UK dairy to set pace for packaging industry

- Last updated on GMT

Related tags: European union, Milk, Uk

The lagging UK packaging industry is vesting hopes in the dairy
sector as the source of a next generation of innovative packaging,
but individual companies view this opportunity as unlikely to
benefit British domestic packaging sales, reports Tom
Armitage.

In the UK, a saturated packaging market and intensified competition from Germany, Italy, and other EU states has seen local producers dropping both prices and output in recent years, in a trend that the Packaging Federation has described as "flat"​. According to the Market Development Corporation (MDC), the UK food and drinks packaging market declined by 6 per cent between 1999 and 2003, to £5.7 billion.

But the MDC and others now predict a somewhat brighter future for the sector rooted in a take-off in dairy packaging contracts: projecting growth of 3 per cent through 2004 to 2008, taking output to £5.9 billion.

Alan Kinnear of the British Packaging Institute points to four main dairy categories - cheese, milk, yoghurt, and spreads - as integral to the future success of the packaging industry, due to their growth potential.

"With the exception of imported cheese, packaging for the dairy industry is still very much lacking in imagination. The main ways the dairy sector can benefit the packaging industry in the long-term is through the provision of more innovative packaging solutions and by responding to the need for both increased product choice and the need for more innovative dairy products - the development of functional ingredients, for example."

The domestic UK packaging market is also set to be swayed by changing demographics - with an ageing population, and a rise in single households driving the development of packaging tailored towards the individual consumer. The dairy market is currently ripe for such development.

But some producers argue that it is unlikely to be the UK packaging industry that scoops up the spoils of a dairy industry packaging overhaul.

Research by Shrinkwrap​, a UK packaging equipment firm that counts Unique Prepared Foods (formerly Eden Vale) among its clients, suggests that it will be packaging producers in Sweden and France that will benefit the most from dairy innovation.

With half of its sales derived from dairy industry packaging equipment, Shrinkwrap has recently embarked on a strategic export drive that the company claims will double its output over the next five years. The first focus for this drive is Sweden and France, to be followed by six other EU countries.

Debbie Frith, business development manager at Shrinkwrap, claims that the drive, which has included the appointment of European agents and distributors and a new website, has already seen sales enquiries double in the last three months. Moreover, the company says the shift in its sales focus might well be followed by a relocation of production.

"We do not want to relocate our entire business outside the UK, however there is some scope to have some of our standard components manufactured out there or even standard machine range fabrication and assembly,​" she said.

Related topics: Markets, Smart Packaging

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