PACKAGING TRENDS. The challenge of market, material and machinery advances. Presented by Ben Miyares, Vice President, Industry Relations

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1 PACKAGING TRENDS The challenge of market, material and machinery advances Presented by Ben Miyares, Vice President, Industry Relations PACKAGING MACHINERY MANUFACTURERS INSTITUTE

2 The leading global resource for packaging

3 PACKAGING TRENDS: What s Driving Packaging Change Today? Economics Economics Economics. Markets Materials Machinery In a perfect world, profitability and competitive pricing are balanced quotients. But in today's world, with commodity prices rising across the board and competitive pressure keeping finished goods prices down, manufacturers are streamlining and innovating in a wild chase just to stay afloat. Others are sinking or already have sunk. Industry Week

4 PACKAGING TRENDS: The cost of doing business is going UP! During the past two years we ve seen price increases of 65% for some metals, 50% for fuel and natural gas, 40% for petroleum and 19% for chemicals. Companies are being forced to absorb these costs internally to compete in markets that are too competitive for comparable finished goods price increases. "Firms are starting to plan on these prices staying high. They're starting to think about how they manufacture their products and where they can make substitutes or redesigns. Dave Huether, Chief Eco nomist, National Association of Manufacturers

5 PACKAGING TRENDS: #1 Change Agent: Cost of Energy A REFINING SHORTAGE THREATENS to keep prices of gasoline, diesel and jet fuel elevated for years, even if oil prices ease. The global capacity crunch is being aggravated by growing demand for oil from China, India and other rising powers. The shortfall hits especially hard in the U.S. where refiners haven t built a new plant since Wall Street Journal, May 24, packaging implications Lighter, larger pack sizes Smaller, lighter equipment Decentralized production Through the wall in-feeds Operational simplification Cutting changeover time, labor In-house package making Machines that conserve energy Increasing automation Maximizing cube efficiency

6 So what are companies doing? And the good news is Investing in packaging infrastructure U.S. packaging machinery demand is poised to reach a new high this year $5.907 billion! A 7% year-to-year increase in aggregate value Up from $5.52 billion in 04 Says who?

7 Converters $ U.S. Packaging Machinery Market Shares Non-durables $338 Chemicals Nondurables Converters Durables $419 Personal care Food Chemicals $379 Durables Personal care $383 Pharm a/med Be verage Pharma/Med $715 Beverage $1,104 Food $2,389 $0.00 $ $1, $1, $2, $2,500.00

8 2003 U.S. Packaging Machinery Unit Shipments Wrapping Dry filling Bottling 4,179 1,665 3,031 Total: 134,020 1,605: Cartoning, Multipacking 1,578: Liquid filling 1,309: Form/fill/seal Pre-made bagging 7, : Skin, Blister 500: Selected Converting???: Capping???: Conveying???: Other Palletizing Case, Tray Inspecting Labeling 8,325 8,422 9,991 11,637 Shrink 23,700 Coding, Marking 49,849

9 PACKAGING TRENDS: Yesterday Heavy, rigid containers Long packaging runs Packaged in-house In-house manufacturing One size fits all Home meal ingredients Metal, glass Multiple dynasties 3 squares a day Atkins, no carbs Printed bar codes Disposable Packager driven Tomorrow Lightweight flexibles Short runs, pack variety Contract packaged Outsourcing, off-shoring Channel specific Home meal replacements Paper, plastics, composites Dynastic M&A s On the move grazing Whole grains, no trans fats RFID Sustainable Retailer driven

10 So what are companies doing? Producing packages in house Form-fill-seal displacing fill seal

11 So what are companies doing? Seeking differentiated Packaging

12 So what are companies doing? Seeking differentiated Packaging

13 So what are companies doing? Multipacking to boost unit sales

14 What Customers Want from You and Your Competition Honest presentation of capabilities Quicker downtime responses More machine flexibility Shorter, less labor intense changeovers Machines that use less energy Accurate operational life cycle cost estimates Simple-to-operate machines Qualified training programs Extended, non-sales relationships Consultative advice Ways to cut cost

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