The flexibles market is shaping up well although it has had to cope with the industry-wide challenges hitting all players in the supply chain. Waqas Qureshi caught up with five specialists.
What markets do you operate in and are you targeting any new ones?
Mike Baxter, Berry Global Flexible Films UK: Our extensive range of flexible films, bags and sacks are used in a wide variety of markets including food and beverage, agriculture, horticulture, chemicals, healthcare, retail and construction. Our recycling business recycles used plastics from a variety of sources including the agricultural, industrial and retail sectors. Alastair Bearman, Chadwicks of Bury: We supply any market that requires a die cut lid. Dairy is our largest market with yogurt, cream, ice cream and desserts being the biggest volumes. Food on the go such as snack pots are also a volume sector for us and we continue to see growth in vegan products.
Simon Hamer, Coveris: Coveris’ UK flexibles business operates across a range of fresh, chilled and ambient food categories including produce, meat and poultry, cheese, bakery, dried goods and confectionery. Within its European manufacturing base, Coveris also operates in the pet food, medical, home and personal care markets. Within the UK, further growth within the cheese sector remains a key target following the launch of Coveris’ sustainable replacement film, MonoFlexBE for Tesco, Iceland and Sainsbury’s grated cheese.
Paula Birch, Parkside: We supply the UK, Ireland, US, and Europe from our West Yorkshire site and Southern Asia, Australia, and New Zealand from our Malaysian operation. Parkside holds a leading position in tobacco packaging and is a key supplier in a wide range of markets, including ambient grocery, fresh and chilled, frozen and non-food.
Mark Lingard, Sirane Group: We predominantly manufacture packaging for the food industry and medical/healthcare sector. We’re recently started to make products suitable for other areas, including vitamins and supplements, pet treats, healthcare/beauty products, coffee and more.
How was trading in 2021 – did you hit forecasts despite the pandemic or was trade affected? What is your company forecast for 2022?
Mike Baxter: Similar to many businesses in the manufacturing sector the impact of the Covid-19 pandemic had to be carefully managed. Overall we achieved this without any negative impacts on our operations.
Alastair Bearman: Trading was buoyant in 2021. We exceeded our 2021 forecasts and grew the business by over 5%. In some areas such as foodservice trading was down, but this was more than made up for by increased volumes from our customers supplying the retail sector.
Simon Hamer: Last year’s trading was in line with expectations despite very tough market conditions following the end of several Covid-19 lockdown periods. Though buying patterns were volatile in a number of markets, the high security of the majority markets we trade in for fresh and chilled food retail have remained stable. Given the current economic situation in the UK, 2022 has brought about major changes in market mood due to inflation and consumer spending budgets. Again, given our supply to highly stable markets like produce, meat, cheese and bakery, these categories remain relatively resilient. However we anticipate pressure on non-essential foodstuffs like confectionery. We also forecast further shrinkflation of packaged goods with customers resizing products and packaging to support ongoing price pressures.
Paula Birch: With everything from the publicity around packaging waste and sustainability to Brexit and the pandemic, 2021 was challenging in terms of demand volatility and shifting consumer habits. Nevertheless, Parkside sustained a stable position in terms of business volume and value. Interestingly, 2021 saw continued growth in the tobacco sector and further development in the company’s sustainable packaging range, including new monopolymer recyclable films.
Mark Lingard: Sirane had a very strong 2021, and we finished the year significantly up on budget. This was partly due to our growth in non-food areas, which had been our core business until recent years. Our core business of food packaging seemed unaffected by the pandemic, I guess people continued to eat.
What’s your strategy for 2022? Capital expenditure, new staff, expansion etc? And is now a good time to invest?
Mike Baxter: The introduction of the UK Plastic Packaging Tax stimulated demand for recycled products. Supermarket front-of-store collection initiatives – where customers are encouraged to return their used plastic packaging for recycling – grew significantly during 2021 with Berry becoming one of the first recyclers to reprocess this waste stream and use the recyclate to produce refuse sacks. We will continue to invest in our recycling capacities as appropriate. For example, last year we installed the first wash plant and recycling facility in the UK that is able to recycle both flexible and rigid plastics.
Alastair Bearman: We are forecasting double digit growth for 2022. We have already invested in a new printing press and cutting equipment in 2021 to gear up for these increased volumes. We are increasing staff numbers and reviewing how we can maximise our production footprint. Further machinery investments are under review and market conditions are favourable for growth.
Simon Hamer: The already discussed economic and inflationary challenges in the UK have driven us to scale up efficiencies and investment into operations to strengthen the business against increasing market cost pressures. Further investment into our UK recycling infrastructure also remains a key strategic area with the intent of positioning Coveris at the forefront of recycled material and recyclable product applications.
