1.1 Introduction
The global flexible packaging market is expected to grow at a CAGR of 3.7% from 2018 to 2023 to reach $243.7 billion by 2023 from $203.5 billion in 2018. The growth of this market is mainly attributed to the down gauging of plastic films, shift from the traditional rigid packaging to flexible packaging, growing consumer focus on convenience and sustainability, increasing incidences of food losses and wastes, and high demand for improving barrier properties. However, the market is impeded by the stringent government regulations and increasing raw material prices.

1.2. DRIVERS
1.2.1. DOWNGAUGING OF PLASTIC FILMS
The plastic is widely used in packaging of high commodity goods and services with high volume and low margin ratio. Using thicker gauge of plastic film in packaging means greater usage of stretch film and more consumption of raw materials. The process of plastic packaging is expensive, not only from revenue point of view, but also in terms of environmental impact. Downgauging of the plastic film emerged as a solution to reduce the amount of raw material used in the product packaging while maintaining the quality of the product, which results in higher savings and less material waste. The adoption of downgauging process helps in saving the resources and energy compared to the other types of packaging. It uses less space during transportation unlike rigid packaging, thus, reducing the cost needed in transportation. Also, the environmental impact of thicker plastic films inclines the customers towards thinner plastic films.
Furthermore, the cost of product packaging has significantly reduced with the adoption of downgauging by replacing less-desirable materials by the manufacturing and packaging companies. The packaging companies are focusing on developing new downgauging processes and technologies, mostly on plastic films, to reduce the film thickness and improve the permeability without altering the quality of the packaged product. This has resulted in reduction in the amount of materials used in the packaging process, which is likely to propel the market growth. For instance, recently, Wipak Walsrode GmbH & Co. KG has refined its downgauging technology to further improve its super thin and sustainable ‘SC Plus’ coextrusion film. SC Plus offers more than 40% reduction in CO2 emissions and is available in 50 – 150 microns thick and uses 25% less resources than conventional film.

1.2.2. SHIFT FROM TRADITIONAL RIGID PACKAGING TO FLEXIBLE PACKAGING
Traditional rigid pack types such as glass bottles and jars, liquid cartons, and metal cans leave a lot of empty space in shipping boxes. Because these packages are rigid, it takes up more volume, weight, and acquires lot of space than required. Further, due to busy lifestyle led by increasing urbanization, pressurize consumer to prefer a product that offer convenience and portability. Also, rising demand for small size and easy to open packs, take away packs, resalable packaging, and microwaveable packaging is generating public pressure on manufacturers and retailers to use packaging that is light in weight yet durable, protective, flexible enough to provide convenience and portability; recyclable, cost effective, and with reduced environmental impact of packaging. Considering these facts, traditional pack types are being replaced by innovative and flexible options designed to meet these consumer needs.

According to the recent survey by the Flexible Packaging Association (FPA), 83% of the brand owners have switched to flexible type of packaging and most of the brand owners are looking to decrease their use of rigid packaging in the future. The flexible packaging is a convenient way to package portable items with its major popularity being gained in the cosmetics; home and personal care products; food and beverages industry; pharmaceuticals, and other popular consumer goods. The flexible packaging is valued for its low cost, sustainability, attractiveness, and convenience. It also improves the labelling of the products unlike rigid packaging.

Besides the lower cost of production and shipping of products, the manufacturers have been switching to flexible containers owing to consumer convenience, ability to fit consumer lifestyle trends, and the reduction in environmental impact that have proven to be the major benefits in shifting the packaging industry from the traditional rigid to flexible packaging.

Packaging companies are developing and launching new and advanced products which is expected to lead the trend of flexible packaging. For instance, the Halls “twist-off” Stickpack converted by Sonoco & Co, a flexible packaging manufacturer allows only one sweet to be dispensed at one time, thus enabling convenience to the customers.

ADVANTAGES OF FLEXIBLE PACKAGING OVER RIGID PACKAGING

The flexible packaging is considered as environment friendly and has proven to be a source of reduction in multiple aspects. For instance, according to the Fres-co System USA, Inc., some of the benefits offered by flexible packaging over rigid packaging include -
• 40% less overall packaging cost
• 50% reduction in landfill waste
• 62% reduction in GHG
• 71% reduction in BTU consumption

Moreover, the flexible packaging uses less room than the rigid counterpart during transportation of the packaging materials. Also, it offers additional benefits with the reduction in the weight of packaging products. Thus, several benefits of flexible packaging over the traditional rigid packaging are expected to continue drive the adoption of flexible packaging by the end use industries.

