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FPA AM, 28 February 2003, Tucson, AZ.FPA AM, 28 February 2003, Tucson, AZ.

Flexible Packaging in Europe:

Trends & Developments

Roger M.P. Loop

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A new name and a new logo!A new name and a new logo!

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Table of contentsTable of contents

Flexible Packaging Europe General information + organization

Issues for the Flexible Packaging industry in Europe Environment, food contact, E-business, supply chain

Market & Statistical information

Conclusion

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General info + activitiesGeneral info + activities

Flexible Packaging Europe Lobby: Food Contact Environment E-business (focus on Reverse Auctions)

Flexible Packaging Europe Communications

http://www.flexpack-europe.org!

Flexible Packaging Europe Activities / Services various Position Papers on the lobby issues Raw material statistics Benchmark for the Direct Member Companies

The Flexible Packaging Europe Congress 22 + 23 May 2003 (Seville, E)

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Organization chartOrganization chart

Flexible Packaging Europe * 14 direct company members (converters!)

* 11 national associations * 21 associate members (= NEW!)

* Academia (= NEW!)

Multinational Division FEDES (SME Division) * t.o. > 50 50 miomio + international+ international * through the national * through the national

(= 14 companies)(= 14 companies) associations all companies associations all companies (incl. associate members), (incl. associate members), with a focus on with a focus on SMEsSMEs

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Main issues to be dealt with todayMain issues to be dealt with today

Environment Process emissions (= solvents) Packaging Waste EU Chemicals Policy (= NEW)

Food contact migration: new concepts / (positive) lists of substances hygiene: retail and other initiatives traceability & declarations of conformity

Health & Safety Solvent based: Occupational Exposure Limits (OEL) + Noise

E-Business Code of Conduct + Checklist Reverse Auctions (*)

Supply chain Good Manufacturing Practices (*) General Sales Conditions (*)

(*): available on the website

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(Flexible) Packaging industrys image(Flexible) Packaging industrys image

Recent EU Study on Forest Based Industries (FBI) (February 2003) Also focus on paper & board processing industries (incl. flexibles)

little spontaneous knowledge of this industry packaging best known product of this industry useful functions of packaging recognized excessive packaging criticized in general the industry was perceived innovative, especially because of new types of packaging and new materials like

composites in general only moderate environment related criticism was given however, multi-material packaging and plastics were believed to have

a negative impact on the environment little was known about enterprises in the sector appeal of this industry as employer was better than other sectors in

FBI, but still low

A Review of theA Review of the

European Flexible Packaging European Flexible Packaging MarketMarket

Many thanks to Paul Many thanks to Paul Gaster Gaster from PCI Films Consulting Ltd who very from PCI Films Consulting Ltd who very kindly provided Flexible Packaging Europe with the market kindly provided Flexible Packaging Europe with the market information data.information data.(with the exception of the Flexible Packaging Europe Benchmark e(with the exception of the Flexible Packaging Europe Benchmark en raw material n raw material information, which comes from other sources)information, which comes from other sources)

More information on PCI Films Consulting Ltd can be found on:More information on PCI Films Consulting Ltd can be found on:http://www.http://www.pcifilmspcifilms.com.com

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PCI Definition of Flexible PackagingPCI Definition of Flexible Packaging

Flexible PackagingFlexible Packaging embraces the manufacture, supply and conversion embraces the manufacture, supply and conversion of plastic and cellulose films, aluminium foils and papers that of plastic and cellulose films, aluminium foils and papers that are used are used separately or in combination, for primary retail food packaging,separately or in combination, for primary retail food packaging, nonnon--food packaging applications such as DIY, hygiene product overwrafood packaging applications such as DIY, hygiene product overwrap, p,

household detergents and certain other specialist nonhousehold detergents and certain other specialist non--food packaging food packaging niche sectors, such as medical and pharmaceutical packagingniche sectors, such as medical and pharmaceutical packaging. .

As such, this definition specifically excludes shrink and stretcAs such, this definition specifically excludes shrink and stretch films used for h films used for secondary packaging and pallet wrap, carrier bags, supermarket ssecondary packaging and pallet wrap, carrier bags, supermarket self service and elf service and

counter bags, silage bags, refuse and industrial heavy duty sackcounter bags, silage bags, refuse and industrial heavy duty sacks, etc.s, etc.

