The North American converted flexible packaging market accounts for approximately 30% of global consumption with an annual spend of $20.7 billion in 2013, reveals a new report from PCI Films Consulting ( Nearly 90% of sales in the region are concentrated in the U.S., with Canada and Mexico accounting for 7% and 5%, respectively. The North American Flexible Packaging Market to 2018 provides a comprehensive assessment of historic trends and the current state of the market, and also includes forecasts of how PCI expects the market to develop over the next five years in the U.S., Canada and Mexico.

After slowing in 2012 due to the economic downturn, demand for converted flexible packaging recovered to grow by around 4% by value in the U.S. and Canada in 2013. Conversely, the Mexican flexible packaging market slowed markedly during the year to around 1.5% due to uncertainties following the change of government and slowing gross domestic product (GDP) growth. Weakening margins and other competitive pressures caused significant rationalization and restructuring in the region with many plant closures and divestments, especially amongst the leading players.

The report also indicates that industry consolidation continues to be a driving factor in this fragmented industry. Private equity firms also continue to play a key role. Important private equity deals in 2013 have included Constantia Flexibles’ acquisition of Globalpack, both portfolio investments of One Equity Partners, and Constantia’s subsequent purchase of the U.S.-based Spear labeling group. Also, private equity firm Sun Capital brought together its Exopack Holdings business in North America and four of its packaging portfolio businesses in Europe to form Coveris Exopack Holdings.

Future converted flexible packaging growth in North America is forecasted to hover around 4% per year to reach more than $25 billion by 2018, with growth in Mexico expected to bounce back to grow at U.S. and Canadian levels over the period. Per capita consumption of flexible packaging in Mexico is less than one-fifth of the U.S. figure, demonstrating its potential for future growth. The North American Free Trade Agreement (NAFTA) also continues to help drive demand in Mexico, with many U.S. packaged food companies manufacturing in Mexico for the U.S. market to take advantage of lower labor rates.