State of the U.S. Flexible Packaging g Industry

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and Extrusion Chairman, Flexible Packaging Association

1 State of the U.S. Flexible Packaging g Industry Tom Cochran President, Amcor Flexibles Americas, Medical and Extrusion Chairman, Flexible Packaging Association FPA 2013 A l M ti FPA 2013 Annual Meeting February 27, 2013

2 The Flexible Packaging Association Flexible Packaging Industry Overview Opportunities and Challenges The Road Ahead 2

3 FPA is the Voice of the Flexible Packaging gindustry Convergence of Programs Supporting Members Industry Data Research INFORMING Members Government Customers Advantages of Flexible Packaging PROMOTING Members Customers FPA Meetings/ Conferences NETWORKING Members Legislation/Regulation PROTECTING Members Government 3

Issues Index Safety Statistics Federal Legislation Climate Change, Solid Waste, Toxic Substances Control Act Resources

4 Legislation/Regulation PROTECTING Members Government Interacting with Environmental Protection Agency CAA, MSW, CWA Food & Drug Administration Occupational Safety and Health Administration Environmental, Health & Safety Summit Environmental Issues Index Safety Statistics Federal Legislation Climate Change, Solid Waste, Toxic Substances Control Act Resources Recovery and End of Life Research Industry Coalitions Flexible Packaging Sustainability Advantages Extended Producer Responsibility 4

Advantages of Flexible Packaging PROMOTING Members Customers FPA

org) Flexible Packaging Achievement Awards & Innovation Showcase

Packaging Design Challenge FPA Flexible Packaging Summer Internship

Insights Research Flexible Packaging Segments Analysis New and

Sustainable Packaging Webinar Battelle Research on Energy Use and

Recovery Pyrolysis Pilots Sustainable Packaging Toolkit Resource

5 Advantages of Flexible Packaging PROMOTING Members Customers FPA Website ( Flexible Packaging Achievement Awards & Innovation Showcase Flexible Packaging Magazine/FPA Update FPA Student Flexible Packaging Design Challenge FPA Flexible Packaging Summer Internship & Academic Scholarship Program Trade Show Participation Consumer Insights Research Flexible Packaging Segments Analysis New and Existing Materials for Flexible Packaging: Environmental Claims Sustainable Packaging Webinar Battelle Research on Energy Use and Emissions Flexible Packaging Sustainability Advantages Resource Recovery Pyrolysis Pilots Sustainable Packaging Toolkit Resource Guide Flexible Packaging g& Sustainability Brochures Sustainability Presentation Flexible Packaging Sustainability Logos Flex Pack Rap Video Battelle Report 5

Industry Data Research INFORMING Members Government Customers FPA Website (www.flexpack.

Converter Report SPMC Benchmarking Report Regulatory and Legislative Environmental, Health h& Safety Sf Summit Environmental Issues Index Safety Statistics EPA and OSHA CAA, MSW, CWA Comments on

6 Industry Data Research INFORMING Members Government Customers FPA Website ( Members, Customers, Government Benchmarking State of the Industry Report Earnings Report Operating Ratios Report Pulse of the Industry Report Compensation and Benefits Report Industry Wide Converter Report SPMC Benchmarking Report Regulatory and Legislative Environmental, Health h& Safety Sf Summit Environmental Issues Index Safety Statistics EPA and OSHA CAA, MSW, CWA Comments on proposed regulations Climate Change Toxic Substances Control Act Solid & Hazardous Waste Networking Industry E News Information Briefs and Press Releases Sterilization Packaging Manufacturers Council Report to Members Membership Directory Marketing Flexible Packaging Magazine/FPA Update Achievement Awards & Innovation Showcase Trade Show Participation Buyers Guide Industry Presentations Flexible Packaging Sustainability Advantages Sustainable Packaging Webinar Flexible Packaging Sustainability Advantages Toolkit Resource Guide Flexible Packaging & Sustainability Brochures Sustainability Presentation Flexible Packaging Sustainability Logos Flex Pack Rap Video Battelle e Report Research Consumer Insights Research Flexible Packaging Segment Analysis New and Existing Materials for Flexible Packaging: Environmental Claims Battelle Research on Energy and Emissions Resource Recovery Pyrolysis Pilots Community Resource Recovery and End of Life Research 6

