Market

Focus on the European packaging market

AR Packaging is a leading manufacturer of packaging solutions serving the food and tobacco markets. The company operates in the global packaging market, which had an aggregate market size of approximately EUR 630 billion in 2015. The company’s current operations mainly focus on the European folding carton and flexible packaging market, which had an aggregate market size of approximately EUR 22.5 billion in 2015.

European packaging market

The European packaging market amounted to approximately EUR 160 billion in 2015.

Folding carton packaging market

The European folding carton packaging market amounted to approximately EUR 10 billion in 2015 and the market is expected to grow at a CAGR of 1.5 to 2% in 2015 to 2020. In 2015, approximately 50% of European folding carton packaging was used for food and beverages.

Flexible packaging market

The European flexible packaging market amounted to approximately EUR 12.5 billion in 2015 and the market is expected to grow at a CAGR of 2% in 2015 to 2020. As a result of the increasing popularity of flexible materials, this market is growing slightly faster than the general food packaging market in Europe. Approximately 75% of European flexible packaging was used for food.

Segments and addressable markets of AR Packaging

AR Packaging defines its markets in six business segments:

  • Tobacco
  • Confectionery
  • Performance Packaging
  • Flexibles
  • Food Service
  • Food & Consumer Goods

AR Packaging’s addressable markets amounted to approximately EUR 8.5 billion in 2015 and the expected growth rate of the addressable markets for 2015 to 2020 is 1.6%. Historically, demand in the addressable markets has been resilient over economic cycles due to the must-have nature of many of the end products of these markets.

Market drivers and trends

There are a number of market drivers and trends in the global packaging market that support the growth of the market especially in the premium products segment:

  • Increasing share of food packaging: Increased share of food packaging increases the overall packaging demand
  • Population growth: Increased population serves as an underlying demand driver
  • Enhanced functionality: Increased demand for new, advanced packaging solutions, e.g. re-closable packs
  • Health and convenience: Increase in packaging which is lighter, re-closable, and offers better freshness communication
  • Reusable materials: Increased focus on reusable materials decrease the overall demand
  • Eco-friendly plastics/bio packaging: The focus on biodegradable/sustainable materials increases. The packaging material mix is assumed to stay rather constant, with a minor shift from metal and glass to flexibles and rigid plastics. Furthermore, the trend is driving a shift from plastic to paper based packaging.
  • ’On-the-go’ lifestyle: Increased demand for advanced time-saving multi-purpose packaging

Tobacco

Tobacco packaging solutions include among other things hinge-lid solutions as well as speciality packaging for gas-tight roll-your-own/make-your-own products. There are a few global and multiple smaller local and regional tobacco manufacturers. The technical requirements of manufacturing tobacco packaging are increasing and there is currently only a limited number of packaging manufacturers in Europe that have the required capabilities. Main competitors include Amcor and Mayr-Melnhof.

Market size and growth
AR Packaging estimates that the size of its addressable tobacco packaging market was approximately EUR 1.8 billion in 2015, of which the European market amounted to EUR 0.9 billion.

The market is expected to grow overall at CAGR of 0.9% in 2015–2020 with a market decline in Western Europe and growth in the South East Asian and African markets.

Confectionery

The segment mainly covers the packaging of chocolate and candy. The solutions offered include carton-based packaging mainly intended for the duty-free stores. The customer base is diverse, ranging from multinational firms to regional and local companies and covers companies that focus on quality or price. The global confectionery manufacturers tend to favour packaging companies with sufficient international reach to supply the customer’s entire network. Main competitors include MPS, Van Genechten, RLC Packaging and Mayr-Melnhof.

Market size and growth
The size of the company’s addressable confectionery packaging market was EUR 0.6 billion in 2015. The market is expected to grow at CAGR of approximately 2.0% in 2015–2020.

Performance Packaging

The products of the segment are mainly used for the packaging of nutritional products, tobacco, drink powders and other food powders. There are multiple suppliers in the market, however, AR Packaging is one of the few suppliers of complete packaging solutions including both material and machinery in its addressable markets. Main competitors include Sonoco in composite cans and Amcor, Saint-Gobain and Crown in products that are substitutes to the AR Packaging’s offering.

Market size and growth
The size of the company’s addressable Performance Packaging market was approximately EUR 1.9 billion in 2015. The market is expected to grow at CAGR of approximately 2.5% in 2015–2020.

Flexibles

The products of the segment are mainly used in the packaging of food, such as processed meat, hard cheese, frozen food, dry mixes and bakery products as well as medical products. There are multiple suppliers in its addressable flexible packaging market. However, many of the manufacturers of flexible packaging serve only a smaller part of the market and the number of suppliers with a large product range is limited. The main competitors include Amcor, Wipak, Südpack and Bemis.

Market size and growth
The size of the company’s addressable flexible packaging market was approximately EUR 0.5 billion in 2015. The market is expected to grow at CAGR of 2% in 2015–2020.

Food Service

The products of the segment include carton– based burger clam shells, meal packs, food trays and cups as well as take-away food packaging. The requirements of food safety and hygiene in the food service market are relatively high. There is a limited number of companies supplying the food service market. Main competitors include include Seda, Delta Packaging, Mayr-Melnhof, Huhtamäki and Van Genechten.

Market size and growth
The size of the Group’s addressable food service packaging market was approximately EUR 0.5 billion in 2015. The market is expected to grow at CAGR of 4.2% in 2015–2020.

Food & Consumer Goods

The main end uses of the products in the Food & Consumer Goods segment include baked products, baby food, frozen food, snacks, dry beverages, chilled food, dairy products and pet food. There are multiple competitors that operate in the addressable Food & Consumer Goods packaging market. The main competitors include CPI, Van Genechten, Mayr-Melnhof and Schur.

Market size and growth
The size of the company’s addressable Food & Consumer Goods packaging market was approximately EUR 3.2 billion in 2015. The market is expected to grow at CAGR of 1.1% in 2015–2020.