Paula Birch: In 2022, we are continuing to invest in core equipment to support that strategy further, delivering speed-to-market for clients and world-class innovative products and services. We are also investing in our operations in Asia to expand our capabilities and support our food and tobacco packaging growth in the region. Demand for hygienic, safe and convenient packaging is growing. As a result, we have been investing in producing the facility’s high-barrier and sustainable flexible packaging solutions.
Mark Lingard: Our strategy for 2022 is one of investment and expansion. This year we have already opened a third site in Telford, as a home for our innovative board division, allowing it to expand into new areas and develop new products, particularly in the sustainable packaging sector. We’re also opening a new site in Dallas, Texas, later this year. We’ve also added new machinery, including pouch-filling machines and VFFS for our new contract packing service (Sira-Pack).
What are the main challenges that you are facing? Operational/energy costs? Materials costs and supply chains? Staffing? Sustainability demands?
Mike Baxter: The recent dramatic price increases for raw materials, energy, transport and consumables impact on all stakeholders in the UK industrial and retail sectors. Manufacturers have no option other than to pass these increases on their customers. Sustainability issues are key to our industry’s future, and these are being addressed by the many commitments and initiatives in our Impact 2025 sustainability strategy.
Alastair Bearman: All of the above. Prices have increased and lead times lengthened for our two main material substrates, aluminium and foil. All of our non base material prices have increased, as have energy costs. Recruiting and training new production staff is a constant commitment. Sustainability demands quite rightly remain a driving force and keep our development team busy.
Simon Hamer: Economic pressures and inflation as described, along with availability of specialist materials due to the global market reopening post-pandemic and globally documented supply-chain challenges. Given Coveris’ integrated PE and PP supply-chain supporting extrusion, print and conversion, we are strategically positioned to support market demands and the domestic production of such materials has actually led to faster development and adoption of more recyclable materials in certain markets.
Paula Birch: The backdrop of Covid-19 and, latterly, the climate of geopolitical unrest in Ukraine and the knock-on effect on the world’s economies is putting the whole infrastructure under intense pressure. We are working closely with our partners to cover all bases ensure we can maintain our supply standards in such challenging times, and we are incredibly grateful for all their support. Alongside this, one of our most demanding challenges is the breadth of volatility across the economy. It’s not just about raw material costs or energy prices, though these are significant. We’re also facing increases across all costs associated with running our business, right down to reams of paper. However, we are continually pursuing ways to operate more efficiently. We remain financially robust and continue to invest in our company, continuing to drive efficiencies and remain competitive whilst minimising, where we can, the level to which we pass it on. The demand for mono-materials such as PE/PE (EVOH) laminates in place of mixed materials is one of these observations. However, it is extremely difficult to source such material in the current climate, which creates a challenge in itself in moving customers onto these more sustainable alternatives.
Mark Lingard: Material costs have been certainly having an impact, with a lot of fluctuation, particular in the board/paper sector.
How has (and do you forecast will) the Plastic Packaging Tax (PPT) affect the flexible sector? Brands and firms have told us that in the immediate future they will pay the tax.
Mike Baxter: For the majority of polythene films, sacks and bags used to pack non-food items, these products can be manufactured with a minimum 30% recycled content and thus avoid the tax. We have been preparing for the introduction of the PPT for more than two years with the development and introduction to the market of our Sustane range, a premium quality shrink film containing 30% recycled content. This delivers high levels of technical performance, allowing its use in a wide range of applications where previously prime polymer was used.
Alastair Bearman: To a certain degree it depends on the type of flexible packaging. Die cut lids are very light weight unlike a heavy gauge laminate, where the financial pressure to change is more significant. The other area that is key is the availability of recycled content materials and the infrastructure to collect and recycle, to allow supply to keep up with increasing demand.
Simon Hamer: Coveris remain at the forefront of recycled packaging innovation with the launch of innovative recycled, UK Plastics Packaging Tax compliant films in both food and non-food products, including our 30% PCR rPET lidding film for berries, recycled stretch films and our award winning Duralite R film for beverage multipacks. Currently there is no commercially available volume of food-contact approved recyclate for other flexible plastic types the UK, so until a widely available supply of food-safe material is available, meeting the requirements of UK Plastics Packaging Tax remains a challenge for the entire UK flexible plastic food packaging industry. We continue to seek to source food-safe solutions through our own integrated recycling network as PIR films become more available. Until then, our short-term focus remains on developing our monomaterial solutions to drive recyclable inputs as part of a circular economy.
