Following a lively 2016 election and the early activities of the Trump administration, many questions surround the short-term future of the United States economy. While outlooks have been mixed, the International Monetary Fund recently predicted the U.S. economy to expand by 3.4 percent in 2017 and 3.6 percent in 2018. This growth will further support an expanding U.S. packaging market. PMMI, The Association for Packaging and Processing Technologies recently released a report, “Global Trends Impacting the Market for Packaging Machinery,” examining the packaging equipment shipments. According to the study, the estimated value of the world packaging machinery market is projected to increase at a 2.6 compound annual growth rate (CAGR) to $43.7 billion by 2019. The U.S. currently represents the largest national market for packaging machinery at about 17 percent of the current global value, which is roughly $38.5 billion.
In this Q&A, Charles D. Yuska, president and CEO, PMMI — the owner and producer of the PACK EXPO Portfolio of Trade Shows — discusses the outlook for the North American processing and packaging industries as well as the trends and challenges that will influence the activities of consumer packaged goods companies (CPGs) and suppliers alike.
Q: What are some of the strongest market segments that will help drive growth in U.S. packaging machinery investments?
A: In the U.S., the pharmaceuticals sector is forecast to grow the fastest of all sectors to 2020, at a CAGR of 2.8 percent. The beverages sector will follow closely, with projections to expand at 2.4 percent over the same time period. This activity in the beverage market — and overall growth of the U.S. food sector — is helping to drive the market for food packaging, with projections to grow at a CAGR of 2.9 percent through 2022, reaching a value of $31.7 billion, according to PMMI’s 2016 Food Packaging Trends and Advances Study. While demands for packaging machinery will increase across most food segments at a pace consistent with the overall rate, two food industry segments stand out. In fact, the confectionery category and meat and related products will outperform other segments on a global level, reaching eight percent and 8.5 percent growth respectively.
Another notable area for growth in the U.S. food market is organic food. PMMI’s 2016 infographic, “What’s Next: Food and Beverage Trends Impact Industry Growth” reported that organic food sales hit a new benchmark of $43.3 billion in 2015, up 11 percent from the previous year’s record. Along those lines, we saw a 25 percent increase in vegetarian claims and a 257 percent rise in vegan claims in global food and drink launches between September 2010-August 2011 and September 2015-August 2016.
Q: What are some of the trends and challenges driving investment in these sectors?
A: PMMI’s 2016 Pharmaceutical & Medical Device Market Trends Study points to the increased life expectancy of people leading to a larger, aging population as one of the most significant drivers for growth in the pharmaceutical sector. This is happening across the globe, with the number of individuals age 65 years and older increasing by 8.5 percent by 2020. Another factor is the expanding categories of branded and specialty drugs as well as innovative medical devices. Forty percent of growth in the U.S. can be attributed to specialty drugs. Additionally, the pharmaceutical and medical device sectors face some of the toughest challenges in combatting counterfeiters. According to PMMI’s 2016 Brand Protection and Product Traceability Market Research Report, counterfeiting is predicted to increase three percent per year worldwide and the current global value of counterfeit goods stands at $1.5 trillion. Estimates place revenue derived from the global counterfeit drug market at $75 billion. The pharmaceutical and biotech sectors in the U.S. are also staring down an uncertain 2017 after receiving tough criticism from President Donald Trump on inversion tactics, drug prices and off-shore manufacturing, but more detail is needed to better understand the possible impact of any new restrictions as well as the pending repeal of the Affordable Care Act.
In the food and beverage sectors, overall rises in demand for organic food and beverage products point to an increasingly health-conscious consumer population, with greater demand for products billed as clean label or natural rather than diet products using artificial sweeteners. Sugary and carbonated beverage sales are also giving way to alternatives perceived to be more healthful, like bottled waters. This factor, combined with the approaching deadlines for provisions of the Food Safety Modernization Act (FSMA) mandating actionable plans for the prevention of food contamination occurrences, is placing a wide range of demands on the operations of manufacturers as they look to enhance production flexibility as a solution.
Q: Can you speak to some of the most compelling practices and solutions that address these trends and challenges?
A: The integration of serialization technologies is not new, but it is gaining importance as global supply chains become more complex and susceptible to counterfeiters. In fact, the costs of increasingly necessary serialization measures — which are less affordable for smaller Contract Manufacturing Organizations (CMOs) — are prompting some pharmaceutical companies to concentrate investments in just a few packagers when outsourcing to CMOs. Additionally, pharmaceutical manufacturers are becoming more comfortable with measuring Overall Equipment Effectiveness in identifying opportunities for line improvements.
To combat counterfeiting, there is an increasing interest and adoption of encrypted symbologies for track and trace applications, smart labels/tags and the use of RFID is growing for internal tracking and cold chain monitoring. Many of the anti-counterfeiting measures applied to the pharmaceutical industry are also gaining momentum in other industries, like the food and beverage sectors. Additionally, these industries are seeing rises in automation and robotics — especially with the introduction of collaborative robots, allowing human operators to work safely and more efficiently side-by-side with no need for guards. The absence of guards affords faster alterations, resets and smaller footprints.
The integration of technologies to support the Internet of Things (IoT) and remote monitoring capabilities is also gaining traction as end users have begun to see these solutions as multi-taskers that enhance efficiency and flexibility while also supporting more rigorous food safety measures. To further support flexibility and reduce changeover times between multiple, shorter product runs, modular components and Clean In Place (CIP) attributes are increasingly in-demand. Additionally, energy-savings has evolved from a sustainability gain to a cost-savings enabler, expected by end users.
Q: How is PMMI helping to connect manufacturers with the solutions providers they need?
A: PMMI increasingly serves as a gateway to the North American processing and packaging industries — both for international CPGs to better understand the market and source solutions from knowledgeable suppliers and for suppliers to connect with U.S.-based end users. PMMI convenes the OpX Leadership Network, an organization that joins manufacturing, engineering and operations professionals from both supplier and end user companies to formulate insights and actionable solutions to challenges across industries all year long. PMMI also offers the PACK EXPO Portfolio of Trade Shows, a world-class collection of industry events to advance a variety of industries by connecting consumer goods companies with manufacturing solutions. As part of that portfolio, PACK EXPO Las Vegas (Sep. 25–27, 2017; Las Vegas Convention Center) will serve as North America’s largest packaging event of 2017, showcasing all the solutions necessary to launch a new product from 2,000 exhibitors. The show will be co-located with Healthcare Packaging EXPO, featuring solutions for the entire pharmaceutical, biopharmaceutical, medical device and nutraceutical life cycles from 250 exhibitors. Combined, the shows will attract 30,000 attendees from a wide range of industries.
To learn more about the co-located PACK EXPO Las Vegas and Healthcare Packaging EXPO, visit www.packexpolasvegas.com. To learn more about the OpX Leadership Network, visit www.opxleadershipnetwork.org