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Global Corrugated Forecast 2012-2016

This report is for the exclusive use of International Corrugated Case Association (ICCA) member associations and companies only. DO NOT DISTRIBUTE BEYOND YOUR ASSOCIATION OR COMPANY. © 2013 Reproduction in whole or in part requires prior written permission.

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TABLE OF CONTENTS
INTRODUCTION 1 EXECUTIVE SUMMARY 1.1 Global, Economic and Business Prospects Comparisons Between Corrugated Production and Overall Levels of 1.2 Industrial Production 1.3 Key Factors Influencing Demand For Corrugated 1.4 Changing Corrugated Specifications 1.5 Summary Forecasts of Global Corrugated Demand 1.6 Assessment of Downside Risks and Upside Gains 1.7 Global Shifts in Business Migration 1.8 Changing Pattern of End Use Demand OVERVIEW OF GLOBAL CORRUGATED PROSPECTS 2.1 Global, Economic and Business Prospects 2.1.1 GDP Forecasts 2.1.2 Industrial Production Forecasts 2.1.3 Downside Risks and Upside Gains to Economic Forecasts Comparisons Between Corrugated Production and Overall Levels of 2.2 Industrial Production 2.3 Key Factors Influencing Demand For Corrugated 2.3.1 Economic and Political Issues 2.3.2 Changing Inventory Levels 2.3.3 Packaging Reduction Retail Developments and the Adoption of Retail Ready Packaging 2.3.4 (RRP) 2.3.5 Transit Outer Substitution Trends 2.4 Changing Corrugated Specifications 2.4.1 Container Constructions 2.4.2 Wall Constructions and Flute Formations 2.4.3 Substance Weight Reductions 2.4.4 Print and Decorative Processes 2.5 Summary Forecasts of Global Corrugated Demand 2.5.1 Forecasts by Area 2.5.2 Comparisons Between Previous and Current Forecasts 2.5.3 Per Capita Corrugated Production 2.5.4 Average Substance Weights 2.5.5 Forecasts By Weight 2.6 Assessment of Downside Risks and Upside Gains 2.6.1 Economic Issues 2.6.2 Political Issues 2.6.3 Monetary Issues 2.6.4 Vagaries of the Weather 2.6.5 Changing Inventory Levels 2.6.6 Packaging Reduction 2.6.7 Transit Outer Substitution 2.6.8 Summary of Downside and Upside Forecasts 2.7 Global Shifts in Business Migration 2.8 Changing Pattern of End Use Demand GLOBAL BUSINESS MIGRATION FORECASTS 3.1 Global Summary 3.2 North America 3.3 Europe
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3.4 3.5 3.6 3.7 3.8 4

Pacific Rim China Rest of Asia Central and South America Other Regions

51 51 52 52 53 54 55 55 56 56 58 58 59 60 60 61 61 62 62 63 64 65 65 66 66 67 68 68 69 70 70 71 72 72 73 74 74 75 76 76 77 77 77 78 79 79 80 81 82 83 83 84 85
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GLOBAL MARKET PROSPECTS 4.1 Introduction 4.2 Summary of Global Market Prospects 4.3 Processed Foods 4.3.1 Processed Foods – Global Summary 4.3.2 Processed Foods – North America 4.3.3 Processed Foods – Europe 4.3.4 Processed Foods – Pacific Rim 4.3.5 Processed Foods – China 4.3.6 Processed Foods – Rest of Asia 4.3.7 Processed Foods – Central and South America 4.3.8 Processed Foods – Other Regions 4.4 Drinks 4.4.1 Drinks – Global Summary 4.4.2 Drinks – North America 4.4.3 Drinks – Europe 4.4.4 Drinks – Pacific Rim 4.4.5 Drinks – China 4.4.6 Drinks – Rest of Asia 4.4.7 Drinks – Central and South America 4.4.8 Drinks – Other Regions 4.5 Non Food Consumables 4.5.1 Non Food Consumables – Global Summary 4.5.2 Non Food Consumables – North America 4.5.3 Non Food Consumables – Europe 4.5.4 Non Food Consumables – Pacific Rim 4.5.5 Non Food Consumables – China 4.5.6 Non Food Consumables – Rest of Asia 4.5.7 Non Food Consumables – Central and South America 4.5.8 Non Food Consumables – Other Regions 4.6 Fresh Foods 4.6.1 Fresh Foods – Global Summary 4.6.2 Fresh Foods – North America 4.6.3 Fresh Foods – Europe 4.6.4 Fresh Foods – Pacific Rim 4.6.5 Fresh Foods – China 4.6.6 Fresh Foods – Rest of Asia 4.6.7 Fresh Foods – Central and South America 4.6.8 Fresh Foods – Other Regions 4.7 Domestic Appliances and Electrical Goods 4.7.1 Domestic Appliances and Electrical Goods – Global Summary 4.7.2 Domestic Appliances and Electrical Goods – North America 4.7.3 Domestic Appliances and Electrical Goods – Europe 4.7.4 Domestic Appliances and Electrical Goods – Pacific Rim 4.7.5 Domestic Appliances and Electrical Goods – China 4.7.6 Domestic Appliances and Electrical Goods – Rest of Asia Domestic Appliances and Electrical Goods – Central and South 4.7.7 America 4.7.8 Domestic Appliances and Electrical Goods – Other Regions

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8 Durable Goods and Clothing – Other Regions 4.1 Other Sectors – Global Summary 4.10.9.8.4 Industrial and Machinery – Pacific Rim 4.8 85 85 87 87 88 88 88 89 89 90 90 91 92 92 93 93 94 94 95 95 96 96 97 97 98 98 98 100 3 PRIVATE AND CONFIDENTIAL .10.1 Industrial and Machinery – Global Summary 4.8.9.10 Other Sectors 4.2 Durable Goods and Clothing – North America 4.10.10.10.10.9.8.7 Other Sectors – Central and South America 4.5 Other Sectors – China 4.7 Durable Goods and Clothing – Central and South America 4.10.8 Other Sectors – Other Regions APPENDIX 4.3 Durable Goods and Clothing – Europe 4.2 Other Sectors – North America 4.3 Industrial and Machinery – Europe 4.6 Other Sectors – Rest of Asia 4.9.8.9.5 Durable Goods and Clothing – China 4.6 Durable Goods and Clothing – Rest of Asia 4.9 Industrial and Machinery 4.6 Industrial and Machinery – Rest of Asia 4.1 Durable Goods and Clothing – Global Summary 4.4 Durable Goods and Clothing – Pacific Rim 4.10.9.Durable Goods and Clothing 4.8.9.7 Industrial and Machinery – Central and South America 4.9.3 Other Sectors – Europe 4.5 Industrial and Machinery – China 4.8.8 Industrial and Machinery – Other Regions 4.2 Industrial and Machinery – North America 4.4 Other Sectors – Pacific Rim 4.8.8.

2011. prepared in July. To highlight key trends in corrugated specifications. To assess the short. 4 PRIVATE AND CONFIDENTIAL .    Details of the research scope and method are contained in the Appendix to this main volume. To establish the Global pattern of demand across the major end uses for corrugated.to medium-term prospects for corrugated demand and to examine the key issues influencing corrugated demand in each region.INTRODUCTION This report contains the 2012 to 2016 Global Corrugated Forecasts prepared for the International Corrugated Case Association (ICCA) by PRISM Ltd. The report compares and contrasts the current forecasts with those prepared in July. in addition to interim forecasts contained in the Mid-Year Review. consistent with the regional categories adopted in the ICCA Worldwide Corrugated Packaging Industry Statistics Report. as well as a Statistical Appendix covering each of the main regions of the world. To prepare up-to-date forecasts of corrugated production in each region of the World. 2012. taking due account of the migration of business from developed to under developed regions. which is presented separately. It contains a brief Executive Summary and a Main Volume containing full supporting data. and to establish 5-year forecasts of the shifts in regional demand. The main objectives are:   To provide an economic overview for the main regions of the world that are used as a basis for global corrugated forecasts.

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The possibility of a sharp slow down or contraction in credit growth impacting still further on emergent markets. Changes in the components for industrial production. Forecasts of industrial production for 2012 and 2013 have been downgraded by a similar amount with the 5-year average growth reduced from 4. it is difficult to see any potential upside gains to the global economic environment.1 for further details) 1. Pressure for packaging reduction arising out of an austere cost environment and in response to more stringent environmental targets. Downside vulnerabilities to these forecasts are:     A lack of resolution to the Euro debt crisis and continued recession there. with potential for a hard landing in China. given the current low levels of business confidence. with a reduction in the share held by manufacturing. widely referred to as the “fiscal cliff”.2 Comparisons between Corrugated Production and Overall Levels of Industrial Production The correlation between corrugated production and industrial production is becoming increasingly tenuous and is influenced by:     Changes in the components for corrugated production.2% to 3. for the 5-year period 2010 to 2015.5% p. All regions have been downgraded with the exception of North America and corrugated has suffered from a sizeable shift away from manufacturing to infrastructure projects.6% in 2012 and from 4.1 Global.. it will grow marginally less than overall levels of industrial production for the next 5 years. As a result.S.5% to 2.5% to 2.9% in 2013.a. although there is a possibility that prospects are viewed with undue pessimism.3% p. Economic and Business Prospects Forecasts of GDP contained in last year’s edition have been revised downward. reflecting the slowdown in the major economies of the world: from 4. resulting in a reduction from 4.a.5% p.a. to 3. (See sub-section 2. The prospects of excessive fiscal tightening in the U.1. Reductions in inventories which are unlikely to recover to pre-crisis levels. There is a stark contrast in the comparisons when applied to each region of the world. Under the prevailing circumstances. for the period 2011 to 2016: 5 PRIVATE AND CONFIDENTIAL . while corrugated output moved well ahead of growth in industrial production for the period 2006 to 2011. Bleaker prospects for exports from emerging to developed regions.