1.2.3. INCREASING CONSUMER FOCUS ON CONVENIENCE AND SUSTAINABILITY
The gradual increase in the proportion of people living in urban areas is leading to greater demand for options that are easy to transport, durable and lightweight, as well as provide convenience in open and reseal. In addition, small and single use packages provide consumer a freedom of choice among different options. Increasing consumer focus on convenience and sustainability is mainly attributed to hectic and busy lifestyles; increasing preference for easy handling and fast cooking; and a general lack of time that have changed consumer consumption habits. Owing to these facts, consumers are favoring packaged products that complement this lifestyle.

In order to meet consumer demand for convenience and sustainability, manufacturers and retailers are increasingly adopting flexible packaging. Some of the products that consumers widely use and look for convenience in packaging are snacks and sauces in stand-up pouches; cosmetic products in squeezable bottles; pharmaceutical drugs in blisters; and shopping bags. Consumer packaging goods companies are responding to this demand by creating more packaging options that are smaller sized, easy to handle and store, and portable. Thus, the changing consumer lifestyle and consumption habits will drive the adoption of flexible packaging in several end user sectors such as food and beverages, pharmaceuticals, and home and personal care.

The regulations such as EU directives, and national government directives are driving a significant amount of pressure that brings change in the consumer behavior related to convenience and sustainability. For instance, the initiatives in the U.K. like the Waste and Resources Action Programme (WRAP) have propelled the change in packaging making it more sustainable. Also, the Department for Environment, Food and Rural Affairs (DEFRA) had introduced a paper named “Making the Most of Packaging” which redresses the balance and focused on the key areas to optimize packaging and maximize recycling.

The major intrinsic benefits of flexible packaging are that it is shipping friendly, less wasteful; provides product protection; and is appealing to the customers. The flexible packaging being light weight has contributed to make the products affordable and easier to distribute nationally and internationally. According to the Federation of Indian Chambers of Commerce and Industry, the rigid counterpart for packaging would weigh around 70% more and would also turn costly, especially in the small product runs. The flexible packaging uses significantly less plastic than rigid containers, thus providing an economical alternative that contains less waste. The improved shelf appeal and the eye-catching billboard effect with low cost attracts consumers to prefer flexible packaged products. Also, the flexible packaging incorporates the barrier material that blocks the harmful UV rays from the sun, moisture, grease, contamination, and oxygen, thereby subsequently leading to the growth in demand for flexible packaging.

1.2.4. GROWING FOOD LOSSES AND WASTES
One-third of the food produced in the world which accounts for approximately 1.3 billion tons is either lost or wasted every year. According to the Food and Agriculture Organization of the United Nations (FAO), around 40% of the losses in the food products occur at post-harvest and processing levels due to improper transportation and storage; whereas, in the industrialized countries, 40% of the losses occur at the retail and consumer levels. The market demands innovative solutions to prevent further food loss.

GLOBAL FOOD LOSSES AND WASTES EVERY YEAR

Source: Food and Agriculture Organizations of the United Nations
The major food losses and wastes are observed in fruits and vegetables and roots and tubers during the post-harvest and transportation process. According to the FAO, the consumers in rich countries waste almost as much food (222 million tonnes) as the entire net food production of the sub-Saharan Africa (230 million tonnes).

The supply chain around the world is struggling to protect the environment in the normal course of the business. The reduction in the packaging cost, minimization of the impact on the landfills, and limiting carbon footprints are the primary goals of the globally responsible packaging suppliers. The adoption of flexible packaging in the food products helps in minimizing the food waste and keeps the food fresh for a longer time. The flexible packaging offers appropriate portion sizes and re-closable packs, and also offers innovative flexible material and new design to minimize the waste in terms of conservation and cost, thus increasing the number of customers. For instance, Vanderbilt Minerals, LLC, an industrial minerals and chemicals company, replaced their fiber drums and filling equipment for their Veegum brand of products. The primary goal of the replacement was to improve sustainability and reduce related transportation cost. The company opted for a unique 20kg flexible gusseted bag to be used with a Termalock industrial sealer designed by the packaging designers at Fres-co System USA. The bags offer ease to open and reclose and can be palletized easily. A four-fold increase in packaging speed and reduction in the transportation cost was observed. Thus, the food losses and waste of products along with the increasing demand to reduce the transportation cost impel the growth of flexible packaging to avoid food losses and waste.

