GENERAL TRENDS
Packaging Industry Outlook and Observations
Urbanization, the rise of e-commerce, and growing consumer demand for easy-to-use packaging have continued to drive growth in the global packaging industry, with an expected CAGR of 3.9% through 2027
As a result of the pandemic, increasing food safety concerns and changing consumer eating habits have resulted in a boom in the global food packaging industry, with the market expected to expand by a CAGR of 5.1% from $338.4B to $478.2B by 2028
Growth factors + growth limitations
Expanding market for non-recyclable, non-bio packaging → limiting biodegradable, recyclable packaging solutions industry
High growth within the flexible packaging industry
Traditional packaging may continue to be replaced by flexible packaging and high-barrier films and challenge rigid packaging like metal and glass for food products
Flexible packaging providers are offering packaging solutions catering to the rise of bakery + confectionery demand → with confectionery manufacturing expected to reach $10.9B in 2023
Sustainability trends - including recycling and biodegradable forms of PET are continuing to rise
Other Industry Observations
Growing consumer awareness for sustainable packaging and increasing environmental federal regulations are augmenting the market for paper-based packaging, with over 75% of companies like PepsiCo, Nestle, and Coca-Cola having already made sustainable packaging commitments
The growing demand for plastic coupled with supply chain issues with crude oil, a primary raw material used in plastic production, has resulted in a surge in plastic prices and price volatility, incentivizing companies to look into alternative forms of packaging
Even with the cost of pulp and paper increasing by over 25%, the increasing demand for sustainable packaging solutions, and stringent environmental regulations, the paper-based packaging industry production is expected to expand by 1.5% annually and a current valuation of $373.7B, exhibiting a CAGR of 4.7% until 2030
The value of domestic packaging machinery shipments hit $10.5B last year, a jump of 11.2% from 2020, according to the Industry Packaging Machinery report from the Association for Packaging and Processing Technologies. Shipments of domestic packaging machinery are also expected to increase at a CAGR of 5.4% to hit $12.9B in 2027. This demand is driven by the increase in consumer goods, increased adoption of automated packaging machines/ systems, and the increasingly efficient machines
Recent and Upcoming Trends
Recent packaging trends show consumers are looking to companies for innovative solutions to keep consumer safety and needs in mind. Consumers expect companies to incorporate responsible and sustainable packaging solutions accompanied by accessible, tamper-resistant, and transparent packaging that will build trust and communicate quality to buyers.
The legalization of cannabis, the rise of the medical cannabis market, and the surge in new cannabis startups have driven the growth of the global cannabis market to a projected revenue CAGR of 25.2% and a market valuation of $23.8B by 2030, with consumers emphasizing the importance of child-resistant and tamper-evident packaging
With consumer demand for sustainable and eco-conscious alternatives to plastic packaging on the rise, startups specializing in plastic-free packaging, circular packaging, and mushroom-based styrofoam alternatives are emerging to disrupt the packaging market
M&A ACTIVITY
Global Packaging M&A Transaction Velocity
DEAL SPOTLIGHT
• Liquibox is a leading manufacturer of sustainable liquid packaging solutions offering a wide assortment of bag-in-box solutions as well as fluid dispensing fitments to a variety of end markets including food and beverage, consumer products, and healthcare
• This acquisition provides Sealed Air accelerated growth and capabilities within sustainable packaging solutions for the Fluids & Liquids industry
• This transaction is synergistic, with both companies benefiting from the complementary solutions portfolio, technologies, and operations
• MBC is a Utah-based company that specializes in the conditioning and recycling of industrial packaging containers, including steel and plastic barrels, drums, and intermediate bulk containers
• This acquisition provides an expansion in their industrial packaging capabilities
• Additionally, sustainable packaging and environmentally-safe collection options are the core of MBC's services, providing TricorBraun headway into this market as well
Date: 11/01/2022
Target: Liquibox
Buyer: Sealed Air Corp
Transaction Value: $1.15B
Date: 9/21/2022
Target: TricorBraun
Buyer: MBC
Transaction Value: Undisclosed
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The opinions expressed herein are those of 555 Capital Advisors. There is no guarantee that any predictions/projections as to certain market activity or events will come to fruition or past market or transaction performance referenced within will yield the same results as transactions previously conducted by 555 Capital Advisors.