7 Meetings/Conferences NETWORKING Members Government FPA Annual Meeting FPA Fall Executive Conference FPA Environmental, Health & Safety Summit FPA Conference Mobil App Industry Coalitions Trade Show Participation FPA Website ( FPA Membership Directory 7

8 FPA Membership Flexible Packaging is any package, or part of a package, whose shape can be readily changed. It includes packaging utilizing plastic, paper, film, foil or any combination of these materials. FPA represents converters of over 70% of Value Added Flexible Packaging; and material and equipment suppliers to the industry. Value Added materials have had significant value added to by having multiple processes performed, most often including extrusion, laminating and printing. Converter Members Associate Members $50-99 MM, 14% $25-49 MM, 16% $10-25 MM, 25% $ MM, 9% $50-99 MM, 7% $25-49 MM, 3% $10-25 MM, 13% $ MM, 17% > $500 MM, 10% < $10 MM, 24% > $500 MM, 7% < $10 MM, 61% 8

9 FPA Members Products CATEGORY PARTICIPATION $ VALUE Rollstock 93% 59% Bags 55% 14% Lay Flat Pouches 41% 3% Standup Pouches 50% 3% Retort Pouches 14% 1% Shrink Sleeves 12% 2% Lidding 12% <1% Shrink Wraps 5% 2% Stretch Films 7% 9% Wrappers 14% 4% Other 22% 2% Source: FPA 2012 State of the Industry Report 9

10 The Flexible Packaging Association Flexible Packaging Industry Overview Opportunities and Challenges The Road Ahead 10

11 World Flexible Packaging Western Europe 19% Central & Eastern Europe 4% North America 27% Asia Pacific 39% South & Central America 6% Rest of World 5% Source: PCI Films Consulting per Jan Homan s FPE Presentation at 2012 FPA Annual Meeting. 11

12 Total U.S. Packaging Industry Total U.S. Packaging $145 Billion Misc Rigid Plastics & Bottles Glass Others 16% 4% 14% Metal Cans 13% Flexible 18% Paperboard 12% Corrugated 23% Total Flexible Packaging: $26.7 Billion Source: U.S. Census Bureau 2011 ASM s & FPA estimates for 2012 total revenue 12

13 Flexible Packaging Segment Analysis 2012 Total Revenue: $26,747 in Millions; 2012 Total Volume: 16,901 million lbs FORMAT 2012 Est. Annual Volume 2012 % $ (MM) CAGR $ (MM) 2012 % Lbs (MM) CAGR Lbs (MM) Composition Bags $7, % 2.4% 28.4% -0.7% paper (37), pe 63), nylon & barrier (< 1) Retail carry bags $2, % 5.8% 13.1% 3.4% pe (57), paper (43) Storage bags $ % 3.5% 3.6% -0.8% pe (100) Trash bags $2, % 3.5% 6.7% 3.5% pe (100) Lay flat/pillow pouches $5, % 2.8% 19.6% 1.0% OPP (30), ldpe (40), OPET (29), foil (1) Standup pouches $1, % 10.7% 5.6% 7.4% ldpe (32), OPET (60), foil (8) Retort pouches $78 0.3% 6.9% 0.1% 4.8% OPET (18), foil (40), pp (42) Cut/wrap $ % 3.6% 1.5% 1.0% OPP (22), WOPP (16), pe (57), paper (5) Flow Wrap $76 0.3% 8.4% 0.3% 5.2% OPP (8), WOPP (92) Wraps $1, % -1.4% 5.5% -3.7% pe (72), foil (18), paper (10) Lidding $30 0.1% 10.6% 0.1% 6.2% OPET (40), foil (30), paper (20), OPP (10) Sleeve labels $2, % 3.9% 4.8% 2.0% PVC (54), PETG (21), OPP (5), OPS (9), ldpe (11) Shrink bundling $ % 2.5% 5.1% 1.5% ldpe (100) Stretch films $1, % 1.5% 5.5% 0.3% ldpe (100) Overall $26, % 3.0% 100.0% 0.8% Source: Flexible Packaging Format Analysis, FPA/PTIS Research

