VA USA

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1 personal Care packaging intelligence BrieF Freedom Drive Suite 600 Reston, VA USA Findings of a in-depth market assessment on the personal Care market as it pertains to the packaging industry.

2 personal Care packaging intelligence Brief pmmi the association for packaging and processing technologies Freedom Drive, suite 600 reston, Va phone: pmmi.org/research publication Date: February 2015 Jorge izquierdo, Vice president, Market Development, pmmi paula Feldman, Director, Business intelligence, pmmi Copyright 2015 the association for packaging and processing technologies. all rights reserved. the information contained herein shall not be distributed or shared by the recipient. no part of this document may be reproduced without the express written permission of pmmi.

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4 Contents 2015 personal Care Market assessment report packaging intelligence BrieF 1.1 overview & Market growth 1.2 themes & Challenges 1.2 Consumer needs & expectations 1.2 Flexibility 1.3 globalization 1.3 packaging Forms/types 1.4 recommendations & Conclusions

5 packaging intelligence BrieF personal Care packaging intelligence Brief the personal care packaging market in north america is estimated to be $4.75 to $6 billion (20% of the global market). the market in the United states is estimated to be $4 to $5.1 billion, while Canada and Mexico combined is $750 million to $1.1 billion. the above market sizes only reflect the packaging market for personal care items. this is out of a total personal care market that exceeds $450 billion and a global packaging market that exceeded $564 billion in 2009 and was projected to grow to $820 billion by $4 to $5.1B the personal care market in the United states is estimated to be $4 to $5.1 billion. $750 to $1.1B the personal care market in Canada and Mexico combined is $750 million to $1.1 billion Market growth respondents expect the personal care packaging segment to increase over the next five years, with an estimated annual growth of about 5.5%. secondary research sources project that the global personal care market will grow at a compound annual growth rate (Cagr) of 4.3% to 4.9%. personal care packaging is expected to grow at a rate consistent with the personal care market. assuming this rate of growth, the global personal care packaging segment is expected to be between $31.5 billion and $38.1 billion by % personal care packaging market is expected to increase over the next five years with an estimated annual growth of about 5.5% % % Cartons have increased the most since 2010 (from 9% in 2010 to 19% in personal Care pib

6 themes and Challenges sustainability sustainability is the most commonly noted challenge for respondents and will continue to be so for the personal care packaging segment for years to come. key areas of challenge are the following: Packaging materials: it is believed that any unsustinable packaging material will become obsolete in the next five to ten years. the industry has a major need for more variety and availability of biodegradable materials, alternatives to standard plastic, and more natural materials (e.g., plant-based resins, etc.). Less packaging: thre trend of using less packaging trend is believed to continue in the future, which will lead to less waste and lower cost for both the consumer and the product manufacturers. the challenge will be in balancing sustainability with maintaining product quality and integrity. Plastic Shrink Wrap: the shift away from using corrugated shipping cases to using plastic shrink wrap could lead to lower costs and a lower impact on the environment. Clearly, the reduction of waste is the big one. if you reduce the packaging, you are reducing the energy that goes in to the packaging - you are reducing the costs. overall, it is a benefit to the consumer in the end. sr. engineer, personal Care Company ConsUMer needs and expectations 2 it is challenging for personal care manufacturers, and ultimately machinery providers, to meet the continuallychanging consumer needs and expectations in a cost-efficient and timely manner. Consumers are making efforts to be green, but also want quality products. the internet and social media are key factors driving consumers expectations. Consumers can easily and quickly review a product online whether it is good or bad. personal care manufacturers need to consider this when bringing a product to the market. it is important for packaging machinery providers and personal care manufacturers to know how the product and its packaging are perceived so any necessary changes can be addressed quickly. Flexible equipment is also important in this instance; if a manufacturer invests a lot of money and takes a risk with a new type of packaging that does not work, they will need to change the packaging quickly. having flexible equipment will allow for a quick response for new product development. FlexiBility 2015 personal Care pib reliability and flexibility are the most important factors that respondents look for when specifying and purchasing packaging machinery. Flexibility and the ability to quickly change to a different setting are requirements for their equipment, which includes being easy to clean and sanitize. Flexibility accommodates various packaging styles and sizes, but machinery also needs to be flexible regarding production levels. respondents have difficulty finding cost-effective machinery for mid-range production. there is machinery set up for high and low production, but it is difficult to find machinery that accommodates mid-range (i.e., handles thousands of items instead of tens of thousands).

