Executive Summary
The total apparent UK market for paper and board packaging in 1997 is estimated at £4.45bn — a 20.7% increase since 1993. This growth in consumption has been largely based on recycled waste paper, which accounted for 71.3% of production in 1997. It is supplied by a paper recovery industry that was established long before the introduction of the European Union (EU) directive on packaging waste recovery and recycling.
A characteristic of the paper and board industry is the large number of foreign-owned companies operating in the UK that are primarily involved in servicing a domestic market — although important, imports and exports collectively represent less than 10% of UK manufacturers’ sales.
Despite its dominant size within the £11.2bn total packaging market, the paper and board industry is oversupplied by a great number of producers relative to market needs. Production capacity is excessive and vulnerable to the expected imminent downturn in economic growth. Ominous developments include new packaging laws that are intended to limit growth in packaging consumption, coupled with the determination of powerful retail distributors to reduce packaging costs. There are acute pressures on packaging companies to produce new designs which minimise volume, but at the same time add value to their products.
Another key development is the globalisation of packaging, with many multinational users expanding sales in areas such as central and eastern Europe, China, etc. It is likely that the world’s largest packaging companies will be exploring growth prospects in these markets, initially through export sales, but ultimately making direct investments, possibly sharing the risks and costs in joint ventures with local partners.
Consolidation of companies by acquisition or by merger has been a fairly gradual process during recent years but, as future prospects in a mature industry become less favourable, consolidation is likely to accelerate. Key Note anticipates that the total value of paper and board packaging sales over the next 5 years will, in real terms, slowly increase from around £4.58bn in 1998 to £5.11bn in 2002. The overall 11.4% forecast of growth in domestic sales is approximately half the rate of growth achieved between 1993 and 1997 (20.7%). Packaging manufacturers will, therefore, have to respond even more quickly with imaginative innovations that will meet changes in demand in their domestic markets.
Eleventh Edition 1998
Edited by Jane Griffiths
ISBN 1-85765-848-5
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