A marked growth in the share held by hard discounters. Growth in multiple convenience stores.2. These attempts at reducing the amount of transit outer packaging in use are being accompanied by changes to product formulations and primary packaging substitution. including the growing importance of vendor-managed inventories.1.  Industrial production in developed regions will grow by an overall 12% with corrugated growing by 7% . are creating some downward pressure on corrugated demand. 6 PRIVATE AND CONFIDENTIAL . There are a number of important retail developments impacting corrugated including:     The continued growth in hypermarkets and supermarkets.2 for further details) 1. notably in emergent regions. arising out of the Republicans’ continued control of Congress. With the increasing sophistication of inventory management. it is likely that stocks will not be recovered to normal pre-crisis levels. uncertainties still exist.   We conclude that these political factors are small. Changes to corrugated container specifications and the substitution of regular-slotted cases by open-top cases. but now that the outcome is known. Swift emergence of internet shopping.S. notably in Europe. a number of political issues are influencing the future:  The U. compared with corrugated at an overall 32%. (See sub-section 2.3 Key Factors Influencing Demand For Corrugated In addition to the economic issues noted in sub-section 1. Few significant changes are evident in the substitution between corrugated and competitive transit outer materials and systems and the market share held by corrugated is expected to remain broadly unchanged. These issues are having an important influence on corrugated specifications. Political tensions exist between China and Japan over disputed island territories. The risk of political instability in the Middle East remains. die-cuts and trays. which will create further marginal downward pressure on corrugated volumes. compared with the economic vulnerabilities outlined in sub-section 1. election had the effect of putting commercial decisions on hold. Current recessionary conditions. notably in developed regions. the most important involving the growing adoption of retail ready packaging (RRP). impacting on the price and availability of oil. Industrial production in emerging regions will grow by a substantial 45%. are resulting in the need for downward adjustments to inventories.

its share is expected to reach 28%. but in North America.a. For the period 2010 to 2015.5% p.3% in 2013. the reduction in substance weights will be no more than 1. (See sub-section 2. prepared in July 2012. Since then.(See sub-section 2.a. there have been further downward revisions and our current forecasts are for growth of 2.3% in 2012 and 3. despite the introduction of intermediate flute formations between B. this forecast was downgraded to 3. China overtook the USA as the largest global producer. as a result of continued reductions in average substance weights. There is a marked move from multi-wall to single-wall constructions in emergent markets. with the growing adoption of Retail Ready Packaging (RRP).a.5 Summary Forecasts of Global Corrugated Demand Over the next 5 years. In 2009.5% p. Growth expressed in tonnage terms will average 2. we predicted that global corrugated production would grow by 5. well below the historic trend. In the July 2011 report. (See sub-section 2.2% in 2012 and 4.4 for further details) 1. In the Mid-Year Review.a.3% p. and an average 3. China will contribute half of the incremental business forecast over the next 5 years and. Substance weight reductions will result in a 5-year yield improvement of 4. for the period 2011 to 2016. by 2016.9% in 2013.4% p.4% in both 2012 and 2013. these changes result in a reduction in the average growth rate from 5.6% p. global corrugated demand will grow by an average 3. to 3. resulting in marginal reductions in corrugated volumes. Decorative print processes account for 11% of total demand and will grow at roughly double the rate for corrugated as a whole.and E-flute. based on area.. and now holds a 25% share of global corrugated output.4 Changing Corrugated Specifications The move towards smaller containers required for shelf ready packaging and the displacement of regular slotted cases by trays and die-cuts continues unabated.5 for further details) 7 PRIVATE AND CONFIDENTIAL .3 for further details) 1. Micro-flute continues to offer well above average prospects.a.1%.4%. with continued investment in new containerboard machines. as the quality of containerboard improves. Demand for decorative print is influenced by the need for improved visual appeal at the Point-of-Sale.

1.6 Assessment of Downside Risks and Upside Gains
Economic/political issues, changing currency parities, the vagaries of the weather, changes in inventory levels, packaging reduction and transit outer substitution, all represent downside vulnerabilities or upside gains, dependent on their likely impact. Our downside forecast is for growth averaging 2.1% p.a. over the next 5 years generating 23 billion square metres of additional business. The upside forecast is for growth of 4.4% p.a. generating an incremental 49 billion square metres. The most likely outcome is for growth of 3.5% p.a. yielding an extra 38 billion square metres. (See sub-section 2.6 for further details)

1.7 Global Shifts in Business Migration
There has been, and will continue to be, a steady move away from developed to emerging regions, resulting from changes in the import/export balance and the relocation of manufacturing and assembly facilities. As a result, the developed regions of the world will see their share of the total corrugated market decline from the current level of 53% to 48% in 2016. However, there is growing anecdotal evidence of moves in the opposite direction, as an examination of the real costs of “off-shoring” create some moves to “re-shoring”. As a result, the impact of future business migration on corrugated demand in developed regions of the world will be less than it has been in the past, and cost differentials between developed and emerging regions will continue to converge. (See sub-section 2.7 for further details)

1.8

Changing Pattern of End Use Demand When viewed in a global context, little change is evident in the share held by each generic market sector, with FMCG markets holding a constant 44.3% share. At a regional level, the differences are far more pronounced. The emerging regions of the world will contribute 80% (30 billion square metres) of the 38 billion square metres forecast to be generated over the next 5 years, with the developed regions contributing only 20% (8 billion square metres). In FMCG sectors, the emerging regions will contribute 74%, but, in industrial and durables markets, their contribution is an overwhelming 90%. (See sub-section 2.8 for further details)

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2.1 Global, Economic and Business Prospects 2.1.1 GDP Forecasts Global Summary In response to the Eurozone recession and gloomier prospects for recovery in world trade, GDP forecasts have been revised downward yet again.

Our forecast for GDP growth this year of 2.6% is similar to that contained in our Mid Year Review, but our growth forecast for 2013 is slightly lower than that predicted in July, 2012. This reflects the slow down in the major economies of the world: US growth has been decelerating, although GDP recovered quite well in the third quarter of 2012; the Eurozone remains solidly in recession and the region’s prospects at best are getting worse more slowly; China, increasingly an engine of global growth, is taking longer than expected to benefit from recently policy stimuli and continues to suffer from depressed conditions in major export markets.

GLOBAL GDP TRENDS AND FORECASTS – 2006 TO 2016 % CHANGE ON PREVIOUS YEAR
Region North America Europe Pacific Rim China Rest of Asia C & S America Other Regions World 2006
2.8 3.8 2.5 12.7 7.6 4.8 na 5.2

2007
2.0 3.6 3.0 14.2 8.1 6.4 na 5.4

2008
-0.1 0.7 -0.4 9.6 5.1 5.2 na 2.8

2009
-3.6 -4.4 -4.5 9.2 3.7 -0.2 na -0.6

2010
2.7 2.5 5.2 10.4 8.6 7.6 na 5.1

2011
2.0 2.1 0.2 9.2 5.5 3.8 na 3.9

2012
2.3 0.4 2.2 7.8 4.9 1.9 na 2.6

2013
2.2 1.0 1.8 8.2 5.6 3.9 na 2.9

2014
2.9 1.9 1.8 8.5 5.8 4.2 na 3.5

2015
3.3 2.2 1.9 8.5 6.0 4.2 na 3.8

2016
3.3 2.3 1.9 8.5 6.2 4.1 na 3.9

Source: IMF WEO; World Bank

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by comparing GDP forecasts contained in last year’s Main Volume. MID YEAR REVIEW AND CURRENT FORECASTS – 2011 TO 2016 % CHANGE ON PREVIOUS YEAR 5 4. prepared in July 2011.5 2 1. COMPARISON OF GLOBAL GDP FORECASTS PREVIOUS. and our current forecasts.5 4 3. the interim forecasts contained in the Mid Year Review. prepared in July 2012.5 3 2.5 1 0.5 0 2011 2012 2013 2014 2015 2016 Previous Forecast Mid Year Review Revised Forecast 11 PRIVATE AND CONFIDENTIAL .GLOBAL GDP TRENDS AND FORECASTS – 2006 TO 2016 % CHANGE ON PREVIOUS YEAR 20 15 10 5 0 2006 -5 -10 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 North America Europe China Rest of World World The following chart shows the extent of the downgrading of these forecasts.

Since then. the Netherlands and Finland have appeared to renege on this agreement to recapitalise banks directly. More austerity measures have been announced in Spain and France.6% in Quarter 2. The transition economies of Eastern Europe are exposed to the Eurozone crisis. In contrast. Central and South America is suffering from below par growth in the US and Europe but growth will pick up in 2014. effectively by-passing governments. however.Developed Economies In the USA. growth has slowed sharply with trade-oriented economies exposed to weak export demand.0% in the third quarter of 2012. oil revenues. 12 PRIVATE AND CONFIDENTIAL . net exports have declined by -5.6%. with GDP up by 2. compared with 1.4% in Quarter 3 following a rise of 7.5% in the first three quarters of the year. and to do “whatever it takes” reduced the risk of contagion.2%. the European Central Bank’s (ECBN) announcement to buy government bonds in potentially unlimited quantities. but the targets will be difficult to achieve in the deteriorating economic climate. with GDP slowing month by month. the region’s largest economy. In Europe.5% decline in GDP. to remain in place until job outlook recovers. This was largely a result of an increase in federal government spending of 9. Much of the growth is coming from investment spending on machinery. A longer-term solution involving more fiscal union remains a long way off and such an agreement may exclude peripheral countries such as Greece. following soft jobs data emerging in the summer. Elsewhere in Asia. The outlook in Japan is somewhat brighter where reconstruction spending is having a more pronounced effect than previously expected. whilst the recent German constitutional court’s favourable ruling on the Eurozone’s bail out fund helped to calm nerves.3% in the second quarter. via Outright Monetary Transactions (OMTs). the economic juggernaut is losing momentum. GDP rose by 7. This “QE3” is expected to boost asset prices and encourage consumer spending. it is actually the lowest since the depth of the crisis period in 2009. equivalent to a -0. and infrastructure investment. buildings and infrastructure. and notably in India. an increase of personal expenditure of 2. Whilst this looks like a strong figure. the governments of Germany. The economic outlook has improved in recent months. In China.0% and a downturn in imports of -0. Emerging Economies The recession in Europe and sluggish demand in the US has hit the developing world. being influenced by political instability. This has unsettled investors’ nerves yet again. led by Brazil. but domestic demand is holding up reasonably well. Prospects for Other Regions are mixed. the US Federal Reserve has recently announced a third programme of quantitative easing.

4 6.8 7.7 -1.7 5.2 -6.1 2009 -10.1% this year compares with 2.3 2014 3.4 2.1 11.3 4.5% in the Mid Year Review.0 2016 3. being revised downwards.0 12.0 3.1 -1.9 -12.0 5.6 na 2.5 12.2.3 3. Our forecast of growth in global industrial production of 2.5 3.0 3.6 2.6 15. there has been a sizeable shift in the share held by infrastructure projects at the expense of manufacturing.7 9.3%.8% to 3.2 6.3 3.9 3.8 na 4.8 na 5.6 2010 5.9 3.1 4.0 2008 -3.3 2.7 na -0.4 6.4 na 3.0 1.7 13.7 9.8 3.5 4.6 3.7 16.5 2.0 2015 3.2 Industrial Production Forecasts Global Summary Forecasts of industrial production have been revised downward in all regions with the exception of North America.1 2007 2.5 7.0 2.1.9 13.3 na -8.6 10.1 2012 3.4 7. reflecting a worsening in most major economies.8 4. with the exception of North America.2 13 PRIVATE AND CONFIDENTIAL .0 na 4.1 1.1 1.1 2013 3.3 17.3 10.3 3. GLOBAL INDUSTRIAL PRODUCTION TRENDS AND FORECASTS – 2006 TO 2016 % CHANGE ON PREVIOUS YEAR Region North America Europe Pacific Rim China Rest of Asia C & S America Other Regions World Source: EIU 2006 2. More importantly for the corrugated industry.4 na 4.8 na 4.7 -1.2 6.0 na 8.8 3.3 -13. with all regions.4 3.5 11. Our forecast for 2013 has also been downgraded from 3.6 2011 4.6 na 5.2 10.4 2.0 3.

prepared in July 2011. the interim forecasts contained in the Mid Year Review prepared in July 2012. It is worth noting that the substantial revisions to the European forecast account for about three quarters of the forecast revisions to total global production. REVISED FORECASTS OF GLOBAL INDUSTRIAL PRODUCTION 2011 TO 2016 % CHANGE ON PREVIOUS YEAR 5 4 3 2 1 0 2011 2012 2013 2014 2015 2016 Previous Forecast Mid Year Review Current Forecast 14 PRIVATE AND CONFIDENTIAL . and the current forecasts. by comparing industrial production forecasts contained in last year’s main volume.GLOBAL INDUSTRIAL PRODUCTION TRENDS AND FORECASTS – 2006 TO 2016 % CHANGE ON PREVIOUS YEAR 20 15 10 5 0 -5 -10 -15 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 North America Europe China Rest of World World The following chart shows the extent of the downgrading of these forecasts.

