procarton · packaging are used annually and of these 95 billion are cartons. of the remainder, 107...

A Report Commissioned by Pro Carton

“The Interface between Cartons andFlexible Packaging”

Association of European Cartonboard and Carton Manufacturers

Flexible Packaging(Plastic Based)

45% = 107 Billion

Folding Cartons40% = 95 Billion

Alu Foil PaperFoil Combinations

End Users’ Packaging Preferences for a New Premium Product

% of FMCG Companies

Cartons57%

No Preference32%

Flexibles11%

Paper Based

159

12

The PRISM Study 2005Pro Carton

Usages of Cartons and Flexibles(All = 238 Billion Units)


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IntroductionFranz Rappold, President of Pro Carton Page 3

Overview of the studyRichard Dalgleish, Managing Director of Pro Carton Page 4

Key findings from the studyCurrent market position Page 5

Market expectations up to 2010 Page 6

The perceptions and attitudes of brand owners and retailers Page 7

Shelf ready packaging Page 8

Consumer multi-packs Page 9

Microflute packaging Page 10

Sleeves and combination packaging Page 11

Quality perceptions Page 12

Purchasing intentions Page 13

Environmental issues Page 14

Contacts Contacts for further information Page 15

What is Pro Carton? Back page

“The Interface between Cartons and Flexible Packaging”

Index


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I am delighted to be able to presentthis summary of the key points fromthe study commissioned by ProCarton from PRISM*.

We felt it was important that anindependent study was carried outthat would look at the interface be-tween cartons and flexible packagingand this report seeks to highlight the main findings of this study.

It is of course important that the bestpossible understanding is reached tofind out more about the followingquestions:

• What is the current status in the markets for cartons and flexible packaging?

• What are the prospects for the future?

“We felt it wasimportant that anindependent studywas carried out thatwould look at theinterface betweencartons and flexiblepackaging.”

• What are the perceptions of the brand owners and retailers of these different types of packaging?

• What are the key trends in the markets?

• What are the purchasing intentions of FMCG companies?

I feel sure that this summary provi-des an accurate and informativereview of the findings of this studywhich summarises the main fin-dings. I therefore hope that you findthe information it contains bothinteresting and useful and that itoffers additional information aboutthis interesting and ever changingsector of the packaging market.

Franz Rappold

President

Pro Carton

Vienna,

September 2005

Introduction

* “PRISM – Packaging Research Intelligence Strategies & Marketing Limited – was launched

in 2003 by Simon Southern following the acquisition of Marketpower Ltd by Landell Mills Ltd.

The Company provides market research and strategic marketing consulting dedicated to the

packaging industry.”

Pro Carton is pleased to be able tointroduce a summary of a membersonly report it has recently commis-sioned. “The interface between car-tons and flexible packaging” wascommissioned from PRISM and looksat the current market, the expecta-tions for the future and the percep-tions of the major players in themarket.

It also investigates the probabletrends in the market and looks atvarious developments that willimpact on both cartons and flexiblepackaging. By independently lookingin depth at this market and thetrends, carton suppliers will bebetter able to understand and reactto the needs of the brand owners and retailers.

The report highlights the importanceof packaging as it adds to its con-ventional role of protection andbecomes in addition a medium ofpromotion and brand building. Thereport concludes that carton packag-

ing is well placed to take advantageof the growth opportunities inEuropean consumer goods markets. Itcloses by saying “Cartons offer brandowners the opportunity to provideproduct differentiation and a qualityimage using packaging that hasdistinct merchandising advantagesand display appeal when comparedwith competing types of packaging”.

We hope you will find the followingpages interesting and if you need anyfurther background please contactPro Carton either atwww.procarton.com or through yourlocal office of which details can befound on page 15.

Richard Dalgleish

Managing Director

Pro Carton

Brussels,

September 2005

“For this ambitiousqualitative andquantitative report,PRISM interviewed49 of the leadingFMCG (Fast MovingConsumer Goods)companies acrossEurope as well as 10 leading retailersand over 20 industryexperts to gain aninsight into thecurrent marketbreakdown andtrends that wereupcoming in thenext 10 years.”

