State of packaging report - October 2022

Four-monthly observatory of the packaging supply chain: situation updated to the first half of 2022. General economic picture; early forecasts of manufacturing closure; final 2021 figures for the packaging industry.

Barbara Iascone
Istituto Italiano Imballaggio

Here we summarize the trends of the manufacturing industry sectors where packaging consumption is most intense, divided into the food and non-food macro-areas. The evolutionary frameworks of the manufacturing sectors are taken from sector analyses prepared by trade associations, ISTAT, Italian Packaging Institute database, Prometeia.

As has been established for some time now, the packaging sector is closely linked to manufacturing trends, especially to trends in those sectors with high packaging use, food and beverage, FMCG, pharmaceutical, cosmetics, etc.

According to the analysis carried out by Prometeia on the trend of the manufacturing industry sectors, the 2022 trend is expected to be sharply reduced.

After the +16% recorded in 2021, 2022 sees a return to more moderate trends with a growth rate of +1.5%; indeed, some sectors will record a negative trend at the end of the year.

This is the case for the “household appliances” and “motor vehicles and motorcycles” sectors, which are expected to record -0.8% and -0.9%, respectively. Together with the furniture industry, which is still stable compared to 2021, they appear to be in the last three places in the ranking in terms of growth prospects.
With a positive trend, albeit drastically downsized, we find the sectors most related to the packaging industry: food and beverages will close with +0.3%, while consumer goods will mark +1.5%. Pharmaceuticals is expected to stabilize at +1.3%.

Good performances by “construction products and materials,” which will grow around +5%, and electronics with +2.4%.

Note. The data used in the preparation of the report are taken from the Italian Packaging Institute database)

The packaging industry

Final figures for 2021 see a healthy packaging industry, with a growth in empty packaging production in 2021 compared to 2020 of +7%.

Empty packaging produced in Italy in 2021 reached 18,189 t/000; turnover exceeded 34.7 billion euros (+4.4%).

Foreign trade was also up from the previous year, with imports at a crisper pace than exports: the former closing with +11.3%, the latter +4.8%.

The inputs to growth were varied: in addition to the usual link to trends in user sectors, which led to an increase in demand for packaging for the packaging of various products, we also witnessed a strong impetus imparted by the inventory movement.

Indeed, for many types of packaging, in 2021, it was necessary to restore inventories to stock, from which manufacturers and users had drawn during 2020.

When it comes to production, among the different types of packaging, along with glass packaging, metal packaging performed the best, and it is in these sectors that the stock movement was decisive: 
+20% for aluminum containers, +5.8% for glass packaging, and +5% for steel packaging.

Cellulosic packaging also proved to be in excellent health, ending 2021 with production up 10.5%. 
With the upswing in the movement of goods both domestically and abroad, wood packaging also recorded a positive 2021 performance (+11%).

Based on assessments by the Italian Packaging Institute, paper-dominant rigid laminates grew by 3% while flexible converters grew by 4.1%. The only negative note turns out to be the production of plastic packaging, which ends the year down (-1.9%).

In addition to the ascertained substitution in some sectors of the plastic bottle for the glass bottle (soft drinks), it should be noted that quantifying production in tons instead of number of pieces penalizes the plastic packaging sector. In addition, the increasing use of small sizes inevitably erodes total tons.

  2019 2020 Var. 20/19 Prev. 2021 Var. 21/20
Turnover (mln €) 33,976 33,256 -2.10% 34,718 4.40%
Production(t/000) 16,906 17,002 0.60% 18,189 7.00%
Exports(t/000)  2,922 2,846 -2.60% 2,982 4.80%
Imports(t/000) 2,139 2,091 -2.20% 2,327 11.30%
Apparent use (t/000) 16,123 16,247 0.80% 17,534 7.90%

General economic picture

Although amid uncertainties and generalized fears, in the first six months of 2022, our country experienced significant economic growth.

Despite price increases, which will intensify in the second half of the year, Italy shows a higher growth rate than France and Germany.

In fact, Italy’s GDP in the second quarter of this year grew by 1% compared to the previous quarter and 4.6% compared to the same period in 2021; thus, the acquired growth for 2022 will be 3.4%, beyond any forecast.

The International Monetary Fund has also revised its estimates, with new data for the second quarter; going forward at this rate, it is conceivable that the annual growth rate for GDP 2022, will be very close to +4%.

Based on the analysis of the Confindustria Study Center, the real uncertainties will be most evident in the second half of the year, with the economic scenario turning dramatically downward. The absolute protagonist of this situation is the rising price of gas, which has been out of control since August. The average gas price in Europe in August settled at 236 euros/mwh, peaking at 330 euros (in July the average price was 171 euros). In contrast, oil prices fell to $100 per barrel in August, down from $112 in July.

As for the manufacturing sector, according to Prometeia’s analysis, it is undoubtedly the Russian-Ukrainian conflict that is taking away momentum from growth, which is assumed to settle at a rate of 1.5% in 2022 compared to 2021, still a positive rate but well below the previous forecast of +4.9%. Negatively affecting the situation are the rise in procurement costs and that of energy costs along the entire production chain. All this will lead to a slowdown in demand and investments.

Image credits: Image by senivpetro on Freepik

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Istituto Italiano Imballaggio

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