MARKET KEY FIGURES, CHALLENGES &PERSPECTIVES OF PACKAGING IN FRANCE (*) The new name of EMBALLAGE & MANUTENTION exhibitions 26-29 NOV 2018 PARIS FRANCE
4/9 IN THE SUPPLY-CHAIN: 60% OF PACKAGING IS AIMED AT RETAIL AND INDUSTRY PLASTIC PACKAGING STAYS AHEAD CORRUGATED CARDBOARD FOR INDUSTRY AND E-COMMERCE GLASS: ETERNAL LUXURY METAL FOR CANS WOOD: DISCREET BUT PRESENT 10 IN AN ECONOMY WISHING TO PROMOTE USE OVER POSSESSION, CAN WE DO WITHOUT PACKAGING WHICH ENABLES THE USE OF PRODUCTS? 11 PACKING MACHINES FOR THE INDUSTRY OF THE FUTURE 2
2017 provided confirmation of the vitality of the French packaging industry, in view of an optimistic macroeconomic environment. This industry benefited from improving economic conditions and higher household purchasing power. E-commerce continued its deployment, with a rise in the number of online shoppers and higher purchasing frequency. Its turnover should exceed 19 billion in 2018. This widespread optimism is however tempered by competition from packaging coming from abroad and an upward trend in the cost of certain raw materials. key figures & industry challenges carried out for ALL4PACK Paris- Comexposium Group by Annette Freidinger-Legay, international packaging expert and consultant for ALL4PACK 3
IN THE SUPPLY-CHAIN: 60% OF PACKAGING IS AIMED AT RETAIL AND INDUSTRY According to ADEME: packaging made from paper/cardboard accounts for more than a third (39%) of the weight of packaging sold on the French market in 2015, estimated at 12.47 million tonnes, ahead of glass (22%), wood (18%), plastic (16%) and metal (5%). Tonnage of each packaging material sold on the market in 2015. Estimated total: 12,47 Mt 39 % Paper/Cardboard 22 % Glass 17 % Plastic 17 % Wood 5 % Metal Source: Adème 4
Nearly 60% (7.46 million tonnes) relates to industrial and commercial packaging, as against 40% (5.01 million tonnes) which is for household goods packaging. Household packaging by % in 2015. Estimated total: 5,01 Mt Industrial and commercial packaging by % in 2015. Estimated total: 7.46 Mt 46 % Glass bottles 24 % Plastic bottles, tubs, yoghurt pots, small plastic bags 23 % Small bags, pouches, cans, cardboard sleeves 7 %... Source: Adème 50 % Trays of fruit and vegetables, outer packaging crates, large-volume bags, corrugated cardboard pallets 29 % Wooden pallets, crates, fruit and vegetable packaging 12 % Films, pallets, returnable trays 6 %... 3 %... Source: Adème 5
PLASTIC PACKAGING STAYS AHEAD The French plastic packaging market confirmed its leadership position by value in 2017 with sales of 7.9 billion compared to 7.7 billion in 2016 (a year which had already reported 1.7% growth), a rise of 2.6%. 2.27 million tonnes of plastic material were transformed and used in packaging, compared with 2.18 Mt in 2016, registering growth of 2.4%. This sector has 320 firms and 38,000 employees. Packaging is the first user sector for plastic material, with almost 45.1% consumed in France and 39.9% on a European scale. Plastic demand by sector by percentage. Estimated total: 4,8 Mt 45 % Packaging 23 % Other 18 % Building and Public Works 9 % Automotive 5 % E&E Source: PlasticsEurope Market Research Groupe (PEMRG) 6
CORRUGATED CARDBOARD FOR INDUSTRY AND E-COMMERCE The customer sectors of cosmetics, toiletries, cleaning products, pharmaceuticals and chemicals are driving business growth more than the food industry which represents nearly 68% of this sector of activity. Plastic materials prices, decorrelated from oil prices, continue to display high volatility since 2014, alternating between peaks and troughs. However, in parallel, opposition to plastics is growing and regulations are getting tougher. In France, disposable tableware made from plastic, with the exception of biodegradable material, is due to disappear in 2020. Thin, non-compostable plastic bags have already been banned since 2017. And the European commission has recommended banning cotton tips, cutlery, plates, straws, cocktail stirrers and balloon rods made from plastic. Similar measures are being developed all over the world amid alarming pictures of oceans choking on plastic waste. 1 Source: Elipso 2 Source PlasticsEurope 2017 Production of packaging paper and cardboard 3 accounts for 56% of total French output of paper and cardboard, which compares to a 45% share in 2002. This production continued to increase in 2017 (+1.7% at 4,514 tonnes), notably supported by an increase in the activity of companies providing paper for corrugated cardboard. Paper/cardboard packaging is used to the tune of 55% in the food processing industry but also for toiletries/ cosmetics/perfumes, household appliances, industry, etc. Packaging relating to industrial activities (trade packaging, outer packaging and transportation packaging, packaging for food service, etc.) make up 80% of nationwide production of paper/cardboard production by weight, and household packaging makes up the rest, i.e. 20 %. This is divided up into five distinct categories, including corrugated cardboard which accounts for 65% of paper/cardboard packaging sold in the market, well ahead of flat cardboard (20%), flexible paper packaging (12%) and those based on moulded pulp (1%). Corrugated cardboard packaging is produced by 17 groups and 73 sites with 11,600 employees, to the quantity of 2,847 million tonnes in 2017, up 0.1% on 2016, and 5.53 billion m² (up 2% compared to 2016) of which 20% was sold in sheets and transformed by cardboard box manufacturers. Total sales for the sector amount to 2.69 billion: a 2.5% increase on 2016. This result should be placed into perspective with two major increases in paper prices in 2017 with a partial knock-on effect, in particular in the second half of the year. E-commerce markets continue to drive 7