Developed Economies
In the USA, August was the third month in a row for contraction in the manufacturing sector, with a further deterioration in the ISM’s index to 49.6. The index recovered to 51.5 in September, indicating a return to modest expansion, but then dropped marginally to 51.0 in October. Manufacturing is still struggling to add jobs more than 3 years after the recession was formally declared as over. In the Eurozone, the PMI’s index was broadly unchanged in August at 46.3; the index fell further to 46.1 in September and this was followed by a decline to 45.7 in October, with the slow down becoming more broadly based, with Germany – the engine economy – not immune to contraction. These declines are reflected in the aggregate Eurozone unemployment rate, now standing at a record 11.4%. Unemployment in Spain is now a staggering 25.1%, making the pursuit of austerity policies a particularly tough task.

Emergent Economies
In China, manufacturing output in August contracted at its fastest pace in nine months, with the PMI index falling to 47.8. A modest improvement in September to 49.2 would indicate a slowing of manufacturing contraction. Industrial production will continue to be seriously affected by weak external markets. Domestic markets will become increasingly important, as rising wages and other input costs impact on China’s competitiveness in export markets. Short-term forecasts of industrial production for 2012/13 in all emergent markets contained in the Mid Year Review have been further downgraded, reflecting the continued widespread slow-down in global trade.

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2.1.3 Downside Risks and Upside Gains to Economic Forecasts Major downside risks to economic recovery are further Eurozone contagion, the US “fiscal cliff”, and slower recovery of emergent markets, with little evidence of any potential upside gains. Downside Risks
The major downside risks to our economic forecasts relate to whether the Eurozone is actually “on the mend”. Northern creditor nations appear to be backtracking on the use of the European Stability Mechanism to recapitalise banks directly and on the use of bail out funds for intervention in secondary bond markets. In any event, it is difficult to see how such measures can lift the Eurozone economies out of the slump that they have fallen into. The second concern relates to the excessive fiscal tightening in the US, given the recent political deadlock. Current US legislation provides for large automatic tax increases and spending cuts scheduled to take effect a the beginning of 2013. This “fiscal cliff” could theoretically result in a fiscal withdrawal of more than 4% of GDP in 2013. This would effectively stall the growth in the US economy and would also have a major impact on world trade and commodity prices. The timing of the electoral cycle means that Congress has a relatively short time to reach agreement on a relaxation of these measures. The effect would be so extreme that, for that reason alone, the IMF assumes that the politicians will not allow this to happen and will, in the end, reach a consensus. A third downside risk applies to the emergent markets. In general, they have been achieving above average growth for over a decade, but there is now some concern that their future potential growth is overstated. In any event, future growth prospects are much lower than the rates achieved in the past, reflecting a general slow down in both export markets and inward investment. A fourth potential risk to industrial output growth is the possibility of domestic banking crises in emergent markets. A sharp slow down in credit growth or outright contraction would have marked impacts on domestic demand and industrial output, in particular on sectors producing finance-sensitive items such as vehicles and big ticket consumer durables.

Upside Gains
Under the prevailing circumstances, it is difficult to see any evidence of potential upside gains to the global economic environment. One possible area is oil price rises, which have abated in recent months, reflecting reduced geo-political risks and improved supply conditions. A final potential upside gain is one of market psychology. There is a high level of pessimism in all regions with few, if any pundits predicting a turning point, with a strong tendency for commentators to “talk us into a deeper recession”. The green shoots of recovery, when they do appear, will undoubtedly bolster business confidence.

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2.2 Comparisons between Corrugated Production and Overall Levels of Industrial Production The relationship between industrial production and corrugated output is becoming increasingly tenuous and corrugated is forecast to lag slightly behind growth in industrial production.
While, traditionally, there has been some correlation between corrugated production and industrial production, this relationship has broken down in recent years, as a result of market volatility, declining output levels and changing inventories. Over the last 18 months, several factors have combined to further influence this disconnect between the two series:  There have been significant changes in the components of corrugated production, notably an increase in the share held by FMCG markets, which are somewhat recession proof, and a corresponding decline in the industrial and consumer durables markets. We are seeing significant changes in the components of industrial production, notably a reduction in the share held by manufactured goods packed in corrugated. This is resulting from the efforts of governments in both developed and emerging markets, to pursue infrastructure projects, such as building and construction, and communications/transport networks, in efforts to encourage growth without risking inflation and excessive direct stimuli to consumer demand.

There is now further evidence emerging of other factors adversely influencing corrugated demand, notably pressures for packaging reduction and reduced inventories throughout the manufacturing and distribution chain, which are unlikely to be recovered in the medium to long term, notably in Europe, as indicated in sub-section 2.3.2. These factors are examined further in the follow sub-section. In the meantime, the table below demonstrates that, whilst growth in corrugated production has exceeded that of industrial production in recent years, for the future we expect growth in corrugated to be slightly lower than that of industrial production, simply for the reasons outlined above.

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4 29.4 13.6 17. However.9 36.8 7.6 COMPARISONS BETWEEN GLOBAL INDUSTRIAL PRODUCTION AND CORRUGATED PRODUCTION BY REGION – 2011 TO 2016 AND 2011 TO 2016 OVERALL % CHANGE 115 Industrial and Corrugated Production – 2006 to 2011 Industrial and Corrugated Production – 2011 to 2016 90 65 40 15 As ia As ia ic a ic a ld er i ca er i ca ns im hi n im Eu ro p Eu ro p W or hi n ns eg io eg io C of C fic Am Am fic of Am Am rR es t Pa or th or th &S Pa es t th e &S C N O N C It is difficult to identify any discernible patterns in the correlation between the two indices in the various regions of the world.8 7.4 71.COMPARISONS BETWEEN GLOBAL INDUSTRIAL PRODUCTION AND CORRUGATED PRODUCTION BY REGION – 2006 TO 2011 AND 2011 TO 2016 OVERALL % CHANGE 2006 to 2011 Country North America Europe Pacific Rim China Rest of Asia C & S America Other Regions World Industrial Production -3. with the exception of China.0 16.1 68.1 17. what is clear is that corrugated growth is forecast to lag that of industrial production in the developed regions but to significantly lead industrial production in all emergent markets.3 29.2 14.5 2.2 7.7 6.7 -0.4 2011 to 2016 Corrugated Production -8.0 34.6 15.1 18.3 41.4 2.9 87.2 na 18. O th e R R rR ci ci W or R er er R ld e e -10 a a 18 PRIVATE AND CONFIDENTIAL .0 18.9 Corrugated Production 7.2 na 8.9 Industrial Production 18.4 20.

2 8.4 -6.6 18.0 0. as a result of these issues.6 These trends are a natural result of the maturing nature of corrugated markets in developed regions.3 2013 1.1 2.7 8.7 4.2 4.1 8.3 5.2 1.4 31.4 4. where the need for cost economies and response to environmental pressures are most pronounced.3 6.6 -1. 19 PRIVATE AND CONFIDENTIAL . faster than growth in corrugated.4 8.COMPARATIVE RATES OF RECOVERY IN INDUSTRIAL PRODUCTION AND CORRUGATED OUTPUT ANNUAL % CHANGE Region Developed Regions Developing Regions TOTAL IP Corrugated IP Corrugated IP Corrugated 2009 -12.3 2. thus making the process even less reliable as a forecasting tool.5 6.2 4.0% and 1.1 5.7 4. this process is becoming much less helpful as a forecasting exercise.7 1.0 Total % Change 2011-2016 12.7 14.5 3. For the developed economies of the USA and the Eurozone region. emergent markets are still benefiting from the increasing penetration of corrugated packaging and the development of new applications.1 12.6 8. we have repeatedly suffered from economists downgrading their predictions of industrial production.3 4.9 2016 3.3 2014 2.9 18.0 2011 2.7 2010 6.9 6.8 2015 2. whilst it is helpful to compare forecasts of corrugated production and industrial production.0 3. In contrast.8 7. In conclusion.4 -8.6 8.2 4.1 45.2 4.8 5.9 1.0 3.9 1.1 3.3 3.2 7. In any event.1 6.1 2012 1.9 1. we estimate that the output of manufactured goods in the main markets using corrugated is growing at between 1.5% p.a. over the last two to three years.

the Congress and the President all have distinct areas of power and can veto each other’s measures. Sub-section 2. In addition. Changing inventory levels and the likelihood that these will not recover to previous levels. Political tensions between China and Japan over disputed island territories have caused some disruption to Japanese electronics and automotive business with China. 20 PRIVATE AND CONFIDENTIAL . 2. but. Political instability continues to be a risk impacting on the price and availability of oil. while the Republicans retain control of the Congress. So the election results have done nothing to alleviate the “fiscal cliff” situation. Retail developments and the adoption of Retail Ready Packaging (RRP). the global economic and political environment remains somewhat unpredictable and it appears that the more traditional economic certainties concerning growth and cyclical recovery no longer apply to the prevailing economic conditions.1 summarised our global economic forecasts and our assessment of downside risks and upside gains and so will not be repeated here.1 Economic and Political Issues The global economic and political outlook remains uncertain. 2. on balance.2 Changing Inventory Levels Future corrugated output will suffer from lower inventory levels. but the assumption remains that Republicans and Democrats will come to an agreement at the last minute. Obama’s Democrats have retained control of the Senate.2. as they have done in the past.3. These continue to be important but additional factors are being examined this year and this section deals with the following:      Economic and political issues. The Senate. A speedy political resolution would remove the potential for further disruption over the longer term.3. Packaging reduction. arising out of the need for cost savings and in response to environmental/sustainability issues. further deterioration is unlikely. Transit outer substitution trends.3 Key Factors Influencing Demand For Corrugated Previous editions have examined in detail the impact of economic and geo-political issues on the future pattern for corrugated.   In conclusion. a number of political factors are influencing prevailing levels of business confidence in downstream corrugated markets:  The first obvious issue is the outcome of the recent Presidential election in the USA.

