Packaging M&A update: Q2 2018
While there is an ongoing concern for the increase of plastic waste on a global scale, the US rigid plastic food container, global flexible packaging, and global automotive packaging are all said to increase by 2025 with the Compound Annual Growth Rate (CAGR) varying from 4.2 to 9 percent. This Packaging mergers and acquisitions (M&A) update provides Deloitte Corporate Finance LLC insights and market data analysis that shed light on M&A trends in the Packaging industry.
- Rigid plastic food container demand1: The US rigid plastic food container market is projected to grow to $7.7 billion by 2022, representing a CAGR of 4.2 percent. Dairy products remain the largest segment of the market due to the suitability of rigid containers for a wide range of dairy applications such as yogurt, sour cream, butter, etc. Growth in demand for produce is also expected to result in an increased demand for clamshells and other protective packaging for delicate items, displacing loose bags and baskets.
- Global flexible packaging2: The global flexible packaging market is expected to grow 5.2 percent annually through 2022, outpacing the rigid packaging market, due to benefits such as visual appeal, lower space footprint, and longer shelf life. Consumer packaged goods (CPGs) are also adopting flexible packaging solutions (e.g., zippered pouches) due to their lower weight, ease of use, and lower material costs, displacing traditional solutions such as bag-in-box for cereal packaging.
- Global automotive plastics3: The global automotive plastics market is projected to reach $68.5 billion by 2025, representing a CAGR of nine percent. The market is experiencing a shift towards high-performance plastics as a substitute for conventional metals and rubber. This shift towards plastics will be driven by the increasing OEM demand for lightweight materials to reduce vehicle weight in response to stringent government regulations on fuel economy.
- Environmentally driven market opportunity4: Growing concern for plastic waste domestically as well as at global platforms such as the G7 Summit is expected to drive new opportunities in the plastics and packaging space. The market for biodegradable plastics, which represents a viable alternative, is projected to grow at a CAGR of 12.4 percent from $5.0 billion in 2017 to $10.1 billion in 2023. The increase in projected demand is spurred by regulation as well as consumer preference for sustainable solutions.
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1 Butschl, Jim. “Dairy products advancing rigid plastic food container demand” https://www.packworld.com/article/applications/food/dairy/dairy-products-advancing-rigid-plastic-food-container-demand, accessed July 16, 2018. 2. Overstreet, Kim.
2 “Global flexible packaging market growth.” https://www.packworld.com/global-flexible-packaging-market-growth, accessed July 16, 2018.
3 Grandview Research. “Automotive plastics market analysis by product (ABS, PP, PU, PVC, PE, PC, PMMA, PA), by application (Powertrains, Electrical Components, Interior Furnishings, Exterior Furnishings, Chassis), and segment forecasts, 2018—2025”. https://www.grandviewresearch.com/industry-analysis/automotive-plastics-market, accessed July 16, 2018.
4 Knowledge Sourcing Intelligence LLP. “Biodegradable plastic packaging market—forecasts from 2018 to 2023, accessed July 16, 2018.