Europe: The Biggest Packaging Market Open for Growth

Published: August 01, 2002, By Corey M. Reardon, AWA (Alexander Watson Assoc.)

Europe represents the world's largest packaging market, valued at $129 billion — and there remains considerable scope for growth.

Average annual growth in Europe the past seven years has been 3%-4%, but has slowed to just 2% for 2001 — a slowing in the industry's overall growth recorded by Ernst & Young (100 Top Packaging Companies) and reflected in AWA's research in the specialty coating and converting markets.

Lower GDP growth rates in Western Europe are the main driver of this slowdown: Eastern European countries — the developing consumer market — are less affected, and Western packaging companies are active in business in the Czech Republic, Hungary, and Poland, as well as the largest potential market, Russia, where we estimate growth in certain sectors to be in excess of 35%/annum.

However, the benefits of what amount to export markets for Western European packaging suppliers and converters cannot be expected to continue to support growth in the long term. Domestic packaging manufacture in Eastern Europe is growing quickly in line with consumer demand and the needs of international brand owners to manufacture their products locally, and source packaging locally, to avoid import costs, which seriously impact margins.

Western European packaging companies will need to turn to new geographical markets, such as Asia Pacific and Latin America, for growth and to value-added products in their home markets. A change in buying habits is noted in mainstream packaging materials, where plastics are showing strong growth over papers, boards, and glass.

AWA Alexander Watson Assoc. is a leading international market research consultant company for the converting and packaging industries.