The Annual State of the Flexible Packaging Industry Report, recently released by the Flexible Packaging Association (FPA), provides industry converters, suppliers, investors, and analysts with insight into the performance of the U.S. flexible packaging industry over the past year. This definitive source of data and information also examines several other aspects of the industry, including the following:
- Performance (growth, revenue/volume expectations, profitability, and capital spending);
- Materials and processes (printing and expected material usage);
- End uses (end-use forecast and U.S. Census Bureau retail segments data);
- Structure and consolidation (merger and acquisition activity);
- Imports and exports (trade outlook); and
- Industry vision, challenges, and critical issues.
The report covers the entire flexible packaging industry, including the segment of the industry that adds significant value to flexible materials, usually by performing multiple processes. This segment of the industry is estimated to be $35.6 billion in 2023 and does not include retail shopping bags, consumer storage bags, or trash bags.
U.S. Flexible Packaging Industry Performance
The total U.S. flexible packaging industry is estimated to be $42.9 billion in annual sales for 2023, an increase of 3.4% from $41.5 billion in 2022.
Flexible packaging represents $20.4 billion of the total $210.8 billion U.S. packaging industry and is the second-largest packaging segment behind corrugated paper. Over 38% of survey respondents experienced higher growth in 2023 than in 2022—with nearly all respondents expecting increased revenue in the years to come.
In data captured from survey respondents, the weighted average shows expected sales revenue to steadily increase by 2028. However, inflationary pressures can impact the growth rate by driving higher revenue and costs.
Industry Structure
The flexible packaging industry comprises approximately 533 converters. The “Top 5” account for 37% of revenue, and the “Top 10” account for 47% of revenue. The “Top 25” converters comprise 59% of total industry revenue.
The year 2023 saw 31 domestic transactions completed, down from 2021’s historic high of 62. This year’s survey asked respondents if their company was planning to pursue or undertake a domestic acquisition in 2024, as well as in the next three to five years. For 2024, 33% of survey respondents said their companies plan to pursue an acquisition, up slightly from 29% in 2023. When asked to project three to five years into the future, 65% of survey respondents said their company would pursue an acquisition. This is down from the 76% noted in 2023’s survey and is considerably higher than the 41% who anticipated a longer-range acquisition in the 2017 survey. This seems to indicate that more converters are looking to acquire new capabilities and scale in the industry.
Materials and Processes
Flexible packaging companies use several materials and processes to produce flexible packaging. Films and resins accounted for the largest spend for converters, with the two categories making up over two-thirds of material purchases: films at 51.3% and resins, 21.9%. Within films, polyethylene (PE) remains the dominant material, with 95% of converters responding to the survey saying they use PE. Polypropylene and polyester are the next most frequently used categories.
Bag/pouch making, printing, and laminating are the most common processes implemented by converters, with over 75% of respondents saying they perform those processes. Other processes, including coating, extrusion, and labeling, among others, help converters differentiate from their competitors.
Flexo printing remains the dominant print technology, accounting for 75% of shipments. Converters continue to add digital printing capabilities. In 2023, the share of converters who said they had digital printing capability was around 12%. However, sales figures for converted products do not reflect a similar growth—digitally printed substrates accounted for less than 1% of shipments.
Issues and Vision
Converters saw “Labor/Talent” as the industry’s biggest issue for 2023, while suppliers ranked “Growth/New Products” as their largest issue.
Economic Analysis of the U.S. Flexible Packaging Industry
Again, for this year, FPA partnered with Inforum, an economic analysis group, to look at the economic contribution of the flexible packaging industry. The study focused on the industry impact in 2022, which represents a business environment impacted by the COVID-19 pandemic. More time is required to determine how the pandemic will affect the industry and related stakeholders in the long term.
Flexible packaging manufacturing activity directly contributes nearly $41 billion toward the U.S. gross domestic product. The industry employs approximately 83,000 people, and flexible packaging manufacturing employees earn $7.2 billion in labor income, which equates to a labor income of almost $86,639 per worker.
The aggregate flexible packaging manufacturing industry generates over $500,433 in economic output per worker, about two times greater than the U.S. economy’s average output per worker of $220,963.
Data Sources
FPA gathers the information in the report through several reliable industry sources, including the FPA members’ State of the U.S. Flexible Packaging Industry Survey; the FPA nonmembers’ “Industry-Wide Converter Survey;” the Annual Integrated Economic Survey, published by the U.S. Census Bureau; the U.S. Departments of Labor and Commerce; industry analysts; and investment banking reports.
Data from these sources provides a more complete picture of the U.S. flexible packaging industry and helps to cross-check information regarding industry size, structure, market segments, and key packaging products.
The report is available to all members and is available for purchase by nonmembers.
Dani Diehlmann is FPA vice president, communications.