Report on the state of packaging – Data 2020 (3)

Oct 17, 2021

Food industry (food and beverages)

As previously mentioned, this is among the areas of production that was least affected by the negative effects of the pandemic. Despite the constraints on the entire Ho.Re.Ca sector, the sector registered a recovery, compared with the pre-covid period, of +3.6%.

FMCG

This sector encompasses all goods for domestic use that are commonly purchased from largescale retail outlets, from food products to personal and household care, through to “semi-durable” goods (clothing, books and newspapers, etc.). In short, it is a vast area with “extensive use” of packaging.

Here the gap between 2019 and 2021 is negative (the trend in 2021 is -1.6% compared to the same period in 2019).

Pharmaceutical sector

After registering positive rates even during the lockdown - the only manufacturing sector to do so - the sector experienced a natural slowdown, up to reaching stability. If we compare the period January-May 2021 with that of 2019, the gap turns out to be +0.4%.

Construction supply chain

Thanks to government incentives and the newfound interest in the home environment due to the months of forced confinement, this macro area has given an important boost to the recovery of manufacturing. The “furniture and furnishings” sector alone led to a recovery of +11.3%, while the household appliances sector registered +25.7%. Also significant was the recovery from the pre-COVID period for building materials (+9.6%), and chemical intermediates also performed well (+11.7%).

Fashion sector

Still in difficulty, the fashion system is among the few that has not yet recovered (- 13%).

Cosmetics and perfumery

Hit hard in 2020, we are witnessing a significant recovery of the sector in the first half of 2021, with a registered growth of 8%.

General economic picture

After the crisis registered in 2020, the global and obviously national economic situation is reawakening.

The recovery hypotheses mentioned at the beginning of 2021 are slowly coming true and Italian manufacturing is driving the recovery not only nationally but also at a European level.

The World Bank, in June 2021, raised its GDP estimates for the year from 4.1% to 5.6%. The USA and China are leading the recovery and are expected to register +6.8% and +8.5% respectively. However, it must be stressed that the pandemic continues to create disastrous situations, including from an economic point of view, in developing countries.

At European level, the second half of the year closed with a 2% increase in GDP (19-country Eurozone), which stands at 1.9% for the 27-member Europe.

With GDP growing by 2.7%, Italy registered an excellent performance: second only to Spain (+2.8%), and better than Germany (+1.5%, averting the crisis at the beginning of the year) as well as France (stable at +0.1%: an important achievement given the negative trend registered in the previous quarter).

According to Confindustria

The latest surveys provided by the Confindustria (Confederation of Italian Industry) research center in September show that, despite some critical issues (shortages of certain raw and semi-finished materials, resumption of contagion), macroeconomic indicators are holding up, also maintaining the positive trends of the second quarter in the third quarter.

In fact, the consumption of Italian families has returned to growth (+5%); thanks to the slowdown of the pandemic, the spread of vaccines and the less severe measures on the movement of people. Travel has also resumed: Italians have anyway preferred staying in the Bel Paese, rather than traveling abroad.

In the third quarter of 2021 industry slowed down while services accelerated. In fact, industrial production has felt the scarcity of productive demand, while services have felt the positive effect of tourism, the same as consumption.

According to Prometeia

In the first part of 2021 the Italian manufacturing industry managed to make up most of the losses registered in 2020, i.e. in the worst period of the crisis.

The trend registered between January and May 2021 (although it is an absolutely partial figure compared to the whole year) is close to +25%.

The recovery of exports, which are growing at a better rate than other European countries, is certainly helping Italian manufacturing activity. Italian exports in the period January-April grew by +4%, while in France and Germany they fell by a -6.7% and -1.4%, respectively.

In the coming months there could be a slowdown due to a rise in supply costs, which could erode profitability margins and negatively affect the turnover trend of the manufacturing industry.

The packaging sector

At the time of writing this analysis, the final figures for 2020 can be communicated.

In the estimates released in the previous months we rated a sector with losses of around 3%; in the final balance we can state that things have gone better than that.

In 2020, the production of packaging (including MSW bags) expressed by weight should settle at around 16,620 t/000, marking a decline of around -1.7% compared to 2019.

Turnover, which is expected to be around 33 billion euros, is down by around 2.8%.

Contributing to reducing the losses is the performance of the sectors with the greatest use of packaging; in fact, in some areas of manufacturing, the demand for packaging has not fallen considerably.

Table 1. Sector balance sheet in Italy: empty packaging (comparison years).

	2018	2019	var. 19/18	2020	var. 20/19
Turnover mln euros	33,187	33,976	2.40%	33,034	-2.80%
Production (t/000)	16,536	16,934	2.40%	16,623	-1.80%
Exports (t/000)	2,895	2,922	0.90%	2,843	-2.70%
Imports (t/000)	2,023	2,139	5.70%	2,080	-2.80%
Apparent usage (t/000)	15,664	16,151	3.10%	15,860	-1.80%

Fonte/Source: Imballaggio in cifre

Analyzing the various materials, the positive trends of rigid laminated packaging with a prevalence of paper as well as steel packaging stand out, where production grew by +6% and +3.5% respectively.

For both these types of packaging, the more than good performance of the food preserve sector has indeed been crucial. Paper and cardboard packaging also registered an upswing: production expressed in tons grew by 1.1%.

The production of plastic packaging showed a drop (-3%), a trend largely influenced by the -4% in the production of flexible packaging. Rigid plastic packaging, bottles and flacons, were in fact seen to be substantially stable.

Foreign trade showed downtrends both in exports (-2.7%) and imports (-2.8%). The trade balance remains positive: with a value of approximately 763,000 tons, Italy continues to export more than she imports.

Apparent utilization, which does not take into account the movement of stock, has dropped by 1.6%.

All in all, we can consider the packaging industry as an area showing good health, which has been able to withstand and deal with a major social/economic crisis.

As regards the prices of raw materials used to produce packaging, in the first half of 2021 they are all on the rise. The first six months of the year saw price rises for all types of material (both virgin and recycled raw materials), this without distinction.

Outlook for 2021-23

Based on initial analysis for 2021, the sector should show a recovery that should lead to recover the losses of 2020, with production growing by 1%. With an average annual growthrate of +0.4%, in 2023 packaging production in Italy should exceed 17,300 t/000.

NOTE: The data used to compile the report comes from the Istituto Italiano Imballaggio database.

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ItaliaImballaggio October 2021