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Optimism in foodservice packaging sector

A strengthening economy and less volatile input pricing could result in a positive year for the foodservice packaging industries in North America and Europe, based on an annual survey conducted by the Foodservice Packaging Institute (FPI).
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Results of the FPI “State of the Industry Survey” found that nearly 85 percent of foodservice packaging manufacturers in North America expect their sales volume to improve, and almost three quarters expect higher profits in 2013. Respondents were a little less optimistic in Europe, with just over half expecting volumes to increase and about a third anticipating better profits than last year. All the North American raw materials suppliers indicated sales volume growth, but less than half expect higher profits in 2013. It was a similar story for machinery suppliers; two thirds of those respondents predict elevated volume in 2013, with about a third expecting more profit.

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In another positive sign for the industry, more than 70 percent of the North American and European manufacturers reported plans to purchase new rather than used machinery in 2013. The two most common reasons for the planned purchases were market share increase and product capability expansion.

When considering growth potential over the next five years, respondents expect strong sales in single-use packaging from grocery stores and quick service restaurant chains; among North American manufacturers, convenience stores topped the list. Grocery stores, fast casual/quick service restaurants, and nursing homes took the lead for largest growth expectancy in foodservice market segments. Many respondents also reported plans to increase manufacturing of paper and plastic foodservice packaging made with recycled material. This is consistent with results from FPI’s “Trends Survey” released late last year.

North American and European respondents highlighted six common challenges facing the industry:

Public perception of packaging or foodservice packaging as “waste.”
Increasing raw material costs.
Margin compression.
Recovery or “end of life” options for foodservice packaging.
Government legislation and regulation.
Customer demands for new product development.

“What’s telling in this year’s survey results is that although ‘global economic recession or recovery’ made the list of common challenges the last four years, it did not this year,” said FPI President Lynn M. Dyer. “When the economy is strong, restaurants and other eating and drinking establishments flourish — and that means the foodservice packaging industry does well. A brighter economic picture means we’re likely to see industry expansion, new markets, product enhancement, and innovation. It’s an exciting time to be in this industry.”

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