Packaging M&A update: Q4 2017
Commodity resin prices rose in December as the US manufacturing and plastics sectors entered a growth phase. At the same time, demand for stand-up pouches and fiber-based packaging continues to rise. This Packaging M&A update provides Deloitte Corporate Finance LLC insights and market data analysis that shed light on M&A trends in the Packaging industry.
- Stand-up pouch demand to grow1: Stand-up pouches represent one of the fastest growing segments in the flexible packaging industry, particularly due to its widespread use in retail/ready-to-eat food applications. According to a Q4 2017 report from AMI Consulting, global stand-up pouch demand is expected to grow from an estimated 90 billion units in 2017 to 113 billion units by 2021, which represents a value of $4.5 billion. While the segment has seen several acquisitions in recent years, M&A activity is expected to continue as some of the largest converters continue to consolidate market share.
- Global fiber-based packaging2: According to a new study from Transparency Market Research, the global fiber-based packaging market is expected to grow at a CAGR of 3.8 percent in terms of revenue between 2016 and 2025, from $284 billion in 2016 to $383.5 billion by the end of 2025. This can be attributed towards the wide range of applications for fiber-based packaging across several end-markets, as well as increased consumer preference for eco-friendly packaging solutions.
- Commodity resin prices rose in December3: Regional prices for the major commodity resins rose in December. It was the third consecutive one-cent hike for Polypropylene (PP), which also had seen a seven cent spike in September as the market reacted to temporary shortages caused by Hurricane Harvey. Benzene prices in December rose 46 cents to $3.30 per gallon, a one-month increase of 16 percent. PP and Polyethylene Terephthalate (PET) bottle resin each increased by a one cent per pound in December, while solid Polystyrene (PS) prices saw a five cent jump.
- Continued growth for manufacturing and plastics4,5: The US manufacturing and plastics sectors have entered a growth phase, as shipments of manufactured durable goods were up 3.4 percent in November when compared with last year, and for the third quarter, the year-over-year growth rate was 4.6 percent. Emerging trends in food and beverage consumption and growing automobile production positively affect key downstream markets. Additionally, growing investment in new machinery will support product demand domestically.
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1 “New report forecasts stand-up pouch demand will top $4.5 billion by 2021”. Packaging World. December 12, 2017.
2 “The State of the Global Fiber-Based Packaging Market”. Packaging World. December 12, 2017.
3 “Commodity Resins Have a December to Remember”. Plastics News. January 11, 2018.
4 “Data Points to Stronger 2018 for the Industry”. Plastics Today. November 15, 2017.
5 "Plastics & Rubber Machinery Manufacturing in the US” IBISWORLD. November 2017.