This translates into packaging design economies incorporating. packers and packaging suppliers to react to more stringent environmental and sustainability targets. Respondents in North America hold similar views. There is growing evidence in Europe that inventories are now being managed increasingly tightly. The growth in concentrated products – for example. and the miniaturisation of audio and telecom equipment all result in less packaging being required. This is examined further in the following section 2. In addition. albeit at historically low levels. In the past. Developed regions of the world are witnessing continued pressure from the leading retail chains for on-going. the reduction in weight of the primary pack (for example. even when markets conditions are improving. inventories relative to sales throughout the supply chain have remained fairly constant. In addition.3. first by laptops and then by tablets. for example. aided and abetted by the need for retailers. resulting in a further reduction in the volume of stocks held each year. the replacement of desktop computers. are creating a short-term spike in inventories that are too large to service prevailing market needs. Similarly. Efforts to reduce manufacturing and conversion waste will have some impact on demand for corrugated and containerboards. inventories would typically be cut back during an economic downturn. all regions are witnessing substance weight reductions impacting on the tonnage demand for corrugated. during a recovery.Historically. although in the US. would be built back to “normal” levels. 21 PRIVATE AND CONFIDENTIAL . and in particular the growing importance of vendor-managed inventories throughout the supply chain. All these developments impact on the area demand for corrugated. Clearly. the current recessionary conditions in developed markets. in the electronics market. recent limits on cash flow have resulted in increased sophistication of inventory management. As always. close control over inventories and the adoption of Just-in-Time sourcing practices have resulted in steady reductions in demand for packaging materials compared with final demand for packaged products. In some instances. but. notably the Eurozone region. smaller flap sizes. but this is being off-set to some extend by continued fragmentation of order sizes. 2. which may include a switch out of corrugated to shrinkwrapping. cost is the driver. for detergents – means that less product and therefore less packaging volume is needed to perform the same function. year-on-year reductions in overall product costs and also in packaging weight.4 which covers changing corrugated specifications. shallower trays and the reduced use of fitments as well as the substitution of RSCs by die cuts and open top cases. whilst environmental issues offer a convincing argument. the move from glass to plastic bottles for beverages) means that less robust transit packaging can be used. resulting in the need for some downward adjustments to output.3 Packaging Reduction Packaging reduction arising out of more intense cost control and environmental issues will have a further impact on corrugated demand levels The need for packaging reduction arises out of the current austere conditions triggering more intense and innovative cost control.

2.4 Retail Developments and the Adoption of Retail Ready Packaging (RRP) RRP will have a significant influence on corrugated specifications. or that its presentation may be less appealing than that of its peer group brands. arising out of the need to provide further transit outer protection to goods supplied from the retailer/distribution centre to the ultimate consumer. they will invariably bring with them moves towards RRP in order to increase speed to shelf. There is much concern over the risk that the brand may be obscured. a more important issue for corrugated is that. Substantial growth. the most important retail issue influencing corrugated packaging in FMCG markets. brand owners are becoming increasingly concerned over how their brands are displayed at the Point of Sale. In contrast. where it now accounts for roughly 50% of FMCG corrugated packaging. In emergent markets. represent significant opportunities for the creative corrugated supplier. with the main trends being:  Continued steady growth in the share held by super/hypermarkets that generally adopt fixed-format retailing which involves the increasing adoption of shelf-ready packaging. Rather more growth is evident in the share held by hard discounters creating additional growth in demand for display-ready packaging. Growth in multiple convenience stores and other outlets. For most countries. leisure centres and food service outlets. these developments have quite a long way to go and require substantial infrastructure development to support the demands of modern supply chains and distribution. joint venture and green field sites. The marketing need to communicate consumer propositions at the Point-of-Sale. Whilst these are all clear benefits to the retailer. in the US discounting sector corrugated outers tend to be purchased unopened. from a low base. This trend is particularly pronounced in Europe where display outers incorporating decorative print and white inner liners are on the increase. such as filling stations. in the use of mail order distribution applied to Internet shopping. with the arrival of the transit outer on the supermarket shelf. reduce out-of-stock situations and improve merchandising productivity. However. RRP is widely adopted in Europe. 22 PRIVATE AND CONFIDENTIAL .3.    RRP is. to help build the brand and to stimulate sales at the point of purchase. It is also becoming increasingly adopted in the US. expansion of modern grocery retailing is being driven by western supermarket chains investing in retail developments through acquisition. These new retail formats will drive up convenience impulse retailing for products consumed “on the go” with associated product and pack formats creating a move to smaller transit outer sizes to service these outlets. evidenced by the recent announcement of a licensing agreement involving two-piece shelf-ready packaging between DS Smith and RockTenn. This has a positive impact on the demand for corrugated packaging. without doubt. All regions of the world – both developed and emerging – are experiencing changes in the structure of retailing.

In conclusion.5 Transit Outer Substitution Trends Little change is forecast in the market share held by corrugated There have been few. the emergence of Internet shopping and growth in multiple convenience stores – will create a significant reduction in average container sizes. involving substitution to corrugated transit packs from wooden crates. changes in the relative shares between corrugated and competitive transit outer materials since the publication of our last report. Any potential moves out of corrugated in FMCG markets are influenced in the short term by lack of funds and sentiment for the required investment. but this trend is less in evidence in other developed markets such as the USA. corrugated will continue to benefit from its presentation characteristics (compared with reusables in particular). Instead.1 Container Constructions The move towards trays and die cuts continues unabated The retail developments outlined in the previous section – the adoption of Retail Ready Packaging (RRP).4. In the longer-term. often without supporting corrugated trays. 23 PRIVATE AND CONFIDENTIAL . notably for fresh foods. but a much greater increase in conversion costs. corrugated demand here is suffering from continued substitution by shrinkwrap. the market share held by corrugated appears to be fairly constant. 2. notably Europe. but is experiencing some inroads from reusable plastic crates. In developing countries. Corrugated continues to take business from wood. In this section. In developed regions. arising out of the increased number of conversation operations involved. This will result in a marginal increase in corrugated consumption. retailers and consumers. where packaging is generally unautomated and subject to damp packaging environments.3. whilst there are a number of marginal substitution trends. traditional local markets selling loose products are being displaced by modern retailing formats. there is a continued move towards reusable bulk systems for liquids. its versatility/flexibility for a variety of packaging formats and its environmental/sustainability attributes. if any. underpinned by greater concern for hygiene and food safety by packers.2. we provide a brief summary of changes to:     Container constructions Wall constructions and flute formations Substance weights Print and decorative processes 2.4 Changing Corrugated Specifications The developments examined in the previous section will have a marked impact on corrugated specifications.

act as a brake on these moves.4%. arising out of the decline in the share held by “township markets”. there is no logical argument against the value for money and the environmental attributes of lighter-weight boards. S-. and significant investment in modern containerboard machines and corrugators. there is little change evident in the relative shares of single wall vs. involving a move towards higher-quality materials. However. between conventional Band E-flute configurations.The trend towards trays and die cuts will continue. Significant growth in decorative print processes and the wider adoption of RRP is resulting in continued growth in microflute constructions.2%. These developments are most pronounced in China for the reasons outlined above. G. certainly in the short term. such moves are expected in other regions. In recent months.3 Substance Weight Reductions Substance weight reductions will result in a 5-year yield improvement of 4.2 Wall Constructions and Flute Formations Microflute continues to offer above average growth potential. An increase in the share held by domestic vs. However. notably the relatively high stacking heights evident in the US. distribution and storage methods. 2. Further factors mitigating against lighter substance weights include reluctance amongst containerboard mills to move down the substance spectrum. products and brands will. there is a marked trend from multi wall to single wall constructions. Wholesale moves towards lighter basis weights in the USA will be limited by the influence of current materials handling. in response to the needs of RRP in FMCG markets and the quest for economies in industrial and consumer durables markets. notably in China.4. The developments reported in last year’s edition continue. In developed markets. in emergent markets. and the fact that the existing machine park of corrugators and conversion equipment is less able to run effectively on lightweight substances. double wall and triple wall corrugated. 24 PRIVATE AND CONFIDENTIAL . in particular in relation to the corner stacking strength of die cut containers and resistance to bowing of the base of the container. North America will see only marginal moves towards lighter substance weights with an anticipated yield improvement of only 1. In contrast. involving substance weight reductions of almost 10% over the forthcoming 5year period. Continued reductions will continue to be made. this trend to microflute in Europe has been influenced to some extent by the introduction of intermediate flute profiles (R-. to some degree. comprising E-flute and fineflute (F-. However. 2.4.and Nflute configurations). T.and P-flute). with substance weight reductions evident in all regions. the required investment in die cutting capacity and new end-of-line equipment across a broad range of locations. export markets and a corresponding increase in the share held by FMCG sectors is also influencing this trend. with improved qualities of containerboards and innovative packaging design.

8 -1.5 -2.3 -1. although these lightweight grades will be adopted more and more in virtually all regions of the world but with the possible exception of the North American market. because it offers the best possible print quality. screen print and digital. fragmentation of above-the-line media and increased awareness of the impact of Point-of-Sale propositions. a decline in the sales of high-ticket items in developed markets and reduced exports of these products from emergent markets.3 -2. collectively these decorative processes account for around 11% of the total global market.0 -2. although recently. and this process will continue to grow.4 -4.2 Region North America Europe Pacific Rim China Rest of Asia Central & South America Other Regions World 2011 to 2016 -1.2 -3. Historically. are resulting in the retail store becoming a much more powerful marketing environment.6 -2.8% p.2 -2. these sectors have suffered from reduced consumer disposable income.4. direct litho.5 -3. litholaminating (including panel labelling). over the next 5 years.Use of lightweight containerboards (defined of liners of 100 gsm and less and flutings of 90 gsm and less) are currently confined largely to the European market.2 2. consumer durables and electrical goods have been important users of decorative print processes.2 -9. coupled with multiple retailers’ and brand owners’ requirements for RRP. 25 PRIVATE AND CONFIDENTIAL . creating a yield gain of 4. Overall. In FMCG markets.2%. As a result. substance weights are forecast to decline by an average -0.1 -7.a. IMPACT OF SUBSTANCE WEIGHT REDUCTIONS ON CORRUGATED TONNAGE DEMAND 2006 TO 2011 AND 2011 TO 2016 OVERALL % CHANGE % Change in Yield 2006 to 2011 -4. Litholaminating holds the largest share.4 Print and Decorative Processes Decorative print will grow at roughly twice the rate of corrugated as a whole Decorative processes comprise high quality flexo post print (3+ colour with interstation drying. global demand for decorative corrugated is forecast to grow at double the rate for corrugated as a whole. involving photographic standards of reproduction.6 -1.3 -4. normally a standalone unit).

well below the historical trend. the main application being large format bulk displays.a. despite its costly and labour-intensive nature. In the medium to long term.5% p. high quality. Screen print continues to expand. high quality. their use is limited to very short runs because of the relatively expensive ink costs involved. such a pre packs and dump bins as well as lifesized figures for cinemas.5.Pre-print is suffering from the new generation. problems of board crush during printing and problems associated with sourcing boards that are completely free from warp. These new generation. However. slower running speeds when handling micro-flute. million square metres (Msm) and billion square feet (Bsf) for the period 2012 to 2016. this has not happened and the main problems have been the high cost of retro fitting litho presses.a. A key factor in this trend is that growth in demand for white corrugated containers is being supercharged by growth in demand for containers incorporating both white outer and white inner liners. We had expected that this process would allow cartonmakers the opportunity of extending their portfolio into micro-flute corrugated. estimated at around 5. the need for improved graphics in both developed and emerging regions will result in demand for white liners increasing at a much faster rate than that for corrugated as a whole. 26 PRIVATE AND CONFIDENTIAL .5 Summary Forecasts Of Global Corrugated Demand 2. Large format digital presses which have recently been introduced that offer high levels of print quality and flexibility. The direct litho process has not achieved much of the promise expected of it. which offer much improved resolution and additional flexibility compared with pre print. based on area. etc. The following three tables show past trends and forecasts of corrugated production expressed in terms of per cent change over previous year. in reality.0 to 5.5% p. flexo post print presses have managed to secure a significant stronghold in the decorative sector and the level of print resolution that these presses now offer is close. a particularly important issue for limited list discounters displaying partially empty display outers. However. flexo post print presses that are now available.1 Forecasts by Area Global corrugated demand will grow by an average 3. although not equal to the photographic reproduction achieved by litho. 2.