Overview of the study


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Current market positionThe report begins by looking at thecurrent market position of cartonsand flexible packaging in the FMCG(Fast Moving Consumer Goods) mar-kets. The product areas covered arevery wide and include all packagedfood products with the exception offresh foods, liquid foods and pro-cessed canned and bottled foods. Italso includes all non food consumerproducts with the exception of consumer durables and industrialproducts.

In the European FMCG markets thereport states that approximately 238billion units of cartons and flexiblepackaging are used annually and ofthese 95 billion are cartons. Of theremainder, 107 billion are entirelyflexible plastic packaging with theremaining 36 billion being made up

Usage of Cartons and Flexible Packaging in Europe for FMCG

Billion UnitsFolding Cartons 95Flexible Packaging 143Total 238

Breakdown of Flexible Packaging into Types

Billion UnitsPaper Based 15Aluminium, Foil and Paper 9Aluminium Foil and PlasticFoil Combinations 12Plastic Based 107Total 143

of paper based flexible packaging,multi material packaging and othersmaller types. Therefore in the markets studied across Europe about40 % of the units are manufacturedfrom cartons whilst 45 % are madefrom wholly plastic flexible packag-ing. Of the remainder (15 % / 36 billion) some 40 % arepaper based packaging.

The report adds that in many pro-duct categories, switching betweendifferent types of material is not soapparent as had been the case someyears ago but this still occurs anddepends in some cases on the pro-duct formulations. For example,recent moves from powders to tablets in the detergent markets have led to an increase in the usageof cartons at the expense of plastics.

Flexible Packaging(Plastic Based)

45% = 107 Billion

Usage of cartons and flexible package in Europe for FMCG.

A change in the form of a productin a field such as detergents maycause a change in the type ofpackaging used.

Key finding

All = 238 Billion Units

Folding Cartons40% = 95 Billion

15Bio.9

Bio.12

Bio.

Flexibles (Other Material)

15% = 36 Billion Units}Alu Foil PaperCombinations

Paper Based


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Market expectationsThe study finds that between 2005and 2010 the European market forcartons will increase by approxima-tely 1.8 % per annum. The market for flexible packaging will, over the same period increase by between1.5 % and 2 % per annum.

As well as organic growth, it addsthat there will be increases in themarket for cartons in several areassuch as shelf ready packaging, multi-packs and display packs. Theneed for improved visual appeal andthe requirements of shelf readypackaging will create particularopportunities for cartons made fromboth cartonboard and microflute.

Another area highlighted for growthin carton packaging is the own brand sector where retailers willcontinue to position their own brandsmore directly in competition withleading brands and with the quality

• Demand forcartons will grow

• Need forimproved visualappeal of packaging

• Increase in theneed for shelfready packaging,multi- anddisplay-packs

• Additional packagingdemands from the growth inretail own brands

• Increasing focuson environmental issues

perceptions of carton packaging, this will have a positive impact oncarton usage.

Price pressure will continue but thereport adds that the pressure on prices for flexible packaging willremain high and on balance, in thefuture, it appears that the effect ofglobal oil prices and currency deve-lopments will have a greater impacton flexible packaging prices than onthe prices of folding cartons whichare made from a naturally occurringand renewable material.

Another change foreseen in thereport is the increasing focus onenvironmental issues and it conclu-des that the folding carton industryis well ahead of flexible packagingon the two critical environmentalissues, the use of a renewableresource and recyclability back tonew packaging.

Key finding


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Perceptions and attitudesOverall there is a strong preferencefor cartons amongst the FMCG com-panies interviewed. The main reasonsfor this preference are the protection,graphics and merchandising appealoffered by folding cartons, theirenvironmental attributes and theirsuitability for differentiating pre-mium products.