1.3. RESTRAINTS
1.3.1. STRINGENT GOVERNMENT REGULATIONS
The increasing concerns related to the littering, recycling, and waste diversion from landfill have promulgated the packaging regulations worldwide. There are over 33 sustainability and environmental protection directives, regulations, targets, and programs in the European Commission that impacts the global packaging. These regulations are supplemented to focus on the environmental benefits enabled by packaging, which also include prevention of product damage, deterioration, food spoilage, and waste.
The packaging waste in Europe is governed by the Packaging and Packaging Waste Directive 94/62/EC amended by the Directive 2004/12/EC. It mandates the recycling targets and allowable contents of hazardous materials such as heavy metal ions. The FDA regulates the use of recycled materials in food packaging, and other potentially disruptive developments like nanomaterials.

The increasing safety concerns in the various industries like food, pharmaceuticals, and cosmetics have impelled to establish guidelines and regulations in order to maintain quality and safety of the products. Thus, limiting measures on the amount and type of material used in packaging is also carried out. These measures further restrict the growth of flexible packaged products and hamper the market for flexible packaging globally.

1.3.2. INCREASING RAW MATERIAL PRICES
The packaging has become an essential everyday item with its usage growing broadly in line with the global economy. The packaging industry is linked with the world economy as a whole. However, packaging convertors have to deal with the fluctuations in the raw material prices across various industries such as food and drinks, healthcare, cosmetics, and other consumer goods depending upon the level of supply and demand. The growing concern for the increasing raw material prices has created a pressure on the brand owners and retailers amplified by move towards consolidation at all levels of the supply chain.

The flexible packaging manufacturers had begun to increase the prices of the finished products in response to the upsurge in the raw material cost. For instance, Amcor Flexibles America increased its prices for the products in North and South America in 2017, activated by the natural disaster and supply chain disruptions. The increase in the price ranged from 5-10% in South America, with a similar increase in North America as well. The major products experiencing increase in the prices included bread, dairy, confectionary, snacks, and coffee.
The increase in the prices of liquid inks and coatings for flexible packaging has also resulted in the increase in raw material prices. For instance, Sun Chemicals announced increase in prices of liquid inks and coatings for flexible packaging effective from January 2018. The increasing cost is due to production and environment restrictions on the key materials especially in China. Also, the supply situation of titanium dioxide remains tight, which is further increasing the cost of production.

In Europe, the flexible packaging sector was enforced to accept the imposition of rise in the prices which were threatened by the slow-down in the supply chain. Also, the cost in the energy supplies had seen a significant increase which varies from region to region. According to the Flexible Packaging Europe, whose membership represents sales revenue of €7 billion stated that the raw material prices represent 60% of the total cost of the flexible packaging. Thus, increase in the raw material cost will have a direct impact on the flexible packaging market affecting the affordability, acceptability, and adaptability of the manufactured products.

1.4. OPPORTUNITIES
1.4.1. GROWING ADOPTION OF SPECIALTY FILMS
The packaging industry is the largest market for specialty films, accounting for two-thirds of the overall demand. The growth in the barrier films is majorly driven by the rapid rise in the use of vacuum packaging; oxygen scavenging; and low-oxygen case-ready technology in meat packaging. The meat packaging has spurred the market for advanced films produced from ethylene vinyl alcohol, nylon, and polyvinylidene chloride resins. The demand for barrier films is also high in the pharmaceutical blister packaging market, particularly fluoropolymer and nylon films in multilayer constructions.