6 2.1 4.1 7.7 -1.5 3.3 2013 % 1.2 5.5 2.1 1.7 1.8 10.0 GLOBAL CORRUGATED PRODUCTION TRENDS AND FORECASTS BY AREA 2006 TO 2016 % CHANGE 20 15 10 5 0 2006 -5 -10 2007 2008 2009 2010 2011 2012 2013 2014 North America Europe China Rest of World World 2015 2016 27 PRIVATE AND CONFIDENTIAL .6 3.3 15.0 1.7 7.3 2.3 1.5 15.4 4.9 1.2 3.5 7.1 1.8 3.6 3.8 2.1 3.9 -0.6 1.0 3.9 2016 % 1.1 3.3 0.2 4.1 5.3 2.0 2007 % -1.5 2.9 3.0 7.3 7.0 2.7 2011 % 0.4 4.7 2.1 2012 % 0.4 6.0 2008 % -3.1 1.0 6.5 -1.7 3.7 1.8 3.5 15.7 4.4 7.3 2014 % 1.3 6.5 1.2 4.0 5.3 7.6 -2.0 7.7 -4.7 3.4 3.0 7.1 3.7 6.9 2.5 10.8 2015 % 1.1 3.GLOBAL CORRUGATED PRODUCTION TRENDS AND FORECASTS BY AREA 2006 TO 2016 % CHANGE Past Trend Region North America Europe Pacific Rim China Rest of Asia C & S America Other Regions World 2006 % 1.1 1.7 3.8 -5.8 2009 % -7.0 7.4 0.5 9.0 Forecast 2010 % 3.1 8.0 5.0 1.6 1.

GLOBAL CORRUGATED PRODUCTION TRENDS AND FORECASTS BY AREA 2006 TO 2016 MSM Past Trend Region 2006 Msm 46881 47977 20321 29381 14261 10416 7803 177040 Forecast 2010 Msm 42663 48415 20355 47048 17819 12190 8817 197307 2007 Msm 46248 49218 20632 33899 15211 10852 8149 184210 2008 Msm 44635 48414 20117 36992 15942 11188 8417 185704 2009 Msm 41151 45674 19144 40734 16096 11345 8473 182616 2011 Msm 42933 49180 20816 50341 18450 12512 9144 203377 2012 Msm 43331 49144 21073 52858 19471 12702 9389 207969 2013 Msm 43875 49956 21350 56030 20921 13087 9665 214883 2014 Msm 44628 50887 21646 59952 22516 13542 9967 223139 2015 Msm 45420 51883 21967 64149 24253 13961 10284 231917 2016 Msm 46277 52954 22248 68639 26133 14395 10611 241257 2006 to 2011 % pa -1.7 3.5 N.4 7.3 3.8 3.4 5.5 1.5 1.5 11.8 2011 to 2016 % pa 1.7 0.2 2.5 0.0 3. America Europe Pacific Rim China Rest of Asia C&S America Other Regions World GLOBAL CORRUGATED PRODUCTION TRENDS AND FORECASTS BY AREA 2006 TO 2016 MSM 80000 70000 2006 60000 50000 40000 30000 20000 10000 0 North America Europe Pacific Rim China Rest of Asia C&S America Other Regions 2011 2016 28 PRIVATE AND CONFIDENTIAL .3 6.2 2.

0 2007 Bsf 497.5 11.3 3. 29 PRIVATE AND CONFIDENTIAL . for the third year running.5 206.8 2013 Bsf 472. output in 2011 was well below trend at +3.9 2006 to 2011 % pa -1.6 98.9 225.3 236. China holds a 25% share of global corrugated output and will contribute half of the incremental corrugated business forecast. In the Mid Year Review prepared in July 2012.2 528.8 87.0 3.9 219.4 2188. with hindsight.3 2012 Bsf 466.2 2595.7 116. there have been further downward revisions and our current forecasts are for growth of 2.0 364.7 101.2 122.2 2009 Bsf 442.5% and Germany 4th at 4.8 239.6 281.0 1904.3 6.1 91.3 2401.0 529.7 316.6 222.9% in 2013.0 2312.8 2011 to 2016 % pa 1.1 140.7 1982.9 Forecast 2010 Bsf 459.1 537.5 398.5 1.9 569.7 107.3 520.7 558. Our forecasts prepared in July 2011 have been downgraded substantially in virtually all regions.0 438.9 216. no other country gets near China and the USA. was 6.4 7.0 2015 Bsf 488.1% on 2010.6 1998.9 2123.4 90.8 226.4 690.0 2237.2 1965.6 529. we predicted that global corrugated production would grow by 5.3% in 2013 and thereafter growth averaging 3.0 506.7 198.0 171. 3.7 3.7% decline in 2009.4%.1 2008 Bsf 480.8 491.0% in 2010.4 2016 Bsf 497.5 232.8 3.2 2. Brazil has moved up from 8th to 5th place over the last year.2 224.1 153. still well below the historical trend line.1 242.7 2495. America Europe Pacific Rim China Rest of Asia C&S America Other Regions World Global corrugated production grew by a substantial 8.7 0.2 547. Sadly.0 150.0 541.7 602.5 120.1 520.5 1.2 218.2 154.4 738.2 2.4% in both 2012 and 2013.2% in 2012 and 4.2 110. In 2009. It is clear. Since then. we are preparing forecasts of corrugated production against a background of economists’ deteriorating forecasts for both GDP and industrial production.9 114.3 173.4 112. however.0 2011 Bsf 462.5 134.8 percentage points ahead. Interestingly.5 0.3% in 2012.2 261.5 N.7 568.7 131. this forecast was downgraded to 3. by the end of 2011.8 104.9 645.4 516.1 2014 Bsf 480. In the Main Report prepared in July 2011.2 94.1 84. As the table overleaf indicates. with Japan ranked 3rd at 6.8 209.2 191. FEET Past Trend Region 2006 Bsf 504.5 229. China overtook the USA as the largest global corrugated producer and.9% per annum.4 5. bouncing swiftly up from the -1. that the economic forecasts that were available 18 months ago failed to predict the continued depressed state of the developed economies of the world and the impact that this had on the emerging regions.GLOBAL CORRUGATED PRODUCTION TRENDS AND FORECASTS BY AREA 2006 TO 2016 BILLION SQ.3 145.5 136.8 163.

0 TOP 15 COUNTRY RANKING BY CORRUGATED OUTPUT – 2011 MSM 60000 50000 40000 30000 20000 10000 0 n re a ly A ce in a ia ny ia ai n il UK y d US Ind Fr an ma Ch Ko es Sp Ja Tu r Br l an Ita Ge r uth So I nd Me Po on x ic pa az ke o 30 PRIVATE AND CONFIDENTIAL .4 3.TOP 15 COUNTRY RANKING BY CORRUGATED OUTPUT – 2011 MSM Country China USA Japan Germany Brazil Italy India South Korea France Indonesia Spain UK Turkey Poland Mexico Top 15 Msm 50341 36667 13143 8947 6902 6516 6275 5657 5581 4525 4467 3878 3374 3292 3216 162781 % Share 24.5 4.7 2.8 2.8 18.6 80.9 1.0 6.2 1.4 3.2 3.6 1.7 1.1 2.2 2.

7 90.8 1.3 8.2 2.7 6.8 1.2 3. The following table summarises the incremental volume of business forecast to be generated by each of the leading countries over the next 5 years.6 0.0 3.8 1.9 4.4 6.9 3.a. China’s share is estimated at 28.1 1.6 1.0 0. Europe’s performance will be disappointing with a current share of 24.2 5.The gap between China and the USA is forecast to widen progressively over the next five years and.9 31 PRIVATE AND CONFIDENTIAL .9 4.2 4.3 8.4% compared with the USA at 16.6 2.1 0.7 3.2%.1 1. by 2016.0 % p.2% declining to an estimated 21. TOP 15 COUNTRY RANKING BY INCREMENTAL CORRUGATED OUTPUT 2011 TO 2016 MSM Country China India USA Indonesia Brazil South Korea Turkey Mexico Vietnam Poland Thailand Russia Japan Germany Philippines Top 15 Msm 18298 3291 2406 2351 1208 976 973 811 718 694 664 596 426 418 254 34083 % Share 48. In contrast. 6.9% by 2016.9 1.6 2.3 3.4 8.6 8.9 3.

4% p. estimated at 3. generating half the incremental business.a.a. ranked a disappointing 14th place. China dwarfs all other regions.TOP 15 COUNTRY RANKING BY INCREMENTAL CORRUGATED OUTPUT 2011 TO 2016 MSM 20000 15000 10000 5000 0 o Ko re a nd m ia A d x ic Po l an US on es na Ind ss pa an y in a az ke Ch Br Tu r Ge rm Me Vi et Th a Ru Ja In d th ilip Ph p in ila es 32 ia The global corrugated industry will generate an additional 38 billion square metres of business over the period 2011 to 2016. The USA is ranked a distant second with incremental volumes benefiting more from its absolute size than its growth potential. This reflects the lower growth prospects for the next 5 years. hitherto the powerhouse of the Eurozone region. forecast contained in last year’s edition. this compares with our previous forecast of incremental business of 59 billion square metres for the period 2010 to 2015. European countries do not fair well. and with Germany. compared with the 5. Again. with the relatively high growth European economies of Turkey and Poland in 7th and 10th place. So u PRIVATE AND CONFIDENTIAL ia n il y .5% p.

33 PRIVATE AND CONFIDENTIAL . with the exception of the Pacific Rim. with Japan recovering from its traumatic experiences rather more swiftly than predicted. 1.2 Comparisons between Previous and Current Forecasts 5-year growth trends have been revised downwards from 5. the most significant revisions to our forecasts are for 2012. COMPARISONS BETWEEN PREVIOUS AND CURRENT FORECASTS – 2010-2015 MSM Previous Forecast Region North America Europe Pacific Rim China Rest of Asia C & S America Other Regions World 2010 Msm 42663 48411 20355 47048 17601 10744 8826 195649 2011 Msm 43163 49685 20711 53164 18635 11157 9119 205634 2015 Msm 46551 54493 22009 83130 25105 12719 10341 254348 2010-15 % p.5.3%.a. downgraded from 5.8 3.3% p.4 3.1 7.4% to 3.a.a. 1.3% p.a. downgraded from 5.3% and. although not to quite the same extent.4 2.4 6.4% p.1% below the prediction in last year’s edition.5 6.4 1. Our forecasts for subsequent years from 2014 to 2016 have also been downgraded. to 3.6 12.4 1. 1.4 2010 Msm 42663 48415 20355 47048 17819 12190 8817 197307 2011 Msm 42933 49180 20816 50341 18450 12512 9144 203377 Current Forecast 2012 Msm 43331 49144 21073 52858 19471 12702 9389 207969 2015 Msm 45420 51883 21967 64149 24253 13961 10284 231917 2010-15 % p.2. However. resulting in a reduction in the average growth for the period 2010 to 2015 from 5.8 2.a. all regions came in at below the previous forecast.4 3.3 1.2 5. for 2013.4% to 2.4% to 3.1 3. Global corrugated production amounted to 203 billion square metres in 2011.3 In 2011.

