Driving costs out of the manufacturing process is the call to arms for businesses in these recessionary times, to be sure. In that regard, the meat-protein industry is not alone in its struggle to come to terms with market forces that impact business performance, chief among them being high prices for crucial commodities such as corn and oil.
Although experts point to price moderations in their short-term forecasts, they continue to be guarded in their overall assessments in light of the decreased demand in the foodservice arena and an oversupply of meat on the market. These are among contributing factors that not only depress prices but, more importantly, create difficulties for meat and poultry processors seeking to beef up margins.
There is a brighter day ahead, however. For one thing, the Freedonia Group Inc. of Cleveland, Ohio, predicts that the demand for meat, poultry and seafood packaging should increase 4.2 percent annually to more than $8 billion in 2011. Such gains, in part, will come from increased meat, poultry and seafood production, with changes in packaging practices also providing opportunities.
Processors are expanding their offerings of meat and poultry in smaller, more convenient sizes as well as increasing the variety of items that are further-processed, according to the Freedonia Group. Processed goods, which tend to use more packaging relative to their volume than larger unprocessed cuts, will continue to experience strong demand resulting from growth in the number of smaller households and consumer demand for more convenient foods which simplify preparation or storage. The increased prevalence of case-ready meats and greater requirements for modified-atmosphere packaging will also boost packaging demand.
In its 194-page “stretch and shrink film” study, available since 2007, Freedonia, a Cleveland-based industry research firm, determined that U.S. demand for that category of film is positioned to grow 4.7 percent annually to $4.7 billion in 2011, requiring 3.2 billion pounds of resin.
Moreover, the U.S. food container demand will reach $23.5 billion in 2011, which the study attributes to a heightened demand for more convenient foods and a shift toward value-added packaging. Plastic containers, and bags and pouches will log the fastest growth. Meat and dairy products and frozen specialties will lead gains by market.
Demand for plastic film in the U.S. is projected to grow 2.6 percent annually to over 16 billion pounds in 2012, valued at $13.4 billion (resin cost only), according to the study. Total plastic film market value (including resins, additives, and processing and other costs) will reach nearly $32 billion. Advances will reflect film’s cost, performance and source reduction advantages over rigid packaging, as well as opportunities in film products such as pouches and modified-atmosphere packaging. Low-density polyethylene will remain the leading film, accounting for almost two-thirds of the total in 2012. These and other trends are presented in Freedonia’s new study on plastic film.
Demand for low-density polyethylene film is forecast to increase nearly 3 percent yearly to 10.5 billion pounds in 2012. This will result from the film’s competitive cost structure, versatility and opportunities in areas such as produce and snack packaging, stretch and shrink wrap, and trash bags. High-density polyethylene film demand will grow at a below-average pace as a result of slow retail bag advances. Polypropylene film demand will expand 3.4 percent annually, driven by produce, grain mill, dairy product and other food-packaging applications.
Demand will also be supported by the popularity of club stores and other mass-market retailers using shrink wrap for multipack items and pallet wrap for product warehousing.
Packaging is the dominant material clogging the waste stream and thus is a prime target of source-reduction programs. Shrink wrap offers solutions to this problem thanks to its low cost compared to other packaging materials and, most importantly, the fact that it is recyclable. Another benefit is its versatility. Plastic food wrappings prevent spoilage and reduce food waste. Clear film is ideal for printing colorful graphics. Plastic shrink and stretch wrap also reduces packaging weight and bulk to reduce transportation and storage costs.
For more information, visitwww.freedoniagroup.com.
February 13, 2009