Packaging market: good prospects despite pandemic

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While most industries have shrunk as a result of the Corona pandemic, the packaging market is recording annual growth of around 5.5 percent. The packaging machinery industry is an exception. However, there is light at the end of the tunnel. The supply situation for some raw and packaging materials remains a crucial point for the industry.

 

Despite the pandemic and lockdown, the reasons for the strong growth of the packaging market include the increased demand for FMCG and pharmaceutical packaging as well as the dynamic growth in e-commerce sales. What slowed down other industries proved to be a driver in our sector. About 5.5 percent growth is a strong statement.


Special case: Packaging machines

Compared to the same period of the previous year, the packaging machinery sector in particular was among the segments to report declining sales. Here, companies had to record an average drop of around 4 percent. At 12 percent, the greatest decline took place in Germany, while the order volume abroad dropped by only 2 percent.

Figures from a survey conducted by the German Engineering Federation (VDMA) offer hope. They show that sales for 2021 are positive again for 20 percent of the companies surveyed in the food processing and packaging machinery sector and will return to the sales level of 2019. A majority of 55 percent expect a slightly longer convalescence and do not anticipate sales at pre-crisis levels until 2022.


Tensed situation: Materials and raw materials

The pandemic has had a significant impact on the supply situation for raw materials. In the paper sector in particular, and even more so in the case of plastic granules, companies are having to contend with huge price increases and a lack of availability.

However, things are getting better, too. According to the VDMA survey, 75 percent of plastics processors expect the general economic situation to develop well or at least satisfactorily.


Reason for optimism

A macroeconomic study by PricewaterhouseCoopers International (PwC) also provides arguments for optimism. 80 percent of the CEOs of German companies surveyed expect the economy to grow in 2021.

This matches our expectations. We expect that despite the lockdown at the beginning of 2021 and even in the event of a further, tough but temporary lockdown, the packaging industry will continue to operate very strongly this year and will be able to continue its growth.

Our optimism also includes the packaging machinery segment. We firmly expect sales to increase in 2021 compared to 2020, even if the level of 2019 will not yet be reached.

For a large part of the industry, the supply situation, especially for paper and plastic granulates, remains the crucial point. Persistent or worsening bottlenecks would result in additional price jumps – with painful consequences for the companies, including production stops.

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