Global market for flexible packaging2002 (nb: European definition)

Continent USD million % of total Per capita consumption in USD- Western-Europe 8,600 24 23.25

- Eastern-Europe 1,420 4 3.45

- North America 12,650 36 41.00

- Central & SouthAmerica

2,750 8 5.30

- Japan 4,000 11 29.50

- South East Asia &Oceania

5,000 14 1.40

- Middle East & Africa 1,150 3 1.45

Total for the World 35,570 100 5.83

Source: PCI Films Consulting inVerpakken, no. 1, 2003

Relative Market Position in Packaging 2002

European Flexible Packaging European Flexible Packaging

10.02 10.02 bnbn (= (= approxapprox. 7.2%). 7.2%)

(of which 1.4 (of which 1.4 bn bn in Eastern Europe)in Eastern Europe)

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W. European Flexible Packaging Market 2001W. European Flexible Packaging Market 2001

By Area = 40 bn m2 By Value = 8 bn

Converted Single Webs47%

Laminates31%

Plain Single Webs22%

Converted Single Webs31%

Laminates54%

Plain Single Webs15%

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W Europe Converted Flexible Packaging Overview W Europe Converted Flexible Packaging Overview 2001 (vs. 2000)2001 (vs. 2000)

W. European Consumption

(7,340 mn) = + 1,4%

of which Flexible Packaging Europe members cover approx. 80%

Exports

(825mn)

= -/- 4%

W. European Production

(8,045 mn) = + 0.25%

Imports

(120 mn)

= + 50%

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Flexible Packaging Usage of Substrates 2001Flexible Packaging Usage of Substrates 2001(= stable vs. 2000)(= stable vs. 2000)

High Barrier coex3%

PVC2%

PET2%

Cellulose1%

Papers15%

Alufoil13%

BOPA1%

PA2%

PE36%

PP4%

OPP21%

Total usage 2.6 m tonnes (2001)

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Converted Flexible Packaging ConsumptionConverted Flexible Packaging Consumptionby Country 2001 (= stable vs. 2000)by Country 2001 (= stable vs. 2000)

Market Value = 7.34 billion 2000

Germany29%

UK20%

Italy9%

France18%

Others7%Spain

7%

Nordic countries

6%

Benelux4%

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East European Converted Flexible East European Converted Flexible Packaging Market (value Packaging Market (value 1.5 1.5 bnbn))

Hungary7%

Czech Rep.7%

Poland18%

Slovakia3%

Balkans3%

Baltic States

2%Other5%

Romania4%

Belarus3%

Ukraine5%

Russia43%

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W European Converted Flexible Packaging W European Converted Flexible Packaging Consumption by EndConsumption by End--Use 2001 (by value)Use 2001 (by value)

Market Value = 7.34 billion 2001

Baked Goods11%

Fresh Food10%

Snacks7%

Dried Food7%

Confectionery11%

Cigarettes6%

Coffee5%

Dairy +Cheese10%

Other Non-food8%

Household4%

Pharmaceutical2%

Medical5%

Frozen Food8%

Other Food6%

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The Future?The Future?

Mature North European Flexible Packaging Markets to grow by 1-2% p.a.

South European Markets of Spain, Portugal, Italy and Greece will grow faster with increasing affluence and also as changing lifestyles, retail

patterns and eating habits lead to greater demand for prepacked foods

East European markets will continue to grow rapidly at 5-10% p.a. with rising affluence

Continued rationalisation and consolidation with the top 20 converters accounting for over 70% of sales

The balance of production will continue to be served by several hundred small and medium sized converters

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Flexible Packaging Europe DCM BenchmarkFlexible Packaging Europe DCM Benchmark

Raw materials and Added value as a percentage of Sales of the Total industry

42%

44%

46%

48%

50%

52%

54%

56%

1998 1999 2000 2001

Raw materials Added value

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Flexible Packaging Europe DCM BenchmarkFlexible Packaging Europe DCM Benchmark

19981999

20002001

Investment (in year)

Fixed assets (year end)

Working capital (year end)

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Investment / Fixed assets / Working capital

Investment (in year) Fixed assets (year end)Working capital (year end)

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Raw material price indexRaw material price index

Rawmaterialprices - Index

40

60

80