The key factors influencing the choi-ce of packaging are display appeal,packaging costs, speed of filling andmerchandising / shelf stacking attri-butes. Folding cartons score well forall these features though cost ismore favoured for flexible packag-ing. However, many filling lines forcartons such as tobacco and deter-gents are amongst the fastest andmost efficient. Additionally, it is wellknown that offset printed cartonshave a cost advantage in the contextof frequent switches of packagingdesign for example in the seasonaland promotional packaging sectors.

Flexibles are perceived to have betterbarrier properties but increasinglycartons are being combined withflexibles in such markets as readymeals and pet foods to offer bothfunctionality and the point of saleattraction that cartons offer. It alsoreports that almost a third of therespondents mention merchandisingdifficulties and relatively poor pro-duct protection when using flexiblesand 20 % expressed concerns onenvironmental issues.

The report states that when launch-ing a new premium product, 57 % ofFMCG companies prefer to do so incartons whereas only 11 % said theywould choose flexible packaging. Thestrongest preferences for cartons liein the confectionery, detergent andconvenience food markets wherevisual appeal on the shelf is seen asmost important.

Key Advantages of Folding Cartons % of FMCG Companies

Product Protection

Graphics

Merchandising

Environment

Premium Look

Ease of Filling

Flexibility of Design

Provision of Information

Transit Efficiecy

Cost

0% 10% 20% 30% 40% 50%

The table shows the strengths of folding cartons mentioned by FMCGcompanies, without any prompting from the researchers.

Key finding

End Users’ Packaging Preferencesfor a New Premium Product

% of FMCG Companies


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Cartons57%

No Preference32%

Flexibles11%

Shelf ready packaging (SRP)The increasing usage of shelf readypackaging is highlighted as a majorgrowth area in the coming years.These initiatives which are designedto not only to increase the efficiencyof shelf stacking in the supermarketbut also reduce out of stock situa-tions, have grown in recent years andthis growth will accelerate acrossEurope but most notably in the UK,Benelux, France and Germany.

Transit outer sizes will reduce astheir role moves from transit protec-tion to display. This is becausedisplay outers will be designed todisplay one or two unit packs inorder to satisfy the needs for greater

diversity on the shelf. This need willtherefore lead to an increase in theuse of attractively printed outersreflecting a strong brand image ofthe product. It is probable that com-binations of cartonboard displayouters with corrugated transit hoodswill be used increasingly to fulfilboth the transport and point of salerequirements.

Ease of use at the point of sale willbe critical so that the outer protec-tion can be easily removed whilstretaining the overall brand image onthe shelf and avoiding unnecessaryunpacking and shelf stacking ofindividual products.

Convenient for retail markets: Shelf ready packaging and displays are efficient and will increase in the coming years.

Key finding

“SRP is set to become a perma-nent feature of theretail sector, asretailers seek tostreamline theiroperations andmaximise spaceproductivity.”

“Future SRP designswork for a completerange of retailproducts includingsachets, trays, foodcans, bottles orjars.”


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Consumer multi-packs It is forecast that the usage of multi-packs will extend greatly beyond thetraditional uses in the drinks anddairy markets. Multi-packs are easyto stack in store offering simplicityand efficiency. They are convenientfor the consumer to select and han-dle and are simple to merchandise.With the increasing need to promotebrands, multi-packs offer a greatersurface area for high quality printingto reinforce the brand. Additionally,offering a number of products in asimple to buy pack, leads to anincrease in sales value.

Cartonboard multi-packs have tradi-tionally been successful in thosemarkets where the product has anintegral stacking strength but therapid development of new styles andsystems will offer opportunities inother market sectors.

Markets that are suggested asgrowth areas in multi-packs are inthe pet foods, chilled and ambientfoods and up market dehydratedfoods. For example pet food poucheswill increasingly be sold in carton-board based multi-packs that willprovide a better brand opportunityand offer greater convenience bothfor in store efficiency and consumer convenience.