14 FPA Industry Revenue Industry Revenue in $ Billions 60% 40% Change Year on Year % Change 20% 0% 20% lions * 2013* ** $Bil % Annual Source: U.S. Census Bureau and Flexible Packaging Association * FPA Estimate **FPA Forecast 14

15 U.S. Flexible Packaging Industry Overview Total Flexible Packaging Industry $ 20.0 B $ 26.7 B Compound dannual Growth Rate (CAGR) last 10 years 3.8 % 2.9 % Number Companies Manufacturing Facilities Employees 89 K 79 K Avg $ Sales per Employee $225 K $337 K 15

16 Converters Cost and Material Purchases Flexible Packaging is composed of 90% plastic Total Industry Material Purchases Estimated t Value is $15 Billion Film Polyethylene: 25% Polypropylene: 38% Polystyrene: <1% Polyester: 12% Nylon: 2% Resin Polyethylene: 72% Polypropylene: 4% Polystyrene: <1% Polyester: 7% Nylon: 7% Source: FPA 2012 State of the Industry Report 16

17 U.S. Flexible Packaging M&A Activity Number of Deals '98 '00 '02 '04 '06 ' U.S. Flexible Packaging Industry by Company Size % 80% 28% 43% 47% 60% 40% 47% 35% 31% > $500 Million $ Million < $ 50 Million 20% 0% 25% 22% 22% Source: FPA State of the Industry Reports & FPA accumulated M&A data for

18 U.S. Flexible Packaging Mergers and Acquisitions 2012 Purchasing Company Umax Packaging Ltd. Berwind Corporation Accraply (a Barry-Wehmiller Company) Fields Ventures LLC D & W Fine Pack Nicolet Capital Polyplex Company Acquired MegaFlex LLC Oliver Products (Oliver-Tolas Healthcare Packaging & Oliver Packaging and Equipment) Turpins Packaging Group Primary Packaging Inc. Thermoforming Div of Clear Lam Packaging, Inc. Interflex Group Inc. Scholle's Vacumet Plastics Div. Berry Plastics Frans Nooren Beheer Companies ( STOPAQ B.V.) Covertech Fabricating Centre Lane Partners Pregis Corp. Inteplast Group Mondi Group Wind Point Partners Graphic Packaging Holding Company Graphic Packaging Holding Company Packaging Dynamics Corporation Trinty Packaging Corp. Seville Packaging Oracle Flexible Packaging Inter-Pac Inc. Pitt Plastics Group Nordenia International AG Hilex Poly Company Contego's European Food Carton Business A&R Carton's Beer and Beverage Packaging Business Group De Luxe Cello-Pack Corp. 18

19 Flexible Packaging Imports And Exports Billions of Dollars $3.6 $3.2 $2.8 Imports Import Export $2.4 Bags: Plastic, Laminated and Coated 72% 54% $2.0 $1.6 $1.2 Exports Bags: Paper 4% 3% Foil and Leaf: Flexible Packaging 24% 42% $0.8 $0.4 $1.7 Billion Exports to: $3.6 Billion Imports from: Canada 36% China 40% Mexico 27% Canada 18% Saudi Arabia 4% Mexico 6% United Kingdom 4% Germany 4% Source: U.S. Census Bureau, Foreign Trade Division Calculations by the Flexible Packaging Association Jordan 3% Thailand 4% 19

20 U.S. Packaging End-Use Markets U.S. Total Packaging Sales Value by End-Use Market: $148 Billion ion US $, Bill Retail food Instit'l food Retail non food Med/Pharma Instit'l non food Industrial Institutional Food $ 1.9 B 7% Flexible Packaging Sales by End-Use Market: $26.7 Billion Retail Food $ 13.1 B 49% Institutional Non-Food $ 1.3 B 5% Retail Non- Food $ 3.2 B 12% Consumer Products $ 2.7 B 10% Industrial Applications $ 2.4 B 9% Source: Flexible Packaging Association, Flexible Packaging Association 2012 Estimates U.S. Census Bureau, SAI analysis and field interviews Medical and Pharm. $ 2.1 B 8% 20

21 The Flexible Packaging Association Flexible Packaging Industry Overview Opportunities and Challenges The Road Ahead 21

