Flexible Packaging Newsletter - Q1 2020

TKO Miller Market Analysis 

• The COVID-19 outbreak, thought to have started in a wholesale seafood and meat market in Wuhan, has drawn massive amounts of attention to China’s food supply chain and health safety. Tighter regulations around meat handling and distribution practices are being considered by the Chinese government and have the potential to drive new demand for flexible packaging, which serves as a tool for protecting food from contamination.
• According to Wood Mackenzie, flexible packaging demand has slowed in China due to a sluggish regional economy, with the market growing at 4.8% in 2019 – down from 5.6% in 2018. Chinese per capita consumption of flexible packaging for fresh and processed meat and seafood is currently so low (see chart below) that a subtle shift in production to larger corporations could have an impact on growth.

• The long-term impact of COVID-19 on the U.S. and European flexible packaging markets remains to be seen. In the short term, however, demand for flexible packaging is expected to increase on an international scale as consumers attempt to mitigate contamination risks. TKO Miller’s proprietary flexible packaging valuation index (see below) remained in line with its peak Q4 2019 level.
• While many businesses that offer final-demand consumer goods and services have seen a sharp decline, flexible packaging’s end markets including grocery stores, drug stores, pharmaceuticals, and big-box retailers have prospered, in part from increased demand in packaged goods.

Recent Flexible Packaging Transactions 

By Joe Froehlich on Apr 8, 2020 8:15:00 AM