development in the sector. Indeed, 80% of parcels are made using corrugated cardboard packaging and e-commerce accounts for 4% of market share for corrugated cardboard and more than 460 million parcels in 2016 4. Cardboard box manufacturers represent 530 companies and 14,000 employees. Total output in 2017 was 1.3 million tonnes and turnover amounted to 2.6 billion excluding liquid food cartons. 2017 saw investment pick up in the aim of increasing capacity and reducing costs. Complex packaging is made up of layers of different materials combined with more than 50% of paper/ cardboard such as food cartons or crisps tubes. Food cartons from a single production site represent 3.5 million units sold, equating to 83,000 tonnes (including for export), i.e. 64%. For the first time, cartons have been overtaken by plastic in the fruit juice market, losing three points of market share (45% carton versus 48% plastic bottles). Its market share also continues to decline in milk (45.3% in 2017 versus 46.7% in 2016). Paper bags include industrial and commercial bags whose sales account for 679 million bags (2.8%) and 97,400 tonnes, and consumer packing bags and small bags which are still growing but at a slower rate (5% per year). The ban on plastic bags thinner than 50 microns introduced on 1 July 2016 has boosted consumption of paper for soft packaging, as has the development of click and collect shopping. All sectors experienced growth for industrial and commercial bags, and particularly those for mineral products (+5.3%), construction materials excluding cement (+4.5%) and chemicals (+3.9%). Food contact paper for folding and flexible packaging experienced stable production volumes in 2017, while the price of raw materials rose according to quality by significant amounts, on average, 10%. Packaging from moulded pulp is produced by eight companies who manufacture 108,000 tonnes, mainly for egg cartons. GLASS: ETERNAL LUXURY France has one of the world s most developed and diversified glass packaging industries 5 and has 17 glass factories and 14 processing centres. The leading worldwide producer of glass packaging has the largest number of plants in France, with nine sites and its head office. Its challenger has seven factories spread in a similar manner across France. Many glass factories are concentrated in the north of France, chiefly in the Bresle Valley in Normandy which, with 70 companies employing more than 7,000 people including 60% of glass workers, accounts more than 70% of the worldwide output of luxury bottles for the perfume, spirits or pharmaceutical industries and generates total sales of 1.5 to 2 billion. Some of these glassmaking sites resumed their investments in 2017. METAL FOR CANS Overall sales in the metal packaging industry 6 ended 2017 on a high with an increase of 8.7% 8
at 1,170.4 million. This is a reflection of a rising raw material prices, passed on in selling prices, and the modernisation of certain sites which became operational to cater to demand. Sales of steel cans recorded stronger growth, up 12% at 787.8 million, than aluminium cans, up 2.6% at 382.6 million. On the other hand, tonnage recorded a very slight 0.6% drop, amounting to 498.5 thousand tonnes which would appear to be the expression of standard weight rather than real weight for certain declared packaging solutions. Exports register a 25.1% increase. Over the space of one year (September 2017 versus September 2016), the drinks can 7 market registered a 0.8% increase in value, while units sold dropped by -1%. Five billion cans are consumed in France: the equivalent of 76 cans per inhabitant. More than one beer out of four is sold in a can, and the trend of slim/ sleek cans continues to run wild: they account for 27% of volumes of soft drinks consumed in France and in total 1 billion units distributed, i.e. approximately 20% of cans filled in France in 2016, compared with only 8% in 2014. The production of tins for conserved food, meanwhile, registers a 6.2% drop at 212.3 thousand tonnes, with a slight increase in different and generally smaller formats. Nonconserved food has picked up slightly following the transfer of certain production units from outside France as a result of the French law banning the use of BPA in food contact materials. Cans for aerosols and industrial packaging are now merged in the same output figures which stand at 61.3 thousand tonnes, while the turnover of steel closure caps registers a 17.1% increase at 78.8 million, despite a drop in the