Multi-packs will also capture themarket in those fields with whichthey are not traditionally associa-ted. They are convenient for consumers and easy to handle. For retailers they also offer a lot ofadvantages.

Key finding

“Special growthareas in multi-packs are in the petfoods, chilled andambient foods andup market dehydrated foods.”


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MicrofluteThe microflute market accounts forabout 20 billion units annually andwill continue to grow at a rate ofaround 4.7 % per annum so thatusage by 2010 will be nearly 32 bil-lion units. This growth will be drivenby demands for improved visualappeal and growth in multipacks and display outers.

The growth in shelf ready packagingwill have a significant impact on themicroflute market, because of theincreasing need for smaller displayouters. Increasingly, decorativemicroflute containers will be adoptedas a substitute for conventional cor-rugated. These containers will besufficiently robust and visuallyappealing to satisfy the joint requi-rements of transit protection, display appeal and merchandisingeffectiveness.

75 % of the microflute market is heldby decorative processes includinglitho lamination, high quality postprint flexo, preprint flexo, screenprinting, and direct printed litho. This latter method has only emergedcomparatively recently, and the carton suppliers are well placed tomeet this challenge and offer solutions.

Demand for these decorative proces-ses is forecast to grow at an averagerate of 4.8 % p. a., whilst unprintedcontainers and those printed on con-ventional in-line flexo presses willgrow at a much lower rate of 1.1% p. a.

The increase of displays and shelf ready packaging also leads to a growth in the microflutemarket.

Key finding

“Carton suppliersare well placed tomeet the challengesof transit protection,display appeal andmerchandisingeffectiveness espe-cially with newtypes of microflute.”


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Sleeves and combination packaging Cartons have been criticised for their lack of barrier properties andflexibles for their poor display andmerchandising properties and for this reason the report finds thatthere will be growth in the use of cartons in combination with othermaterials.

One major sector will be the continu-ing development of ready meals wherethe food is packed into a plastic trayand a sleeve made of cartonboard usedto cover the tray so providing bothadditional protection and high qualityprint to help with the merchandising ofthese products. Whilst this market iswell developed in some countries inEurope, there is an increasing demandfor ready meals and the combination ofcartonboard and plastic will continueto grow. With the rapid developmentespecially in Eastern Europe of theready meals market this multi materialssystem that exploits the best propertiesof both materials will continue to grow.

Another area identified is the increa-sing use of barrier boards to manu-facture cartons. With the growth inthe prepared food markets, allied tothe developments in barrier techno-logy, cartons can now be used for awhole range of different applicationsin the food and related fields. Againin using cartons the brand owner andretailer can ensure the best possibleimage for the product and this isbecoming particularly important inthe own brand sector where growth is forecast to be high.

Barrier boards allow difficult productsto be packed directly into cartonswithout the need for additional innerwrapping or lining. This is done witha wide range of extrusions and laminations of base boards such asfolding boxboards (FBB), solid bleached sulphate (SBS), recycledboards (WLC) and solid unbleachedboard (SUB).

Combinations of cartonboard andplastic will continue to grow as forexample the demand for readymeals increases. Ready meals areoften packed into a plastic tray anda sleeve made of cartonboard.

Key finding

“There will begrowth in the use ofcartons in combina-tion with othermaterials, plasticsextrusions andlaminations.”


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Quality perceptionsWhen launching a premium product57 % of FMCG respondents said thatthey would use cartons as a firstchoice whereas only 11 % said theywould use flexibles. The strongestpreferences for cartons were in theconfectionery, biscuit and conven-ience food sectors and none of therespondents in the these marketssaid they would prefer to use flexibles.

Product differentiation in the ownlabel sector at the point of sale,needs to distinguish between pre-mium and general own label pro-ducts and FMCG responses indicatethat cartons offer the best opportu-

nity to maximise sales in these areas. Cartons allow this productdifferentiation across the range ofdifferent types of products and thequality image of cartons can beenhanced still further for the highergrade own brand products.

