreign-based companies in U.S. markets.

We estimate demand data for our base year of 2002, and forecast for 5 years to 2007. All figures are in constant 2002 U.S. dollars. Markets are all analyzed and projected in volumes, and resin markets and some application markets are also analyzed in terms of the film area (in thousands of square inches or msi, the common term used in the industry) that could be produced from these volumes, assuming an average or typical film thickness. Five-year growth rates are all compounded (signified as average annual growth rates or AAGRs). All market figures are rounded to the nearest million pounds or million msi. Because of this rounding, some growth rates may not agree exactly with figures in the market tables, especially for small market segments where rounding can be significant.

This report is segmented into ten sections, of which this is the first.

The Summary encapsulates our findings and conclusions, and includes summary major market tables. It is the place where the busy executive can find the major findings of the study in summary format.

Next is an Overview of the flexible plastic packaging industry. We start with a historical perspective on packaging and define and describe the major plastic materials used in flexible plastic packaging, both commodity and specialty resins. We then describe different types of flexible plastic packaging, such as plastic bags, pouches, and overwraps.

In the first of our market analysis sections, we describe, discuss, and analyze the U.S. market by flexible plastic resin or packaging type or material. We analyze U.S. markets for commodity and specialty flexible plastic packaging resins, by physical volume in pounds and in area using some typical film wall thicknesses.

The second market analysis section looks at flexible plastic packaging markets by some of the most important applications. These include food packaging; non-food bags/sacks; shrink/stretch film; and consumer, healthcare, and industrial applications. Food packaging and bags/sacks are the largest segments.

The next section is devoted to flexible plastic packaging technology, with special emphasis on production of flexible plastic packaging resins and packaging structures. We cover the basic technologies of producing flexible plastic packaging structures, such as polymer orientation, film formation, barrier technology, and multilayer film structures.

Next we look at the structure and competitive factors and trends in the U.S. flexible plastic packaging industry. We introduce some major suppliers of the plastic resins used in flexible plastic packaging, as well as compounders and converters who turn base resins into flexible plastic packaging structures. We discuss competition among materials, both inter-plastic competition and competition with paper packaging. We note some international aspects that affect the U.S. industry.

The next section is devoted to a discussion of public, environmental, and regulatory issues that affect the flexible plastic packaging industry. These include government regulations for use of plastics and plastic structures in flexible packaging, disposal and recycling of flexible plastic packaging, and public perceptions of packaging.

The last narrative section, Supplier Profiles, is devoted to information about some of the most important major suppliers to this large industry. Our emphasis is on leading suppliers of flexible plastic packaging films and structures rather than manufacturers of plastic resins.

Finally, we include an appendix and a glossary of some important terms, abbreviations, acronyms, etc. used in the FPP industry and related technologies such as important materials, chemicals, and polymers.

This report is devoted primarily to commercial industrial markets for flexible plastic packaging in the United States. Different organizations, publications, and analysts define "packaging" in different ways, especially flexible packaging. For example, The Society of the Plastics Industry (SPI) includes household and institutional refuse bags and film in their definition of flexible plastic packaging, whereas Modern Plastics magazine calls such bags and sacks "non-packaging film."

We agree with SPI and define flexible plastic packaging rather broadly. Thus we include plastic bags and sacks as well as shrink/stretch wraps, etc. However, we do not cover non-packaging applications such as uses of flexible plastic films in agriculture, construction, electronics (except for packaging), medical devices and disposables (that is, the devices themselves as opposed to the packages in which they come), labels (and release films for stationery and labels), graphic arts and wallcoverings, and other such non-packaging industrial and consumer products and applications. We also exclude films used for decorative or protective overlays when their primary purpose is not to package a product; this includes plastic labels. Such non-packaging applications use a great deal of flexible plastic films, upwards of one-third of all plastic films used in the United States.

We also stress that this report is devoted to flexible plastic packaging. "Flexible" means different things to different people, but our definition and scope follow those of most in the industry. Plastic resins can be extruded and blown into flexible web rollstock structures of many different thicknesses. Thinner rollstock is called "film" while thicker is called "sheet." The dividing line between what is called film and what is sheet is arbitrary, and varies with the material and the supplier or analyst. Some put the line as thin as 5 mils, while others generally consider film to any web up to 10 mils thick and anything thicker is sheet. Further confusing the issue The Society of the Plastics Industry, the industry trade association, describes all polyethylene rollstock up to 12-mil thickness as film, but makes the divide for polypropylene at 10 mils.

Softer and more flexible films are considered films at greater thicknesses than others that are basically more rigid and stiff. Thus low-density polyethylenes, ionomer, EVA, and well plasticized PVC resins are inherently flexible and can be formed into thicker films, while nylons, polycarbonate, higher density polyethylenes, nitrile resins, and unplasticized PVC are inherently stiffer. Thus BP Chemicals defines sheet as any thickness of 5 mils or greater for its BarexÒ brand of nitrile resins, while a plasticized PVC hospital bag can be up to 15 mils thick and still be quite flexible and considered to be film.

Despite the fact that these terms are somewhat arbitrary, and different dividing thicknesses are used for different resins and sometimes even for the same resin, in general, flexible packaging is said to use plastic films while more rigid packaging uses sheet webstock. Thus all thermoforming, blister, and skin packaging are considered rigid packaging and are not within the scope of this report. In other words, the final packaging film product must be truly flexible to be included in this study.

Finally, this report is concerned exclusively with synthetic polymer plastic films; we exclude cellophane and other such cellulose-based films, most of which have almost vanished from the U.S. scene in favor of synthetic polymer films.

METHODOLOGY AND INFORMATION SOURCES

Extensive searches were made of the literature and the Internet, including many of the leading trade publications, and well as technical compendia, government publications, and information from trade and other associations. Much product and market information was obtained from the principals involved in the industry. The information for our company profiles was obtained primarily from the companies themselves, especially the larger publicly owned firms. Other sources included directories and articles.

ANALYSTS CREDENTIALS

J. Charles Forman's work in industry included 21 years at Abbott Laboratories in R&D and manufacturing management. Dr. Forman has researched and written more than 30 multiclient market research reports on a variety of subjects ranging from building construction materials, to several studies on plastic packaging. Polymers and packaging are specialty areas. He has been with BCC for over 10 years. B.A., MIT; M.A. and Doctorate, Northwestern University, Chicago, IL.

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