Specialty films are described as high-value resins and are modified either by coating or metallized with additives in such a way that they impart special functionality. The demand for specialty films is primarily driven by the rising need for high value and technologically advanced material that provides characteristics such as barrier properties, controlled permeability, light control, and electrical conductivity or resistivity. The biodegradable and water-soluble specialty films are witnessing decent growth rate, as improved technology and consumer acceptance allow these films to penetrate into new applications. Also, the specialty film manufacturing companies are undergoing collaboration and joint ventures to capitalize the enormous opportunities created by many countries in the specialty film packaging market. For instance, Toppan Printing and Max Specialty Films (MSF), a supplier of specialty packaging, labeling, coating, and thermal lamination films have formed a joint venture in India to seek the growing opportunity of the Indian and overseas market.
The specialty films shield the content from external deteriorating such as light, moisture, and gas. Also, it retains the quality of the content including freshness and aroma. This intensifies opportunities for specialty films in growing manufacturing sectors such as pharmaceuticals, food and beverages, home and personal care, and chemical products.

1.4.2. THE PROLIFERATION OF BIO-BASED PLASTIC FILMS IMPLY A PROMISING GROWTH FOR THE FLEXIBLE PACKAGING MATERIALS
According to the European Bioplastics, the global bioplastics production is expected to reach approximately 2.44 million tonnes in 2022. The growth in production is attributed to increase in price of fossil materials, publicized publicized effects of climate change, and the increasing dependence on fossil resources. Growing consumer awareness about recyclability and environmental impact of the packaging material is playing greater role in consumer purchasing decisions. Bioplastics offers many advantages over consumer demand for recyclability and reduce environmental impact such as reduce CO2 emission; don’t generate as much toxic run-off; can be reclaimed and recycled into other products; reduced carbon footprint; and it is cheaper than normal plastics. By using bioplastics in packaging, manufacturers can effectively respond to the growing demand for eco-friendly packaging. The term bio-based plastic is majorly used for a group of different materials based on biomass, materials that are biodegradable, or a combination of both.

With the recent developments in the flexible packaging industry, the companies have introduced bioplastic films generally made from renewable organic feedstock like tapioca roots, sugar beets, sugar cane, and corn; thus, fueling the growth of bio-based plastic films in the flexible packaging industry in the next few years. For instance, Plastic Suppliers, Inc. (PSI) announced the introduction of EarthFirst UL, an ultra-thin, bio-based sealant web used for flexible packaging applications in 2017. The material offers all the environmental advantages of PSI’s EarthFirst family of bio-based plastics.

The increasing industry and government awareness in order to help and develop the need for the use of sustainable resources is expected to propel adoption of bio-based plastic films in packaging industry. Also, discarding waste is another global problem as the landfills for waste discard are on rise. The adoption of bio-based plastic films will thus provide solutions to control the waste and also reduce the deterioration of the landfills. Therefore, significant importance of bioplastics over normal plastics will further provide growth opportunities for flexible packaging market.

1.4.3. SHIFT IN FOOD SERVICE FROM FROZEN TO MAP PACKAGED PRODUCTS
The Modified Atmosphere Packaging (MAP) is an optimal blend of pure oxygen, carbon dioxide, and nitrogen with a high barrier of permeable package. It is well established in the food industry and continues to gain its importance. The term represents the natural ambient air in the package that is replaced by the gas or gas mixture which often includes nitrogen and carbon di oxide. The packaging of products under protective atmosphere preserves the quality of the fresh produce over a longer period of time, prolongs the shelf-life, and gives the food producers an access to geographically larger market for perishable products. These products are packaged in thin polymer films especially high-performance films which are less permeable, improves the shelf-life and enhances the flavor of the products. The MAP is highly suitable for meat and sausage products, dairy products, bread, fruits and vegetables, fish, and other convenience products. The MAP materials are expected to have mechanical strength to stand up to machine handling, storage, and distribution; at the same time, be cost effective and appealing to the customers. According to the Mapflex, a technical MAP packaging service, flexible plastic packaging material make up 90% of the MAP; whereas, foil, metal, glass, paper, and cardboard account for the remaining 10%. The types of plastics used for MAP are:
• Polyethylene
 Low density
 Linear low density
 High Density
• Polypropylene
 Regular polypropylene
 Oriented polypropylene
 Co-extruded Oriented Polypropylene (COPP)

The pre-baked bread product packaged in the modified atmosphere i.e. carbon di oxide witness an increase in the shelf-life from 5-20 days when stored at room temperature. However, some products can retain their shelf-life for 6 months if packaged in appropriate atmosphere with accurate packaging material. The packaging of bread products under modified atmosphere and with precise packaging material do not need freezing, thus, making it easier, and cheaper to be stored, transported and distributed.
The modified atmosphere provides better quality; reduces waste; improves sales opportunities; reduces the use of preservatives; and offers appealing design to the product; thereby providing growth opportunities for the flexible packaging market.