Paula Birch: The Plastic Packaging tax is still in it’s infancy and as all involved begin to get to grips with it, the impact we have seen directly from it has been minimal. However, one of the initial reactions we have observed across the market is an awakening in the desire to secure alternative flexible packaging solutions. It is unavoidable that the tax needs paying, with the new policy. Firstly, the new tax policy is forcing brands and retailers to absorb the tax into their overall costs. This is potentially counterproductive as ultimately the cost is passed onto the end consumer, further inflaming the current inflationary spiral despite packaging manufacturers, brands and retailers doing all they can to keep groceries and other staples, price rises under control and minimse the impact on the consumer.
Mark Lingard: Our experience so far has been similar, in that companies seem willing to pay the plastic packaging tax rather than find sustainable alternatives, often claiming it is cheaper to pay the tax than it is to pay for the alternatives. I think this will begin to change, as and when the costs of some of the alternatives become more widely available and economies of scale kick in to play. Our experience overseas, where some of these taxes were introduced earlier, is that the inquiries for sustainable alternatives also started to come in at the point in the year where the tax bills started to land. It’s possible in the future that if the tax is not reducing the amount of plastic, it will be increased – and may be increased to a point where it is no longer cheaper to pay the tax, which may be the precursor to real change.
The plastic debate is not going away anytime soon. How do you feel the industry responding to sustainability issues surrounding flexible plastic packaging?
Mike Baxter: We actively support NGO-led initiatives to increase recovery and recycling rates of used plastic packaging and reduce waste. We are also participants in many sustainability initiatives including the WRAP Plastic Pact, CEFLEX and the EU based Circular Plastics Alliance.
Alastair Bearman: It’s a very exciting time to be involved in flexible packaging. The focus on sustainability is driving some excellent developments. Lightweighting, single component laminates, paper-based flexible packaging alternatives and new barrier coatings, along with many other developments are being developed at an impressive pace.
Simon Hamer: We see this as less of a challenge now given our development of alternative, sustainable plastics. With the increased availability of recyclable plastics and customers moving to a more science-based approach to packaging, we are finding that packaging decisions are now being driven by a carbon footprint, data driven approach. Given our technologies in food waste reduction, we are once again seeing this as a sustainable priority and one which cannot often be achieved through alternative non-plastic formats. In terms of the wider industry, though UK recycling infrastructure requires urgent development, particularly given the demands of the plastics tax, the effort from UK retailers through in-store soft plastic collections mean that more plastic than ever is now recyclable.
Paula Birch: We operate in an industry under constant scrutiny, so we must continuously innovate to ensure we are producing the most sustainable packaging we can. And we believe the sector has been doing that. The amount of recyclate containing and fully recyclable films available today from many of the leading players in the market is really pleasing. However, we must continue working closely together as a collaborative sector that sees sensible decision-making emerge around sustainable plastics and packaging use. We are proud to work in the packaging sector, and the last 12 months have proved that more than ever.
Mark Lingard: I can only really speak for Sirane, which has a straightforward answer for any of customers who inquire: we can offer plastic-free packaging, but it will not be suitable for everyone and everything and if it’s not, we can offer recyclable plastics as the most sustainable alternative. There really is no need, in many cases, for the plastic flexibles which cannot be recycled, there are alternatives out there. But there has to be an acceptance from the customer that the alternatives may be more expensive. The industry as a whole seems more inclined to accept recyclable plastics as a sustainable packaging solution. However until there is widespread kerb-side collection there will still be people who don’t consider them recyclable, due to the amount that will still end up in landfill.
THIS MONTH’S INDUSTRY EXPERTS
Mike Baxter is external affairs director at Berry Global Flexible Films UK, The packaging supplier and also one of the UK’s leading recyclers of used plastic packaging, with three vertically integrated recycling and re-manufacturing factories. All of the recyclate generated is used to manufacture new polythene sacks, bags and films.
Alastair Bearman is sales and marketing director of Chadwicks of Bury, the UK manufacturer of die cut lidding producing over 1.5 billion lids per annum. It has an extensive range of barrier lidding materials and over 400 cutting tools to produce multiple bespoke sizes.
Simon Hamer is managing director, UK flexibles at Coveris, one of the leading European packaging manufacturers of flexible packaging solutions for some of the world’s biggest respected brands. Coveris operates 29 sites in the EMEA region with 4,100 employees, and is headquartered in Vienna, Austria.
Paula Birch is global sales director of Parkside, the flexible packaging solutions provider specialising in paper and plastic flexible packaging for various markets including food, personal care and tobacco. Established for more than 40 years, the company is a global supplier with manufacturing sites in the UK and Asia.
Mark Lingard is marketing manager at Sirane Group, the manufacturing and NPD company specialising in absorbency, bags/pouches/films (including flexibles) and board, with sites in Telford, Shropshire as well as the Czech Republic and Mexico, and soon in the US.
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