Packaging machinery suppliers set to consolidate?

Edited by the Engineeringtalk editorial team Jan 29, 2002

New analysis by Frost and Sullivan showed the European Packaging Machinery market enjoyed rising growth rates throughout the late 1990s, with estimated market revenues of $6.52 billion by 2007

Rising awareness amongst potential end-users regarding the increased range of applications offered by packaging machinery systems is likely to present growth opportunities in this well-established market.

New analysis by Frost and Sullivan showed the European Packaging Machinery market enjoyed rising growth rates throughout the late 1990s, as end users focused on attaining efficient and effective packaging lines.

The industry analysts valued the market at $4.61 billion in 2000, with estimated market revenues of $6.52 billion by 2007.

In particular, encouraging growth rates are expected in the form-fill-seal, filling and closing, and group packaging machinery segments.

As the market gradually approaches maturity, growth is likely to be based on increasing demand for packaged goods throughout Europe, with industries such as food, beverage, and pharmaceuticals expanding rapidly.

In addition, as increasingly flexible machinery is developed, many end users are expected to upgrade and enhance older packaging lines in order to increase efficiency.

"In this scenario, companies that are very focused on research and development will begin to dominate," states Mik Sabiers, Research Manager, Automation Group.

Accelerating advances in computing, electronics, and product tracking technology, coupled with heightened awareness about the benefits of automated systems are likely to generate demand even from industries that have not traditionally used such technologies.

It has become the norm over the last decade for larger packaging machinery end-users to invest in integrated machinery and now smaller customers are also realising the benefits are too great to ignore.

This does not mean that demand for separate machinery like filling machines will disappear completely, but in a vast range of packaging applications integrated machines are taking increasing market share.

The study confirms a trend towards integrated machinery, ease of use, and one-stop-shop solutions.

Increasingly, end-users are looking towards advanced integrated machinery to streamline production processes.

"This trend should become increasingly dominant in future, with manufacturers looking for new space and time-efficient technologies to take the packaging machinery industry forward," adds Sabiers.

The challenge here will be for manufacturers to develop combined machines to sustain business.

Ease of use is another major end-user demand likely to drive the development of packaging systems.

As workforces in manufacturing are cut back and time constraints increase, OEMs and end-users alike-including those with dedicated specialists on their staff-are expected to demand solutions that are easier to install and use.

Leading players in the market include Krones, SIG, Klockner Packaging, Tetra Pak and SASIB.

With more than 3000 companies are believed to be operating in the highly fragmented European packaging machinery market, the top players account for less than 40 percent of the total market.

"Competition is also likely to centre on customer-care and maintenance, although performance of machinery and price are also likely to be important considerations," Sabiers points out.

In this scenario, it is necessary for companies to recognise that their reputation in specific areas of the industry can be a key factor to increase future sales and influence customer loyalty.

The shift by end-users towards purchasing complete packaging lines from suppliers has resulted in a number of mergers and acquisitions.

To provide such complete packaging solutions, large packaging machinery manufacturers are expected to increasingly acquire smaller established companies, enabling expansion into new segments of the market.