Report on the state of packaging – Data 2019 (3)
Four-monthly Observatory of the packaging supply chain: situation updated to August 2020. The analysis obviously takes into account the consequences of the world pandemic, which has blocked activities and heavily influenced everyone’s habits, from many points of view. The recovery is expected to be slow in all sectors.
Barbara Iascone
Istituto Italiano Imballaggio
Here is a cross-section of the trend in the manufacturing industry sectors where packaging consumption is more intense - with its consequent evolution - divided into food and non-food macro-areas.
The evolutionary frameworks of the manufacturing sectors are taken from sector analyses elaborated by trade associations, the database of the Italian Packaging Institute or Prometeia.
Food Area
Negative trend for the food production and only the resumption of Horeca will be able to raise the general situation.
In the month of April, according to the latest data available at the time of writing, there is a decrease in production of 8.1% compared to April 2019. This negative figure adds to the -6.5% already recorded in March, again in comparison with the corresponding period in 2019.
The trend decrease in the first quarter was -1.5%, while in the first quarter of 2020 the rate was still positive, +0.8%.
The decline is essentially influenced by the performance of the Horeca sector, which accounts for about 1/3 of domestic food consumption. It is important to emphasize that although the decline in the food sector has nothing to do with the disastrous trends in other sectors, it is no less important.
The sector has always been characterized by countercyclical trends, i.e. even in times of great crisis it did not record trends with great criticality, but the crisis resulting from the pandemic did not hold up.
Obviously this trend has also had an impact on packaging, creating some criticality especially for some types of packaging. The glass bottles will certainly be affected, in particular the production related to mineral water.
Non Food area
Fashion System
According to the analysis elaborated by SMI - Sistema moda Italia, in 2019 the sector recorded the following trends: in the “clothing” area, production closed the year at -5.6% while in the “textile” area it was -7.6%.
The production of the fashion sector as a whole was therefore at -6.2%. After a first quarter in slight decline, -0.3%, in the second quarter of 2019 there was a recovery with production up by 1.5%. In the following two quarters the negative trend compared to 2018 was consolidated.
With regard to the outlet markets, the domestic market closed with a decrease of approximately 8%, while the foreign market closed with an increase of 2.2%. SMI also carried out a survey of the effects of Covid-19 on the performance of the sector in the first quarter of 2020. In the quarter January-March 2020 there was an average decline in orders of -29.2%.
Furniture and furnishings
Another sector strongly affected by the health crisis was the furniture sector which, in the period January-May, registered a drop of over 30% influenced by the production stoppage of the months of lockdown. Another fundamental element is the heavy drop in exports.
Cosmetic sector
Forecasts for the cosmetics sector for 2020 are more rosy than a few months ago. According to the latest elaborations of the study center of Cosmetica Italia, the 2020 should close with a final value of the -15%, since although negative it is better than the world forecast. Estimates for exports are -12%. The consumption that “kept” even during the quarantine period were those of face and hand hygiene products, shampoos and conditioners. The consumption of perfumes and cosmetics, on the other hand, is definitely decreasing. The sector has however not only been affected by production stoppage, but also the closure of beauty salons and hairdressers.
Pharmaceutical sector
One of the very few sectors with a positive trend is that of pharmaceuticals, an area of manufacturing that played a key role during the pandemic and which surpassed production levels in 2019 thanks also to the good performance of exports. Based on the analysis of the first five months of the year, the sector recorded +3.1% in 2020.
Other manufacturing sectors
The performance of the other manufacturing sectors closely linked to the world of packaging is definitely negative: household appliances at -22.9%, metal products and construction materials at -20%.
NOTE The data used for the preparation of the report is taken from the database of the Italian Packaging Institute
International economic framework
The International Monetary Fund has updated its forecasts for GDP trends around the world.
According to the latest figures, world GDP will fall by 4.9% in 2020. The situation in which we find ourselves is unprecedented and the recovery will be very slow, so much so that world GDP growth in 2021 is expected to be only +5.4%.
For the current year, in Italy, the drop in GDP will be -12.8%, while in the Eurozone the expected contraction is -10.2% overall (-7.8% for Germany, -10% and more for the United Kingdom).
The evolutionary assumptions for 2021 see Italy recover by 6.3%, while the Eurozone as a whole will reach +6%.
The United States will contract by around -8% in 2020, with a positive rebound in 2021 of +4.5.
According to Confindustria
On the basis of the calculations carried out by the Confindustria (Confederation of Italian Industry) study office, it can be seen that in July - data available at the time of writing - the rise of Italy is difficult due to the still low domestic demand. In June, consumption was down 15% per year. Exports started up again as early as May, but they are still large below pre-Covid levels. Italy, in this sense, recovered better than Germany and the United States, recording acceptable results for exports of pharmaceutical products; exports of food products performed less well. Those relating to motor vehicles and the fashion system were halved.
In general, in the Eurozone, the first signs of recovery were recorded in May, thanks to the reopening of many production activities; industrial production recorded +12.4%, even if these are partial rebounds since on an annual basis, and the trend is negative (-19%).
China is restarting, recording an expansionary phase of production activity for the second consecutive month.
On the other hand, the figures for the United States, which is still in the middle of a pandemic, are still uncertain.
According to ISTAT data, in Italy in May there were very positive changes in the main indicators, with industrial production increasing by 42%, exports by 35% and construction by 168%. But how should these data be read? They are certainly not representative of an economic boom, on the contrary.
The levels of these indicators had reached very low levels earlier in March, and even more significantly in April.
From this point of view, the positive values have a completely different perspective.
In March and April more than 40% of industries, the so-called non-essential ones, completely stopped their activity, bringing industrial production down by 28.4% in March and 20% in April. The same fate for exports, which fell by 16.3% in March and 67.9% in April. As can be seen from the numbers, pre-Covid levels did not recover either.
According to Prometeia
According to the latest analysis provided by Prometeia (July 2020), the maximum point of the contraction in Italian manufacturing was reached in April, reaching -40% (compared to April 2019 data).
The decline in the first five months of 2020 compared to the same period of the previous year was -21.6% for production and -19.3% for turnover.
The same situation at the European level where France, again relative to the first five months of the year, registered -19.9% in production and Spain -17.6%, referring to the same period of 2019. Germany registered smaller drops (-15.9%) thanks perhaps to the limitations imposed during the pandemic, which were lower than in Italy, France and Spain.
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