3 1.a. 14 12 Previous 10 8 6 4 2 0 Current North America Europe Pacific Rim China Rest of Asia C&S America Other Regions Comparisons between previous and current forecasts for the period 2010 to 2015 are contained in the table below.4 1.1 112.8 3.4 3. 1.a.5 1.9 136.1 114.0 Avg % p.5 116.3 Revised 20112016 Avg % p.Comparisons between previous and revised forecasts for each region are summarised in the following graph: COMPARISONS BETWEEN PREVIOUS AND CURRENT FORECASTS – 2010-2015 % P.0 3.a.4 6.3 6.8 2.5 34 PRIVATE AND CONFIDENTIAL .2 130.8 3. 1.4 117.1 176. 1.A.6 12.6 118.2 107.4 7.2 5.4 1.6 108.3 136. GROWTH IN GLOBAL CORRUGATED OUTPUT – 2010 TO 2016 INDEX AND AVERAGE ANNUAL % GROWTH Previous 2010-2015 Region North America Europe Pacific Rim China Rest of Asia C & S America Other Regions World Index 2010 = 100 109.1 3.5 Avg % p.7 142. together with our forecast for 2011 to 2016.4 3.1 7.4 Revised 2010-2015 Index 2010 = 100 106.5 107.5 1.4 2.5 6.2 2.6 117.

0% and 7. 2.9% over the next 5 years. at between 3. However. and the Rest of Asia showing a per capita increase of 30%. Per capita corrugated consumption will increase marginally in all regions. resulting in a 12. with non durables increasing at only about half the overall rate. 30% in rest of Asia and marginally elsewhere.9% growth in per capita corrugated consumption. with the exception of China. 35 PRIVATE AND CONFIDENTIAL . whilst corrugated production is forecast to increase by an overall 18. industrial production forecasts through to 2016 have been revised marginally upwards. Furthermore. the growth in industrial production will continue to be driven by durables. the gap between growth in non durables and corrugated is expected to continue to widen. In the USA. and our forecasts for corrugated through to 2016 have been revised downwards accordingly.3 Per Capita Corrugated Production 5-year per capita corrugated output will grow by 35% in China.GROWTH IN GLOBAL CORRUGATED OUTPUT – 2010 TO 2015 INDEX 2010 = 100 210 180 150 120 90 60 30 0 Previous Revised North America Europe Pacific Rim China Rest of Asia C&S America Other Regions World 5-year forecasts for all regions have been downgraded with the most significant changes to our forecasts being in China and Europe. The world’s population will grow by 5.0%. where we are predicting a substantial increase of 35%.6%.5.

4 Average Substance Weights Substance weights will decline by an average 0. 36 PRIVATE AND CONFIDENTIAL .3.a.PER CAPITA TRENDS IN CORRUGATED PRODUCTION 2011 AND 2016 2011 Region Population (Mn) North America Europe Pacific Rim China Rest of Asia C & S America Other Regions World 457 780 200 1348 1906 493 1353 6538 Corrugated Production (Msm) 42933 49180 20816 50341 18450 12512 9144 203377 Per Capita Corrugated Production (m2) 94 63 104 37 10 25 7 31 Population (Mn) 479 786 201 1382 2041 525 1508 6922 2016 Corrugated Production (Msm) 46277 52954 22248 68639 26133 14395 10611 241257 Per Capita Corrugated Production (m2) 97 67 111 50 13 27 7 35 PER CAPITA TRENDS IN CORRUGATED PRODUCTION 2011 AND 2016 (M2) 120 100 80 60 40 20 0 North America Europe Pacific Rim China Rest of Asia C&S America Other Regions World 2011 2016 2.5. The table below summarises substance weight reduction forecasts for each region. arising out of the developments noted under sub-section 2.8% p.4.

8 GLOBAL CORRUGATED WEIGHT TRENDS AND FORECASTS 2006 TO 2016 g/m2 800 700 600 500 400 300 200 100 0 North America Europe Pacific Rim China Rest of Asia C&S America Other Regions World 2006 2011 2016 2.1% overall for the next 5 years will result in tonnage demand increasing at an average rate of 2.3 -0.4 -1.9 -0.a.6 2011 to 2016 % pa -0.5% p. below average area growth.5. 37 PRIVATE AND CONFIDENTIAL .6% p. compared with area growth averaging 3.4 -0..4 -2.0 -0.3 -0. Regional forecasts of tonnage demand are provided in the following table.a.3 -0.GLOBAL CORRUGATED WEIGHT TRENDS AND FORECASTS 2006 TO 2016 g/m2 Past Trend Region North America Europe Pacific Rim China Rest of Asia C&S America Other Regions World 2006 g/m2 665 537 652 717 601 599 581 625 2007 g/m2 665 534 650 703 601 598 579 622 2008 g/m2 655 531 648 689 599 594 576 617 2009 g/m2 636 527 644 682 596 590 573 611 2010 g/m2 636 524 641 675 593 585 571 608 2011 g/m2 636 520 638 665 590 590 568 605 2012 g/m2 634 515 636 652 588 587 566 600 2013 g/m2 632 511 633 639 586 584 563 595 Forecast 2014 g/m2 630 507 630 626 584 580 561 590 2015 g/m2 628 503 627 614 583 578 558 585 2016 g/m2 627 499 624 601 581 577 555 580 2006 to 2011 % pa -0.4 -0.7 -0. A reduction in substance weights of -4.8 -0.5 -0.5 Forecasts by Weight Tonnage demand will grow at 0.9% p.4 -0.a.5 -0.

9 3.6.6 2.4 2.2 2011 to 2016 % pa 1.8 2.2 0. In sub-section 2.3 6.1 Economic Issues Major downside vulnerabilities are Eurozone debt contagion. The main factors we examine in this section are:        Economic issues Political issues Monetary issues Vagaries of the weather Changing inventory levels The extent of packaging reduction Transit outer substitution 2.1. which can be summarised briefly as follows: 38 PRIVATE AND CONFIDENTIAL . we briefly summarised the downside risks and upside gains to our economic forecasts.3.2 0.5 2.6 -0.6 Assessment of Downside Risks and Upside Gains There are a number of factors influencing our forecasts that need to be examined when preparing upside and downside forecasts of corrugated production. Most of these represent both downside vulnerabilities as well as potential upside gains. a Chinese hard landing and slower recovery in the US.9 4. dependent on their likely future impact.4 2.1 9.7 4.9 2.GLOBAL CORRUGATED PRODUCTION TRENDS AND FORECASTS BY WEIGHT 2006 TO 2016 KT Past Trend Region North America Europe Pacific Rim China Rest of Asia C&S America Other Regions World 2006 KT 31189 25771 13249 21078 8572 6243 4536 110637 Forecast 2010 KT 27132 25364 13050 31770 10564 7137 5033 120050 2007 KT 30746 26305 13413 23832 9142 6487 4716 114640 2008 KT 29238 25707 13027 25487 9549 6640 4848 114497 2009 KT 26184 24085 12320 27784 9597 6691 4857 111518 2011 KT 27288 25554 13286 33484 10893 7380 5198 123083 2012 KT 27459 25320 13393 34455 11442 7451 5313 124833 2013 KT 27720 25527 13509 35792 12257 7649 5444 127897 2014 KT 28113 25790 13635 37531 13156 7859 5588 131673 2015 KT 28530 26080 13776 39355 14135 8073 5739 135690 2016 KT 28993 26401 13886 41268 15192 8303 5894 139937 2006 to 2011 % pa -2.7 0.

Excessive fiscal tightening in the USA and the need to reach an accommodation to avoid political gridlock over the “US fiscal cliff”. This decision has triggered widespread anti-Japanese demonstrations across China.  For most of these factors. in effect. 39 PRIVATE AND CONFIDENTIAL . However. particularly in China. but the effects would be largely contained within the region. these political risks and potential gains. notably from emergent markets. and the impact of depressed export markets on output levels. the downside risks appear to be far greater than the upside gains 2. with an assumption that an accommodation will be reach over the impending “fiscal cliff”. The Euro is currently under pressure from the Eurozone recession and further downgrading in its parity will reduce the competitiveness of imports. 2. The Japanese government’s decision earlier this month to nationalise three of the Diaoyu or Senkaku islands. a weakening of the Canadian Dollar would benefit Canadian box makers.   In conclusion. whilst interrelated with economic issues to some degree.3 Monetary Issues Changing currency parities will impact to some degree on regional demand patterns. which could adversely affect input costs. which are disputed territories claimed by China.   The impact of the Eurozone debt crisis spreading and acting as a brake on global economic recovery. threatening bilateral trade and China’s outbound tourism to Japan. This could be further exacerbated by rising wages lowering export competitiveness. Escalation of this dispute could seriously effect trade flows and output in the Asia Pacific but we view this as a localised issue. inflation and the rate of global recovery. The Canadian corrugated market has suffered with the high value of the Canadian Dollar against the US Dollar and this is expected to continue. delaying decisions rather than creating significant risks or potential gains. The main political downside risks and upside gains to our corrugated demand forecasts are:  The forthcoming Presidential election in the US.2 Political Issues Political vulnerabilities are small in relation to economic risks.6. which is. are small in relation to the economic issues outlined above. Clearly. The risks of geo-political instability in the Middle East and its impact on oil prices. Concerns that future growth potential in emergent markets might be overstated. all the indications are that future oil prices will be more stable than in the recent past. Taiwan and Japan.6. limited largely to automotive and electronics sectors. The possibility of domestic banking crises in emerging markets impacting on credit growth/contraction and investment.

However.4 Vagaries of the Weather Adverse weather has taken its toll but cannot be predicted Fresh foods and produce account for only 7. its share amounts to 22%. packaging reduction and transit outer substitution all represent both downside risks and upside gains Our forecasts assume that recent declines in inventory levels in the developed markets of North America. but all the indications are that the Australian Dollar will maintain its current value. the Thai floods. influenced by the extent to which retailers. but are clearly unpredictable. High Yen exchange rates are encouraging outward migration of manufacturing from Japan and are currently having some impact on export business. such as Central and South America. Since then. A depreciation of the exchange rate would greatly improve prospects for domestic manufacturing sector.6. 40 PRIVATE AND CONFIDENTIAL . Europe and Japan will not be recovered to their full extent. Significant downside risks for Oceania lie in the region’s close links with China and export ties with Europe. over the next 5 years.6. This could be an under or over estimate.6. adverse weather patterns and national disasters such as the Japanese tsunami. 2.6 Packaging Reduction Our forecasts for developed regions assume that packaging reduction will deflate corrugated demand by an average 1. The substitution from corrugated to RPCs may be understated.5% p.a. hurricanes in Central and South America. Mexican box makers have benefited recently from the low parity of the Peso against the US Dollar. 2. Again. this is expected to continue but a substantial strengthening of the Peso would adversely affect Mexican exports both to the US and further afield. We conclude that these changing currency parities are localised and relatively short term in their impact. droughts and flooding in Oceania and South Africa represent significant downside risks and upside gains. An increase in the Chinese Yuan exchange rate during 2011 and the early part of 2012 did little to quell opinion that it remained undervalued. research in the USA suggests that corrugated could make some inroads against returnables in the agricultural sector.Conversely. packers and corrugated suppliers react to austere market conditions and environmental/sustainability issues. 2. or indeed strengthen in relation to other currencies. this would represent an upside gain if this were not the case. but in some regions.0-1. there has been a reduction as China’s government reacted to a slowing of the economy and export trade. Conversely. representing a modest upside gain.8% of global corrugated demand.5 Changing Inventory Levels Assumptions concerning inventory levels. Accordingly.6. 2.7 Transit Outer Substitution Our forecasts assume little change in the market share held by corrugated in relation to competitive materials.

