Packaging is big business - global production is estimated at nearly USD 400 billion. Consumer packaging material account for the overwhelming majority of this business: comprising nearly two thirds of all consumption. Corrugated board accounts for nearly 20% of all packaging sales, second only to rigid plastic packaging materials.
The whole packaging material business, according to the regional differences in line with GDP growth, is gradually expanding. Global corrugated board demand was 92.7 million tons in 2000, which is expected to grow to 109.3 million tons by 2005. Representing 60% of world demand, North America and Europe are considered as mature markets: The respective growth rates anticipated up to 2005 are 2.2%/annum (3.4 million tons) and 3.5%/annum (4.3 million tons). The highest growth rate in demand will be experienced in China and Southeast Asia (4%), and in Latin America (4%). With its consumption of 40 million tons, Asia will become the largest corrugated board market by 2010.
The principal driving force behind the growing packaging material market is an increased demand for packaged consumer items. The key motivator of cardboard box use is food packaging, particularly in the more developed regions. In the United States food, agricultural produce, beverage and tobacco make up 40% of cardboard box usage, while in Europe such end-users account for around 42% of all box consumption. In less developed regions, the same end-users also figure among the principal box consumers, particularly where the given product is one of the area´s major export products. For example, in Latin America, where Ecuador, Costa Rica and Colombia are among the key producers of bananas and other fruits, cardboard for boxes constitutes one of the basic elements of packaging and shipping.
The consumption of some non-food end-user areas, however, has also increased dramatically. Pre-cut paper and packaging material use has increased significantly in the USA and Europe with the spread of information society, for example. The development of the electronics industry in Asia has also spurred corrugated board consumption. In Singapore, for example, more than 75% of all corrugated board is used for packaging electronic products.
It is still mainly regional and local customers that buy the product, coming primarily from the fresh produce, beverage, dairy and stationery packing sectors. The role of global customers, though, has increased and will continue to do so. Depending on the segment, global customer account for some 25-30% of the entire corrugated board market. Their share in area of consumer durables and packed/dry foods is the largest, however, globalization also appears in the beer and wine sectors.
Key consumer trends in the packaging material market among others:
- Centralized purchasing
- Greater coordination and harmonization in packaging features
- Lower packing costs
- Fewer suppliers
- Global partnerships
Partnerships feature the following advantages:
- More extensive market share / growth
- Consciousness in developing new products and shipping chains
- A potential decrease in selling and transaction costs.
Global customers are changing the regional corrugated markets:
For the time being, corrugated board and box manufacturers are still at an early stage of globalization. The European ones have broken into Eastern Europe by way of processing. United States manufacturers have set up production and processing in Europe, and processing in Central America. Economy is crucial, yet global scale expansion does not necessarily mean that cardboard manufacturing and/or capital is taken abroad. The most important is to provide optimum service to strategic customers in the selected market. This concerns marketing, distribution and service chains in all key market sectors.
Solutions, January 2003, p. 7. |
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