PIRA

France is the third largest European market for packaged consumer goods behind the U.K. and Germany. Like the rest of Europe, it has experienced strong volume growth over recent years thanks to the dynamism in packaged food, soft drinks and cosmetics and toiletries markets.

In fact, according to Euromonitor, all consumer markets in France, apart from alcoholic drinks, experience increased volume sales in 2003.

However, not all the news in this market is good. The French market, like all others in Western Europe, is suffering at the hands of the fast consolidating retailing sector, which is at the heart of the pricing pressures that all packaging sectors are feeling.

The consumer packaging market was estimated to stand at 92.5 billion units in 2002, with Euromonitor forecasting that this will rise by 8 percent to reach 100 billion units in 2007.

The challenges posed by consumer trends towards convenience and the higher number of single households, as well as increased consolidation among brand owners and the demands of retailers has led directly to a corresponding rise in acquisitions and mergers within the packaging sector. These influences are as applicable to the paper and board market as they are to any other sector.

Western European markets for both carton and corrugated sectors are being challenged by rival material structures as well as the shifts in European retailing patterns, and this is forcing converters to become more innovative.

Nevertheless, paper and board still accounts for the largest single material share in Europe, standing at about 40 percent. The food and beverage sectors, as with all packaging sectors, are the major European markets for paper and board, accounting for 40 percent of corrugated usage and 50 percent of carton usage. Other very important sectors include tobacco, pharmaceuticals, and cosmetics and toiletries.

The Confederation of European Paper Industries (CEPI) puts paper and board production for 2003 at approximately 95 million metric tons. In fact output of paper and board by CEPI's member countries has increased on average by 3.5 percent per year since 1991, adding 27 million metric tons to output figures. Packaging grade papers account for about 40 percent of the European Union's packaging market. Of this, corrugated takes about 60 percent by volume and folding cartons about 28 percent.

In 2003 production of packaging grades increased by 4.3 percent (plus 1.5 million metric tons) with output of carton board showing a rise of 6.5 percent. Case material production rose by about 3.8 percent and wrappings by 1.9 percent. Output of all other packaging grades increased by 4.3 percent. Within Europe, Germany is the largest paper producer, followed by Finland, Sweden and France.

(CEPI's member countries are the EU member states plus Hungary, the Czech Republic, Poland, Norway and Switzerland, and one Associate Member: the Slovak Republic.)

Despite these figures the Western European economy remains less than dynamic, and challenges for the paper and board sector include becoming more innovative in order to address brand owner and retailer demands for on-shelf impact, and not least to increase profit margins.

Cartons do have one distinct advantage: their sheer volume on the supermarket shelf. Here their flat stable surfaces mean that print processes are instrumental in adding eye-catching designs, while new cutting, creasing and folding methods are adding variety to the standard carton.

France's folding carton manufacturing is valued at about 1.07 billion [euro], while consumption is on a par with the corrugated sector; each accounting for about one-third of total production of board-based packaging--folding cartons, corrugated cases, point-of-sale display units, liquid packaging, etc.

Packaging accounts for 43.9 percent of paper and corrugated consumption in France; about 48.9 percent for graphic applications; and 6.7 percent for sanitary and domestic uses, according to figures from the French paper and board association Copacel.

In France the apparent consumption of paper and corrugated has increased by an average of just 2.0 percent per year over the past 10 years. During the same period 53.6 percent of the French production of paper and corrugated has been exported with 57.5 percent of French consumption of paper and corrugated being met by imports.

According to Euromonitor, this translates to board and packaging accounting for 47.5 percent of the packaging market in France in 2003, with an output of 5.2 billion metric tons.

Pira International's report on the Future of Folding Cartons, states: "Although consumer demand remains more or less stable, e-auctions and the strength of the retailing sector have affected French carton converters adversely."

This has led to numerous plant closures, increased consolidation and a corresponding reduction in staff. Despite these changes, the French carton sector still remains fragmented. Pira International forecasts further consolidation.

Here's the good news. As the spiritual home of perfumery and cosmetics, France is Western Europe's second largest producer and consumer of cosmetics, and the largest producer and consumer of pharmaceutical products.

These two end use markets combined are the largest sectors for cardboard-based packaging and significantly boost France's output of "high value, high quality and luxury packaging." It is these strengths that should fuel growth, particularly through export, at least up to 2007.

The surge in demand for over-the-counter pharmaceutical products, ironically including anti-smoking products, heralds good news for the carton sector.

France Market Breakdown

Food accounts for 40 percent of carton usage in France with recent growth coming from the ready meals and soft drinks. Frozen, fresh and chilled foods are still the leading sectors as, consistent with trends across the rest of Western Europe, consumer demands for ever more convenience continue.

"Chilled foods and soft drinks sectors will undoubtedly drive growth over the next five years," states Pira International.

Printing processes for cartons in France are lead by offset, but gravure also has a significant share. This reflects France's status as one of Europe's largest producers of premium goods such as cosmetics, perfumery and upmarket wines and champagnes. However, while currently underdeveloped, the French market also holds potential for digital printing, most particularly in the pharmaceutical sector.

Pira International forecasts total usage of cartons in the food sector will rise by 11 percent on 2002 figures to 9.5 billion units by 2007.

The corrugated case market could become the unsung hero of the packaging supply industry. While most of the hype surrounds new developments in plastic packaging, corrugated continues to head the global list of the most wanted transit materials.

Almost without exception corrugated is the single largest packaging material category by volume in the world. Add to this the fact that paper and board accounts for the largest single material share, standing at about 40 percent in Europe and 38 percent in the rest of the world, and the massive scale of the industry comes sharply into focus.

In France, as elsewhere in Western Europe, the food and beverage sectors are believed to account for 40 percent of corrugated usage. Despite the perceived threat from plastic in the transit sector, corrugated board still represents 62 percent of the total out transit packaging market in Europe, according to FEFCO. This equates to 29 billion square meters or 16,000 million metric tons of corrugated board.

FEFCO believes that successes for the corrugated industry have been driven by two factors:

The predicted growth in corrugated based on tonnage should take into account the success corrugated suppliers have had in developing lighter weight grades. FEFCO forecasts yearly growth figures by region.

High growth markets for corrugated in France, as across Europe, include point-of-sale displays and the growing trend for highly decorative and visually appealing transit outer packaging. These now extend across almost every user market and are seen as powerful means of promoting brand image.

Flexo post print processes and the accompanying improvements to flexo inks, along with the introduction of lightweight fine flute formations, are helping corrugated converters meet retailer and brand owners' demands.

Although far from being a certainty, several commentators and market players believe they will be able to get paper and board pulled from the scope of the Super-Regulation.

In the meantime though, there are plenty of other areas where paperboard packaging suppliers and converters will have to stay alert and informed if they are to stay within the law.

1. Good container design's impact on reducing the amount of corrugated used in packaging. This includes the substitution of slotted cases by trays and the use of diecut packs.

2. Plastic reusable crates have had only a slight impact on corrugated market share since their use has been limited largely to short shelf life foods and fruit and vegetables.

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