The stronger preference for flexiblesis in the dehydrated food market buteven then less than a third expresseda positive preference and over 50 %had no firm preference. The reasonsfor the preference for flexibles inthese markets has been the develop-ment of attractively printed pouches.

Cartons are first choice in thepremium sector.

Key finding


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Purchasing intentionsWhen asked whether they would belikely to switch products into foldingcartons, flexible packaging or com-bination packs in the future abouthalf of the respondents said theywere likely to make changes.

Of these 40 % expected to use morecartons as a replacement for flexi-bles. A further 40 % anticipated usingmore cartons in combination withflexibles and less than 20 % expectedto make changes from cartons toflexibles. The report adds that themost likely areas for gains in cartonsare the confectionery, detergent and

dehydrated foods sectors but it also adds that whilst pouches willcontinue to grow the use of cartonsin combination with pouches willincrease to help with the promotionand merchandising of these products.

FMCG companies see the best oppor-tunities for folding cartons in multi-packs and shelf ready packaging asthis is where the combined proper-ties of cartons and flexibles can beexploited to the best effect in termsof merchandising and projecting aquality image.

CartonsCombinationsFlexibles

Purchasers in fast moving consumer goods companies see the best opportunities for foldingcartons in multi-packs and shelfready packaging.

Packs expected to gain share in future.

Key finding

Flexibles20%

Combinations40%

Cartons40%


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Environmental issuesMost FMCG companies recognise theenvironmental argument in favour ofcartons and end users are well awarethat flexible packaging has a problemin this respect. When asked for thekey advantages and disadvantages of cartons and flexible packaging,environmental issues were seen as a clear advantage for cartons buta clear disadvantage for flexiblepackaging.

The two most important elements on environmental matters raised byFMCG’s were the recyclability and the use of a renewable resource. Inboth instances cartons were seen asclearly better and it is stated in the

report that “Attempts by the flexiblepackaging industry and its suppliersto develop more environmentallyfriendly products have met with onlylimited success, and the level offlexible packaging recycled back intopackaging is effectively nil.” Inadditions it is stated that over 80 %of flexible plastic packaging used in Europe is based on non renewableresources.

Respondents also felt that cartonswere rightly regarded as a naturalmaterial and therefore had a naturaland friendly image at the point ofsale.

Awareness of the environment is important for younger and older consumers. Cartonboard is,and has the image of a naturalmaterial and thus complies withthe demands of environmentalcompatibility and responsibility.

Key finding

Recycling Rates for Paper & Board Packaging(Source: EU Data 2002)

90

80

70

60

50

40

30AT BE DK FI FR DE GR IT NL PT ES SE UK

Paper & Board PackagingRecycling Rate


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Contacts

HEAD OFFICE Phone: +32 2640 [email protected]

AUSTRIAPhone: +43 1 218 [email protected]

BELGIUMPhone: +32 2343 [email protected]

FRANCEPhone: +33 1 5389 [email protected]

GERMANYPhone: +49 6251 [email protected]

GREECEPhone: +30 210 [email protected]

ITALYPhone: +39 02 [email protected] www.procartonitaly.com

NETHERLANDSPhone: +31 7031 [email protected]

NORDICAPhone: +46 650 740 [email protected]

SPAINPhone: +34 93 481 [email protected]

SWITZERLANDPhone: +41 1 266 [email protected]

UKPhone: +44 20 7915 [email protected]

Contacts for further information


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HEAD OFFICE

Pro Carton250 Avenue LouiseB-1050 BrusselsPhone Belgium: +32 2 640 4955Phone UK: +44 1635 [email protected]

What is Pro Carton?Pro Carton is the European Associ-ation of Cartonboard and Cartonmanufacturers. Headquartered inBrussels, it has offices in 11 coun-tries in Europe who, through variouspublications, activities and events,promote the use of Cartons andCartonboard to a wide variety ofpeople and groups.


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procarton · packaging are used annually and of these 95 billion are cartons. of the remainder, 107...

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