The discussion below focuses on a handful of the fastest and strongest growth segments in flexible packaging. These are business segments that are worth disproportionately high multiples in today’s markets. These are also segments that often require capital and new investments to support the growth that they are experiencing.
- As flexible packaging has increased in popularity and has grown steadily over the past decade, the processes for graphics decoration and production has become more sophisticated, more efficient and infinitely more attractive to consumers. Flexographic print capabilities have expanded and become steadily more colorful and more detailed, with flexo techniques steadily improving, including even high definition capabilities in recent years. Needed capital is significant, but potential for growth can be astounding. We currently see more than 20 flexo buyers today for every one seller.
- Flexible packaging today has grown enormously for food markets in particular. As a plastic packaging intermediary, we experience an enormous range of buyers, targeting almost every niche within the industry. There are several strong segments in particular, but today we see about 75 percent of the buyers for flexible packaging companies hoping for concentrations and specialization in food. Food products are typically seen as competition-resistant because customers are likely to need to buy food on a steady basis, regardless of economic trends. Such steadiness increases safety for capital expansions and reduces risk, thus increasing price.
- Another increasingly common industry sub-segment is packaging for pet products. Pet products are often thought of as being recession proof. As demographics continue to build older populations, there are older people owning pets with much greater capability to spend as they deem necessary. Thus pet spending continues to climb, and per-item pricing climbs as well.
- Innovative package shapes (bags and pouches) and new closing and reclosing innovations (zips, spouts, etc.) have become the future. As we talk to package manufacturers in the U.S. today, four out of every five have been specifically pressured by customers to add new shape innovations in their packaging formulations. There is a cost to such additions, both in capital equipment needed and in professional expertise required of staff. However, it’s quickly coming to the point where for many products, such capabilities are widely recognized as a have-to element for packaging capabilities in the future.
- As technology continues to evolve, high-performance films with new capabilities become ever more a part of the flexible packaging future. It may be modified atmosphere packaging for baked goods, it may involve the new heat-resistant packaging which can allow foods to be cooked without removal from packaging. It may involve improved clarity for products where transparency is desirable. Particular expertise, skill and experience with any of these newer material technologies makes a company worth more to customers and potentially worth more to buyers as well.
Owners in a desirable and growing sub-segment of their industry command strong flexibility as they look toward growth.
