North America is the world's largest consumer of packaging. Since a brief dip in 2009, the North American packaging market has recently been growing steadily.
Although market sentiment is still cautious in the region, the North American packaging industry is expected to grow by, on average, 1.4 percent annually above inflation levels to reach $186 billion by 2017. Smithers Pira examines the key areas of this growth, and the main challenges to the market in the next four years.
1. Mexico to continue impressive growth
Of the three North American countries, Mexico is forecasted to have the highest percentage of growth in both the short and mid-term. In 2011 the largest market share of the North American packaging market was by the U.S., with 83.3 percent ahead of Canada with 9.8 percent and Mexico with 7.0 percent. The U.S. saw the biggest negative impact from the global economic downturn.
Mexico is expected to gain on average 3.1 percent per annum over the next four years to 2017. Particular areas of growth in the Mexico packaging industry include soft drink beverage packaging, meeting the needs of customers seeking both versatility and sophistication from their packaging.
2. Paperboard to lead market share
Although paperboard suffered a steeper decline than most other packaging materials during the recession, especially in the U.S., it has recovered quickly and returned to pre-crisis levels. In 2011 in North America, the largest share of packaging consumption was paperboard, taking 33.7 percent of the total, and corrugated packaging claimed the largest share of North American paperboard packaging sales.
Corrugated packaging was not only the fastest-growing paperboard sector, increasing by 4.7 percent during the year 2011, it also accounted for the largest share of board consumption at 64.3 percent. The U.S. is forecast to maintain its 2012 share of North American board packaging sales, growing on average by 0.9 percent per annum above inflation levels to reach $51.9 billion in 2017.
3. Rigid plastic packaging to continue success in North America
According to The Future of Packaging in North America to 2017, a market report from Smithers Pira, the rigid plastic packaging market is forecast to grow on average by 2.6 percent per annum to achieve sales worth $40 billion and 11.9 million tonnes by 2017. Mexican rigid plastic packaging sales are expected to grow the fastest in the region, with an average annual growth rate of 4.8 percent and surpass the Canada packaging market consumption levels by $45 million in 2017. Rigid plastic packaging is expected to continue to gain popularity in the market, experiencing the highest growth rate across plastics, ahead of PET (polyethylene terephthalate) and PE (polyethylene).
In 2017, the rigid plastic packaging market is forecast to be worth $433.5 billion, with PE and PET remaining the main plastics used for consumer manufacturing.
4. Industrial sectors to demonstrate recovery
Uncertainties still remain concerning the North America economy—specifically the impacts of the European economic crisis and political uncertainty in oil-exporting countries. The U.S. has also been significantly affected by falling real estate values and difficulties in securing financing for future investments. However, the industrial segments have been in recovery since a sharp downturn in demand in 2009. Real estate values are now also starting to show recovery.
Growth rates of industrial packaging are showing the same forecasted growth rates as those in consumer packaging in coming years. Industrial packaging is expected to increase on average by 1.2 percent per annum above inflation levels to reach $62.5 million by 2017.
5. The growth of retail-ready packaging
Retail-ready packaging (RRP) refers to packaging delivered to a retailer in a self-contained unit, which is immediately ready for on-shelf product display without the need for assembling or unpacking. This type of packaging provides an attractive structure which both advertises and displays a product, cutting down on operation costs as the shipping package itself arrives basically shelf-ready.
Retail-ready packaging is continuing to gain popularity and traction in North America as a number of retailers consider its implementation and others expand their efforts in the area. This is due to an increased understanding of RRP, and the ever-growing penetration of RRP across categories.