7 118.4 Low Likely outcome High SUMMARY OF GLOBAL UPSIDE AND DOWNSIDE FORECASTS OF CORRUGATED PRODUCTION – 2011 TO 2016 % CHANGE ON PREVIOUS YEAR 6 5 4 3 2 1 0 2011 2012 2013 2014 2015 2016 Low Likely outcome High 41 PRIVATE AND CONFIDENTIAL . with a low of 2. therefore. over the next 5 years compared with a low of 2.1 3.4 3.1 3.7 2015 2.3% p. and will continue to be. our concerns are.8 4.1 2012 0. a Chinese hard landing and a US slowdown.8 2016 2.8% p.3 4.a. By its very nature.8 Summary of Downside and Upside Forecasts Corrugated area growth forecasts are subject to prevailing business confidence levels. the major uncertainties relate to shortterm economic prospects: in summary. SUMMARY OF GLOBAL UPSIDE AND DOWNSIDE FORECASTS OF CORRUGATED PRODUCTION – 2011 TO 2016 % CHANGE ON PREVIOUS YEAR Annual % Change 2011 3.8 3. an assessment of the downside risks and upside gains noted above can be nothing more than subjective and dependent very much on the levels of business confidence amongst our respondents.3 3.a.9 2. our forecast of the “likely outcome” is not a mid-point estimate but nearer to our downside forecasts.1 2014 2.6 4.a. Our “likely outcome” forecast for global corrugated production is for growth averaging 3. 2.2.1 3.1% p. and a high of 4.5 4.5% p.9 2011-2016 % p. and a high of 4.9 4. Not surprisingly.0 4.0 2013 1.a.3 Index 2011=100 110. a European meltdown.6 3.6 123.6. Without doubt.a.4% p.a.

1 3.0 3.9 2011 – 2016 % p.3 7.3 142.5 1.7 -0.2 109.3 112.3 4.9 136.3 2.3 6.7 15.5 billion square metres: COMPARISON OF INCREMENTAL FORECAST – 2011-2016 % of 2016 Market 9.6 98.4 6.4 0.5 4.2 1. INDEX 2011 = 100 Region Low North America Europe Pacific Rim China Rest of Asia Central & South America Other Regions World 0.8 2011-2016 Index (2011= 100) Likely Low Outcome High 103.a.2 2.7 18.8 and 47.6 118.9 107.7 116.7 106.7 3.8 37.7 124. the incremental business generated by the global corrugated industry over the next 5 years will be anything between 21.1 3.0 135.0 118.5 3.5 % p.6 115.9 47.6 123.4 REGIONAL SUMMARY OF UPSIDE AND DOWNSIDE FORECASTS OF CORRUGATED PRODUCTION – 2011 TO 2016 INDEX 2011 = 100 Low Likely outcome High 160 140 120 100 80 60 40 20 0 North America Europe Pacific Rim China Rest of Asia C&S America Other Regions World In summary.0 101.9 145.3 2.4 7. Likely Outcome 1.1 2.5 1.3 141. 2.8 107.6 High 2.0 113.0 117.5 2.5 4.Summary 5-year forecasts for each region are contained in the following table: REGIONAL SUMMARY OF UPSIDE AND DOWNSIDE FORECASTS OF CORRUGATED PRODUCTION – 2011 TO 2016 AVERAGE % CHANGE 2011-16.2 110.4 7.a.9 BSM Downside forecast Likely outcome Upside forecast 21.3 42 PRIVATE AND CONFIDENTIAL .1 112.0 111.

the emerging regions of the world will increase their share from 47. this is significantly higher than the 18. there is more evidence of this as the real costs of “off-shoring” – involving freight logistics. there has been a steady and continued move away from developed to emerging markets.2.8 % of the additional business and around 6. Last year.7 Global Shifts in Business Migration The impact of business migration will be less than in the past with some evidence of “re-shoring”.1%. reflecting some easing in the level of migration. 43 PRIVATE AND CONFIDENTIAL . we reported on anecdotal evidence that migration from developed to emerging regions was starting to wane. However. The developed regions of the world will see their global share decline from the current level of 53. In contrast.9% in 2016.2% of the incremental business forecast. They will contribute only 20.0% share contained in last year’s edition. Relocation of manufacturing and assembly facilities to emergent regions because of their perceived cost advantages. they will generate 79. Historically. damage and problems relating to communications – become self evident.0% of this will be contribution by China. resulting from:   Changes in the balance of imports and exports between developed and emerging markets.0% to 52.0% of corrugated output to 47. This year.

3 20.3 5.1 0.8 100.8 10.0 3.0 1.INCREMENTAL BUSINESS GENERATED BY DEVELOPED AND DEVELOPING REGIONS ANALYSED BY REGION – 2011 TO 2016 MSM Region Developed Regions North America Europe Japan Oceania Sub Total Developed Developing Regions Pacific Rim (ex Japan) China Rest of Asia Central & South America Other Regions Sub Total Developing TOTAL 1006 18298 7683 1883 1349 30219 37880 2.3 20.7 48.2 INCREMENTAL BUSINESS GENERATED BY DEVELOPED AND DEVELOPING REGIONS ANALYSED BY REGION – 2011 TO 2016 MSM Developed Regions Developing Regions 20000 15000 10000 5000 0 hi na As ia pa n ia ro pe er ic O ce an Ja p Ja er ic a Am O th Eu Am of N or th im Pa ci fic R C &S R er R (e es t x eg C io ns an ) a 44 PRIVATE AND CONFIDENTIAL .0 Msm 3344 3773 426 118 7661 % 8.6 79.

a.3 7.2. with industrial and durables sectors holding a constant 43. When viewed in a global context. GLOBAL END USE MARKET PROSPECTS FOR CORRUGATED 2011.8 4.5 2. there are few discernible trends in the relative shares of the main generic market sectors.2% share.9 100. % SHARE 2011 Msm % 44. this applies in particular to the non-FMCG sectors. with fast moving consumer goods and fresh foods markets maintaining a 52.9 3.0 Msm 106956 18454 51411 52585 11851 241257 2016 % 44.8 100.5 FMCG Markets Fresh Foods/Produce Durables Industrial and Machinery Others TOTAL 90083 16013 43234 44268 9779 203377 GLOBAL END USE MARKET PROSPECTS FOR CORRUGATED 2011.9 3. but prospects in each region vary considerably.3 21.5 3. 2016 MSM 120000 100000 80000 60000 40000 20000 0 FMCG Markets Fresh Foods/Produce Durables Industrial and Machinery Others 2011 2016 The emergent regions of the world will continue to see a marked increase in their share of each main market sector. 45 PRIVATE AND CONFIDENTIAL . 2016 MSM.6 21. 3.8 4.8 Changing Pattern of End Use Demand Little change is evident in global end use prospects. where their current share is a little over half the total.3 7.5 3.1% share.3 21.0 2010-2015 % p.9 21.

0 100. ANALYSED BY MARKET – 2011 TO 2016 % SHARE Market Processed Foods Drinks Non Food Consumables Fresh Foods/Produce Domestic Appliances and Electrical Goods Durable Goods and Clothing Industrial and Machinery Others TOTAL Developed (%) 63.7 56.8 47.0 100.0 TOTAL % 100.0 100.6 45.2 52.0 100.0 TRENDS IN RELATIVE SHARES OF DEVELOPED AND DEVELOPING REGIONS.9 57.0 100.0 100.8 47.4 21.TRENDS IN RELATIVE SHARES OF DEVELOPED AND DEVELOPING REGIONS.1 42.4 50.7 24. ANALYSED BY MARKET – 2011 TO 2016 % SHARE Developed and Developing Regions by Market 2011 Developed and Developing Regions by Market 2016 90 80 70 60 50 40 30 20 10 0 Fo od s nF oo Do D rin dC me ks on sti F su cA re m s pp hF ab lia les oo nc ds es /P & ro Du El du ec ra ce ble tric a Go lG od oo sa ds nd Ind us Cl oth tria ing l& Ma ch ine ry Ot Pr he oc rs es se dF oo ds No nF oo Do D rin dC me ks on sti F cA su re m s pp hF ab lia les oo nc d es s/P & ro Du El du ec ra ce bl e tric a Go lG od oo sa ds nd Ind Cl us ot h tria ing l& Ma ch ine ry Ot he rs No Pr oc es se d 46 PRIVATE AND CONFIDENTIAL .4 54.2 53.0 100.9 2016 Developing (%) 40.2 52.5 44.1 41.6 49.0 100.0 100.5 55.0 2011 Developing (%) 36.0 Developed (%) 59.0 28.1 75.0 100.7 60.5 46.1 TOTAL % 100.8 47.3 44.8 50.0 100.0 100.0 100.6 78.9 58.5 53.0 100.0 100.0 100.3 75.3 39.0 71.2 49.9 24.

6 79. this change reflects the poorer prospects for export markets in emerging countries.2 Developing Msm 5690 4118 2726 1935 4165 3251 7422 913 30219 % 69.3% of the 7.0 100.0 100.7 6.8 55. The provision of attractive and innovative Retail Ready Packaging (RRP) will be a vital element in the development activities of corrugated suppliers intent on exploiting these sectors in developed and increasingly.7 billion square metres of additional business forecast to be generated. FMCG markets will generate 57.9 20.1 79.0 100. INCREMENTAL BUSINESS GENERATED BY DEVELOPED AND DEVELOPING REGIONS – ANALYSED BY MARKET – 2011 TO 2016 MSM Market Processed Foods Drinks Non Food Consumables Fresh Foods/Produce Domestic Appliances and Electrical Goods Durable Goods and Clothing Industrial and Machinery Others TOTAL Developed Msm 2488 715 1135 506 273 488 896 1159 7661 % 30.4 14.Over the next 5 years.1 10.0% share held by FMCG markets.0 100.6 85.0 47 PRIVATE AND CONFIDENTIAL .0 100.3 93.8 86.2 billion square metres.4 20. This contrasts with last year’s edition. Of this.2 70. and an increasing reliance on domestic consumer markets to generate growth. 49.8 29.9 89.0 100.2 13. compared with 41.0 100.1% will be in the industrial and durables markets. in emergent regions of the world.0 100. which reported a 37.1% in FMCG sectors. the additional business captured by emerging markets will amount to 30. In the developed regions of the world.8 TOTAL Msm 8179 4833 3861 2441 4438 3739 8318 2072 37880 % 100.2 44.