7 globalization globalization continues to impact the personal care packaging segment. respondents expect a higher growth rate for developing countries than for developed countries. Consumers in developing countries have more disposable income now to spend on themselves. they want their own product formats and designs not a copy of U.s. packaging. as personal care companies grow and expand all over the world, their service needs are also global. packaging machinery providers need to have global service support capabilities. overall, service does not appear to be an issue for most respondents (personal care manufacturers in north america), but this may not be the case in developing countries. larger companies tend to have in-house service capabilities, but still need a local service provider. it tends to be environmental concerns. people are looking for recycled materials to use in their production or reduced material usage for environmental reasons. Converting technology Manager packaging ForMs/types about two-thirds of the personal care products come in liquid form, while about 20% come in semi-solids, solids, and powder. other product forms include grooming products, oral care products, and hot fill (liquid then solidifies). as can be seen below, the relative percentages of the different forms is similar to the 2010 study, but liquids account for a higher percentage and powders have decreased. as in 2010, bottles continue to be the most common packaging type used. tubes are also used extensively. Cartons have increased the most since the 2010 (from 9% in 2010 to 19% in 2014). pouches are one of the least used packaging types, despite what was predicted in the 2010 study (i.e., Most respondents expect pouches to experience the most growth by 2015 ) personal Care product Forms 2014 personal Care packaging types 2015 personal Care pib

8 Bottles are expected to have the most growth by estimated compound annual growth rate (Cagr) over the next five years is expected to be 5%. a project engineer discussed his company s bottle usage: Bottles are growing and bags are declining. i am not sure if that is industry-wide... our new formats are going to bottles. there are fewer quality issues with bottles as compared to bags - fewer leaks Jars, tubes, and cartons are expected to increase slightly (Cagr of 3.5%, 2.3%, and 0.8% respectively), while cans are expected to decrease by about five percent over the next five years. recommendations and ConClUsions Continue to improve flexibility and changeover speeds for packaging machinery. 4 work closely with customers early in the design stage to understand exactly what their need are and how the machinery can meet those needs. Differentiate your machinery by detailing the different types of packaging that the machinery can handle, as well as how fast the changeover is. Develop machinery to accommodate all levels of production low (hundreds), medium (thosands), and high (tens of thousands). Design machinery that has flexibility, but is also simple (e.g., standard programming), easy to use (e.g., software interfaces), and easy to clean personal Care pib

9 Work closely with customers to ensure their machinery meets recent government regulations. offer updating solutions and services for customers with older machinery so their machinery meets the regulations. include internal methods of documentation in new machinery to help customers (e.g., equipment performance reporting, internal testing capability, control systems, etc.). Focus on providing excellent service for customers. Continue to improve service already offered to customers - this was a major challenge in the 2010 study, but did not appear to be an issue in this study. Consider offering global service support capabilities to keep up with globalization. Direct more efforts toward innovation for personal care packaging machinery. work with customers to understand their future packaging goals and discuss dream big scenarios. Determine how machinery and technology can help them reach those goals. integrate smart technology (e.g., automatic settings for different products, sensors to monitor fill levels, record run times, communication, etc.) on more basic, low production equipment not just high production machines. improve automation that is currently available that will help lower production costs for customers. Partner with customers to explore new sustainable packaging methods and materials that can be used with your machinery. 5 provide guidance regarding machine compatibility with new, natural materials (e.g., resin-based, bioplastics, etc.). Design machinery to support less product packaging to account for future trends personal Care pib

10 pmmi headquarters Freedom Drive, suite 600 reston, Virginia t: (571) F: (703) e: pmmi latin america homero 418 piso 7 Col. Miguel Chapultepec Miguel hidalgo, D.F Mexico t: + (52 55) F: + (52 55) e: latina@pmmi.org learn More! learn more about pmmi s Business intelligence reports. pmmi s most recent reports include: Confectionery Dairy Beverage Food safety and retail-ready traceability packaging secondary packaging trends in robotics Visit pmmi.org or by contacting paula Feldman, Director, Business intelligence, at or pfeldman@pmmi.org.