Blog Plastic Packaging: Balancing Growth and Innovation in 2022 - Plimsoll Publishing UK

Following the events of the last two years combined with environmental issues, shifting consumer behaviour and constant innovation, now is a pivotal time for the plastic packaging sector. Plimsoll’s analysis of the UK’s leading plastic and flexible packaging companies has found that the industry is well placed to grow in 2022, with 268 companies achieving a financial health rating of “strong” or “good”. While average company values are also up slightly compared to the previous year, overall growth currently sits at around 0.2%.

The pandemic undoubtedly brought huge disruption to the packaging production and supply chain, as well as a significant fall in demand from the suffering hospitality sector in particular. However, as consumer behaviour was forced to change, demand did increase in other key areas including packaging for food retail and medical devices.

Furthermore, ongoing growth in e-commerce has provided a much-needed boost which shows little sign of slowing – according to the latest data in Plimsoll’s analysis, 199 companies in the plastic and flexible packaging industry are selling more now than last year. With the end of the year traditionally bringing surges in online retail thanks to both Black Friday and Christmas, could the sector be heading towards a return to normality in the months to come?

While recovery is top of the agenda for many players in the plastic packaging industry, another longstanding challenge is the issue of sustainability.  Following the introduction of the Environment Act in November, moving into 2022 this will be thrown further into the spotlight with the new Plastic Packaging Tax coming into force from April. Stating that all plastic packaging manufactured in or imported into the UK must contain at least 30% recycled plastic, this is likely to have repercussions on the packaging supply chain both at home and abroad. Balancing this demand for more sustainable options with both quality and profitability is a significant challenge that the industry must face.

While larger companies have long been investing in the development of new solutions to meet the demand for more sustainable packaging, this shift may prove to be more challenging for some of the smaller firms in the sector. Consumers are also becoming increasingly sensitive to packaging waste and as a result, there is a necessity for transparency not just on products, but throughout the entire manufacturing process, to avoid accusations of greenwashing.

Not all businesses will be able to make significant investments in the research, staff, machinery and new technologies required to meet the changing demands of the plastic packaging sector. Combined with the lasting effects of the pandemic we may see some consolidation throughout 2022 as those already struggling fail to remain competitive. Plimsoll has already identified 65 companies as being “in danger” – how many more could fall into this category in the next few months?

For some businesses, acquiring in key areas could be an effective way to meet changing levels of demand and diversify their offering. Plimsoll has extended their research to a number of specialist sub-sectors of the packaging industry. Analysed against a 9-point checklist to assess their takeover potential, the acquisition targets below could provide opportunities for growth in the coming year.

Whether through potential acquisitions, monitoring suppliers or keeping an eye on competitors, packaging companies must equip themselves with the tools to face the new year with confidence. Being able to closely follow changes in the industry using the latest financial data is more important than ever. Plimsoll provides up-to-date analysis on over 400 companies in the Plastic & Flexible Packaging sector, allowing business leaders to keep an eye on the latest developments in their sector and to plan for success in 2022 and beyond. Find out more by clicking here.