1.4.4. FALLING CRUDE OIL PRICES
Plastics act as a mainstay material of the modern day and are one of the fastest growing commodities in the world, thus creating many important investment opportunities across the world. The per capita consumption of plastics is increasing rapidly in various sectors such as automotive, agriculture, construction, food and beverages, pharmaceuticals, healthcare, FMCG, among others. The accelerated globalization, rapid change in technology, and increasing consumers have highly benefitted the plastic industry to grow globally. The plastic being a derived product from the petroleum refined products; the drop in the crude oil prices has significantly benefitted the plastic manufacturers.

The fall in the oil prices are due to the tale of supply and demand imbalance. The establishment of new oil sources have contributed to the global supply. For instance, the companies in the U.S. have begun using techniques like fracking and horizontal drilling to extract oil from shale formations. Also, the U.S. has become the largest oil producer surpassing Saudi Arabia and Russia. The weak economic activities along with the shift to cheaper and cleaner alternatives have further led to the lower demand in the oil industry. The slowdown witnessed in China and Germany has particularly weakened the demand for oil in Asia and Europe.

GLOBAL CRUDE OIL PRICES, 2014-2017, ($/BARREL)

Source: Organization of the Petroleum Exporting Countries (OPEC)
The crude oil prices in 2014 were reported to be $92.69/barrel which experienced a decline of 56.1% in 2016 and reached $40.68/barrel. The falling crude oil prices will provide a cost tailwind as well as increase the demand for plastic production due to the rising disposable income at the customer level.
According to an article in NASDAQ in 2014, the correlation between polyethylene prices to crude oil is 95%. The downfall in the crude oil prices is witnessing a significant increase in production of plastic film packaging, especially polypropylene and polyethylene; thereby providing growth opportunities for flexible packaging market.

1.4.5. EMERGING MARKETS
The major contributors in the emerging markets are China and India; the other emerging countries include Indonesia, Brazil, Russia, Argentina, Chile, Colombia, Kazakhstan, Myanmar, Poland, Pakistan, and Nigeria. According to the Constantia Flexibles, news in 2016, the emerging market consumers make up about 75% of the total world population. Also, the emerging markets are made up of more young people contributing about 9% of the total population aged between 13-17 years of age. The young population set an important trend for the food manufacturers about the future consumption. The flexible packaging consumption per capita is less than one-fifth as compared to developed markets. However, the market growth is predicted to be 3 times higher than the developed markets.

The inward direct investment by multinational brand owners and convertors; and improvement in the living standards are creating more opportunities for flexible packaging in emerging markets. Further, the high population growth and liberalization in the number of markets contribute to the increasing market potential in emerging economies. Also, changing consumer lifestyles and the development in mass retailing are expected to generate growth opportunities for flexible packaging market in emerging economies in the near future.

1.5. CHALLENGE
1.5.1. RECYCLABILITY
Typical snacks packaging bags are made from seven layers of foil and plastics. Currently, no single machine exists that can separate these layers, thus, they are not recyclable. Further, it is a very expensive process and there would not be much market for recycled material. Most of the flexible packaging material is used in food products packaging and recycling of these packaging material can cause food contamination. Thus, due to high risk of food contamination, very small portion of flexible packaging can be reused.
Plastic packaging materials are not compatible with each other due to the intrinsic immiscibility at the molecular level, and differences in processing requirements at a macro-scale, which possess major challenge in the recycling process. For instance, PVC contaminant present in PET recycle system degrades the recycled PET resin. On the other hand, PET in PVC recycle stream form solid lumps of undispersed crystalline PET, which significantly reduces the value of recycled material. Therefore, the risk of food contamination by using such recycled packaging material possess major challenge for the growth of the flexible packaging market.

Contact –
Meticulouse Research
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