number of production sites. WOOD: DISCREET BUT PRESENT The wood packaging industry in 2015 relied on 980 firms and 1,138 establishments with 17,300 workers, generating sales of 1,688 million. Three specialities can be distinguished, of similar size: The manufacture of pallets/pallet crates: 499 million of sales including 60 million for the manufacture of pallet crates alone, 580 firms and 6,900 workers; The reconditioning of pallets: 407 million of sales, 200 firms and 3,200 workers; The manufacture of industrial packaging: revenue 374 million, 410 firms, 4,500 workers. The industrial crate and packaging manufacturing activity recorded a 3% rise over the whole of the year 2017. Whereas with only 40 firms and 1,900 workers, light wooden packaging accounts for 198 million in 2015. These firms totalise a production potential of 800 million to 1 billion units per year, such as lightweight fruit and vegetable crates, oyster baskets, boxes, tubs etc with 45 companies and for turnover of 250 million 9. The total of other activities, including service provision is far from insignificant, with 210 million in 2015. High worldwide demand for wood and limited availability in certain regions have driven wood prices higher with a knock-on effect on selling prices of pallets. Since the beginning of 2017, the average price of sawnwood, taking into account all species and cross sections, rose in France by a minimum of 15-20 per cubic metre, reflecting an average increase of 10 to 12%. 3 Source: Cofepac / 4 Source: Carton Ondulé de France / 5 Source: Glass International / 6 Source: SNFBM / 7 Source: GIE La Boîte Boisson 9
IN AN ECONOMY WISHING TO PROMOTE USE OVER POSSESSION, CAN WE DO WITHOUT PACKAGING WHICH ENABLES THE USE OF PRODUCTS? Whatever the product, the tougher international composition encountered by suppliers of products and equipment is forcing them, in order to maintain and develop their market positions, to shift their range upscale continuously. The technical characteristics and intrinsic quality of products have for a long time been differentiating factors. Today, suppliers must contribute more value to their customers, by incorporating the many use functions of the product and associated services. A fair share of these functions, which cater to major challenges in society (population ageing, health, safety and liberty, mobility, social contact, the energy transition, etc) remain yet to be invented. The last step consists of selling the use of the product rather than the product itself. Enabling the use of products: isn t this one of the essential functions of packaging which we should furthermore measure in terms of usability? Usability, or the capability of being used is defined by the standard ISO 9241-11 as the extent to which a product can be used by specified users to achieve specified goals with effectiveness, efficiency and satisfaction in a specified context of use. Can we as a result get by without packaging as long as it is eco-designed? 10
PACKING MACHINES FOR THE INDUSTRY OF THE FUTURE Packing and filling machines were produced in France by 147 legal entities employing 4,597 people and reporting sales of 976 million. French output of 626 million in 2016 is down by 3.8% on 2015, while apparent consumption grows by 5% at 749 million. As a consequence, imports rise by 22.2% to 583 million, while exports also aim register an increase of 11.1% at 460 million. The appeal of the French market remains high, much like its specificity in the production of packing and filling machines. And there s the rub! By way of comparison, sales by Italian manufacturers of packing machines stand at 7.190 billion in 2017, including 79.1% exported, compared with 6.604 billion in 2016. In an era of French Fab and the Industry of the Future, certain industry accelerators are offering firms the chance to transform themselves through new technologies such as 3-D printing, artificial intelligence, robotics, digital tech, big data, etc. Firms that receive support are able to innovate, break into the industry of the future, develop their turnover, start exporting, change their business models and more assertively assume their corporate social responsibility. In Germany, firms already appear to be a step further on. They hope to improve the flexibility of their production thanks to Industry 4.0, which has prompted them to make investments. According to a survey conducted by Bitkom and EY in 2017, 45% of surveyed German firms used solutions bearing the Industry 4.0 hallmark last year. This figure is a 6% increase in the space of a year. In France, 56% of suppliers of packing and filling machines and intralogistics equipment, surveyed for the ALL4PACK Observatory, say that the technology of the Industry of the Future can reduce time to market, while 51% agree that it increases productivity and production capacity. 8 Source: Economic observatory, national inter-professional organisation for forested wood / 9 Source: SIEL / 10 Source: Guide to the technologies of the Industry of the Future, March 2018, Alliance Industrie du Futur 11
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