22 Opportunities and Challenges Opportunities CPG and Consumer Expectations Highlighting g g Innovation Consumer Insights Research Challenges Regulatory Compliance Promoting the Sustainability Advantages of Flexible Packaging and Addressing the Challenges 22

23 Opportunities to Meet CPG Expectations Product Performance Enhanced Product Resistance / Predictability Fit for Use Films Easy to qualify / meet consumer requirements Consumer Appeal Better Aesthetics Sensory Improvements Ergonomics Easy Open / Reclose / Dispensing i Better Product Compatibility Sustainability Simplicity (15000 film Packaging Specifications) Film Standardization across Multiple Products Layer Removal Supplier Partners Global Executions Innovation Source: Neil Rogers: Procter and Gamble 23

24 Highlighting Innovation FPA Awards Structural and material advances: 20% of Entries Consumer Convenience ; 35% of Entries Environmental/Sustainability: 11% of Entries Printing/Graphics: 26% of Entries 24

25 Sustainability Advantages of Flexible Packaging 60 pounds of 6 pounds 3 pounds of 1.5 pounds = 50 pounds of = = = beverage glass of Rigid aluminum of Flexible PET plastic 25

26 Sustainability A Fact of Life Sustainability and environmental impacts of packaging are constantly under attack Challenges include Misinformation and Emotionalism Flexible Packaging has many sustainability advantages over other packaging formats However, Flexible Packaging Waste (2.5% of US U.S. MSW) is under scrutiny i i i h d l FPA is continuing to research and explore post use alternatives 26

27 FPA Sustainability Initiative Battelle: Sustainability Assessment of Flexible Packaging, Energy Use, GHG Emissions, End of Life Sustainability Advantages of Flexible Packaging Toolkit FPA/Columbia UniversityEarth Engineering Center Studies: Identification and Assessment of Available Technologies for Materials and Energy Recovery from Flexible Packaging Waste Economic Analysis of Collecting and Processing Flexible Packaging Waste Life Cycle Analysis of End of Life Options for Flexible Packaging Flexible Packaging Waste Resource Recovery Next Steps New and Existing Materials: Environmental Claims Post Use Alternatives/Resource Recovery 27

28 Resource Recovery (Communication/Education) Updated Research on Viable Post Use Alternatives Framework for Developing a Community Resource Recovery Project Developing Partnerships with NGOs, Waste Management, Communities Educating members, CPGs, NGOs, Communities, Governments 28

29 The Flexible Packaging Association Flexible Packaging Industry Overview Opportunities and Challenges The Road Ahead 29

30 The Road Ahead Global Growth Innovation Driving U.S. Conversion Opportunities Food Safety Thomas Bouraoui, Exopack, LLC Raw Material Price Volatility CMAI/IHS Recovering Economy (?) Don Reynolds, Economist 30

31 World Flexible Packaging Consumption 2011 % World Population Per Capita Consumption In U.S. $ Developed Regions 1 11% $42.28 Developing Regions 2 89% $ Primarily Western Europe and North America 2 Includes Eastern Europe, Central & South America, Asia Pacific and the rest of the world 31

32 The Road Ahead End Use Categories/Packaging g gtypes and Conversion Opportunities End-Use Category U.S. Flexible Packaging - % U.S. Non Flexible Packaging - % Retail Food Institutional Food Retail Non Food Institutional Non Food Industrial Medical & Pharmaceutical Source: Opportunity Assessment for the U.S. Flexible Packaging Industry Report, Strategic Analysis Inc. 32

33 Flexible Packaging Exceeding Expectations Flexible Packaging Has Changed The Way We Cook Eat Take Medicine Clean Our Homes Use Mouth Wash It Has Created New Markets like Pre-made salads Fresh- cut Fruits Microwave Meals in a Pouch 33

34 Please Contact FPA for a User Name and Password: fpa@flexpack.org Tom Cochran President, Amcor Flexibles Americas, Medical and Extrusion, Chairman, Flexible Packaging Association 34

Sustainability Advantages of Flexible Packaging Webinar

Flexible Packaging gassociation Sustainability Advantages of Flexible Packaging Webinar The goal of the webinar is to describe the research FPA has done on sustainablepackagingand and to introduce you