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4 2.0 3.3 GLOBAL BUSINESS MIGRATION FORECASTS 3. they will generate 79. from 203 billion square metres in 2011 to 240 billion square metres in 2016.2 2.7 3. distinguishing between developed and emerging regions. and they will contribute only 20.1 Global Summary The global market for corrugated will grow at an average 3. Some investment out of Japan into neighbouring countries following the tsunami of 2011.5 6. Some investment out of China into neighbouring countries but growing emphasis on the domestic Chinese market.0 2011-2016 % p.2 6.5% p.5 0.8 6.1 47.8 9.8 3.1% over the same period.8 24.9 5.4 7.1 100. notably India.8 5.2 3.6 28.0% to 52.5 10. The trends outlined in our last report are still very much in evidence:      An easing in the rate of business migration from Europe and the US to the Asia Pacific region. rather than exports.5 1.2 47.6 1.0% to 47.9% over the next 5 years.3 53. Growing investor interest in Asia. TRENDS IN RELATIVE SHARE OF DEVELOPED AND DEVELOPING REGIONS – 2011 TO 2016 MSM Region Developed Regions North America Europe Japan Oceania Sub Total Developed Developing Regions 2011 Msm 42933 49180 13143 2591 107847 7673 50341 18450 12512 6553 95530 203377 % 21.1 6. Msm 3344 3773 426 118 7661 1006 18298 7683 1883 1349 30219 37880 46277 52954 13569 2709 115508 8679 68639 26133 14395 7902 125749 241257 Pacific Rim (ex Japan) China Rest of Asia Central & South America Other Regions Sub Total Developing TOTAL The developed regions of the world will see their global share decline from 53.a.0 Msm 2016 % 19. generating an extra 38 billion square metres of business.3 52.9 3.2 21.9 1.0 100.5 Inc. The following table shows forecast changes in the share held by each region and the incremental business generated by each over the 5-year period. 1.a. Continued West to East migration in Europe.1 24. 49 PRIVATE AND CONFIDENTIAL .5 1.8% of the business and almost two-thirds of this will be contributed by China.0 3.2% of the incremental business forecast. The developing regions of the world will increase their share from 47.6 0.

Despite these concerns.3 Europe Over many years. the manufacture of toiletries and homecare products destined for the US market is also increasing. targeted both at exports and the growing domestic market.2 North America While traditionally the North American market has suffered from a worsening trade balance with the Asia Pacific region. and emergency freight when there are delays all add up. Within the Eurozone region. the impact of moves towards fiscal union and. this is now moderating somewhat. resulting from the devaluation of the Peso. the ultimate membership of the Euro club. a significant shift from west to east. Europe has suffered continued business migration to the Asia Pacific region and. indeed. its impact in the future will be somewhat less than that experienced in the past. the impact of business migration on corrugated demand in developed vs. there are far too many concerns over the state of each economy. although the UK automotive industry. 50 PRIVATE AND CONFIDENTIAL . because of rising freight costs and also because of an improvement in Mexican labour competitiveness. More importantly. within Europe itself. is becoming the major driver of corrugated demand. We conclude that. 3. whilst there continues to be migration from North America to emerging regions of the world. narrow. Recently. The price per piece is substantially cheaper but freight. A recent study suggests that 50. In the longer term. there have been further losses due to major US manufacturers consolidating production in the US. Europe has certainly not attracted its fair share of inward investment. This trend is also evident in Canada where there is some evidence of shipping in bulk and repacking locally. migration out of Europe is being held back to some extent by the lack of any propensity to invest in the current uncertain climate.While these trends are clearly evident. damage. Production outside of the Maquila market. with the sorry state of most of its leading economies. Respondents appear to be more aware of recent reversals in “off shoring”. the future parity of the Euro. cost differentials between developed and emerging economies will. Mexico continues to benefit from inward investment from the US and Japan. and some business has been regained from China. logistics. outside the Eurozone. has been a notable exception. In the area close to the US border. 3. emerging markets will be less than it has been in the past. with investors questioning future levels of final demand and concern over high inventories. inevitably.000 jobs have been brought back into the US as people become aware of the total cost of “off shoring”.

moving up the value chain. The impact on corrugated demand will be a continued migration of manufacturing in electronics.The situation in the Central and Eastern European economies is somewhat different. through movement of these sectors inland and to the west. As a result. Companies are also migrating within China from locations in the south and east. India and other parts of Asia. and this will certainly influence future levels of direct foreign investment. The major conclusion to draw from shifts in business in Europe is the migration from east to west. these sectors in Central and Eastern Europe will generate an additional 510 msm of business. However. Both automotive and electronics companies have become more aware of the need for supply chain security following disruption from the earthquake and tsunami in 2011. These developments reflect moves to concentrate more on domestic as opposed to export markets. in particular. to inland and western regions to take advantage of lower wage costs and closer proximity to 3rd. 3. electronics and electrical equipment. This will involve an outward migration to China. clothing. despite their reliance on exports to Eurozone markets. The Central European economies. automotive and industrial machinery. the concentration of expertise in high-tech sectors such as electronic components production is likely to be spread more widely in the future. due to the need to disperse geographically concentrated sectors. have benefited from the migration of high skilled manufacturing activities in the electronics. Industrial and consumer durables markets in Western Europe will lose 93 msm of business over the next 5 years. The impact for corrugated will be relocation of demand from low-tech industries in the south and the east. 3. plus some net losses to newly-emerging Asian economies. causing a shift to high-end manufacturing and services. in contrast. the automotive sector is currently suffering from low demand levels and high inventories throughout Europe as a whole.4 Pacific Rim In Japan. The government has recently announced measures to encourage foreign investment into high-end manufacturing and energy generation. business migration is generally in the outward direction for reasons of cost and proximity to market. hit by lower exports. luggage. 51 PRIVATE AND CONFIDENTIAL .5 China Rising labour costs continue to encourage outward migration of labour and resourceintensive industries such as textiles.and 4th-tier cities. which are currently in the doldrums. China and India are important locations for Japanese automotive production and sales operations. domestic appliances and automotive sectors.

There is growing interest in direct foreign investment in Cambodia and Myanmar with movement of low-tech labour-intensive activities such as textiles expected to lead the way. The net impact of business migration on corrugated demand will be mixed. However. In Brazil. including Vietnam. the costs of doing business. The incentives for investment in local production are also helping to generate investment in automotive. Foxconn is looking to expand their production away from China into Indonesia and Myanmar and possibly to other parts of Asia. Hyundai. new investments in automotive-related products include expansion of components sourcing. Canada. Some flat and LCD TV production has been moved out of Thailand to Vietnam and there is evidence of other low technology production migration. which is likely to result in some inward investment in manufacturing and some restructuring of cross-country operations to improve supply chain security across Asia. including Taiwan and South Korea. will act as a brake on these developments. have benefited in recent years from inward migration of low-tech manufacturing of textiles. However. and relatively low labour rates. Nissan Motor. lack of infrastructure and rising labour costs. In the electronics sector. 3.3. foreign investment is being encouraged by a favourable exchange rate. Indonesia and India. to some extent. LG and Samsung have announced investments in mobile ‘phone manufacturing. All these moves indicate considerable investor interest in the ASEAN region. with investments targeted to serve the growing local consumer markets. a growing middle class. In India. there will be marginal moves from high-wage economies towards the newer emerging low-wage economies such as Cambodia and Myanmar. VE Commercial Vehicles. white goods. resulting in inward migration from Japan and two-way movement between countries within and outside the region. significant infrastructure improvements will be needed to support such investments. brown goods 52 PRIVATE AND CONFIDENTIAL . and to establish a base for supply throughout Central and South America for supplying the US and. Ford and Skoda. are expected to recover from 2014 onwards. with the dispersal of some electronics and automotive production.7 Central and South America Most of the larger Central and South American economies continue to attract direct foreign investment in manufacturing. but is expected to show signs of accelerating again as world trade recovers. notably in India. to take advantage of lower-cost production. The natural disaster of the tsunami in Japan has caused considerable disruption to electronics and automotive production operations. In addition. Vietnam and Indonesia. including basic electrical appliances and printers. footwear and electrical equipment. engines and assembly operations by a number of companies including Volkswagen. notably in India. investors are being quite cautious towards new projects in response to the current downturn in world trade. The rate of investment has slowed somewhat due to the slow down of the global economy. in the short term. Whilst.6 Rest of Asia Emerging nations with low wage costs. levels of direct foreign investment in the region.

Local businesses as well as multinational companies are assessing opportunities for relocating manufacturing facilities. favourable land prices and investment incentives. the government is attempting to discourage outward investment in low-tech sectors such as shoes. Guatemala. textiles and clothing. as well as some currency benefits. Costa Rica. modern infrastructures. as a result of high exchange rates. on the assumption that the Australian Dollar will maintain. El Salvador and Chile are gaining US business that had hitherto been supplied by China. indirect outward migration is occurring through loss of domestic manufacturing business to overseas suppliers. Some movement of multinational consumer goods and electrical appliance manufacturing into the Middle East is evident. multinationals are assessing potential for establishing low cost manufacturing facilities for regional operations. or perhaps increase. although poor infrastructure and political unrest could well limit these opportunities. Other countries in Central and South America such as Mexico. encouraged by low energy costs. 3. its value. Honduras. 53 PRIVATE AND CONFIDENTIAL . In addition. Similarly. as a result of lower freight rates and labour costs. across North Africa.8 Other Regions In Australia.and electronics sectors.

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6 9.0 2011-2016 % p.9 3. fresh foods will generate only 6. with forecasts of changes in its relative share and with additional commentary on end use developments within each region.1 4. 4.9 9. whilst emergent regions have a major share of industrial and durables sectors.6 9.2 9. Of the 38 billion square metres of additional business forecasts for the next 5 years.9 100. 3.5 21.4 GLOBAL MARKET PROSPECTS 4.9 3. changes are rather more significant when examined at a regional level in subsequent sub-sections.9 7.8 4.9 4. However.a.3 2.2 Summary of Global Market Prospects GLOBAL END USE MARKET PROSPECTS FOR CORRUGATED – 2011 TO 2016 MSM AND % SHARE 2011 Msm Processed Foods Drinks Non Food Consumables Fresh Foods/Produce Domestic Appliances and Electrical Goods Durable Goods and Clothing Industrial and Machinery Others Total 49306 20840 19937 16013 19160 24073 44268 9779 203377 % 24.6% by industrial and durables sectors.1 Introduction This section examines the following end use markets on a global basis:         Processed foods Drinks Non-food consumables Fresh foods Domestic appliances and electrical goods Durable goods and clothing Industrial & machinery Other sectors For each market consumption of corrugated is quantified for each region.6% will be generated by FMCG markets and 43.8 21.5 Very little change is expected in the relative share of each major end use when viewed in a global context.2 10.8 10.8 4.4% of the additional business.3 3.5 3.6 2.8 11.0 Msm 57485 25673 23798 18454 23599 27813 52585 11851 241257 2016 % 23.4 11. 44.8 100. 55 PRIVATE AND CONFIDENTIAL . This is because developed regions of the world hold a greater share of the FMCG sectors.8 7.

0 4.7 9. are very similar to those contained in last year’s edition.8 10.2 6. % SHARE Region Processed Foods Drinks Non Food Consumables Fresh Foods/Produce Domestic Appliances and Electrical Goods Durable Goods and Clothing Industrial and Machinery Others Total Msm 8179 4833 3861 2441 4438 3739 8318 2072 37880 % 21.6 12.4 11.1 Processed Foods – Global Summary Products included:      Biscuits. confectionery and snack foods Dried foods and beverages Canned and bottled foods Frozen and chilled foods Dairy products 56 PRIVATE AND CONFIDENTIAL .These growth patterns.5 100.3 Processed Foods 4. summarised below.9 22. GLOBAL END MARKET PROSPECTS FOR CORRUGATED 2011 TO 2016 INCREMENTAL BUSINESS MSM.3.0 5.

9% of the additional business generated.7 6.0 2011-2016 % p.8 6. growth in the middle classes and inward investment by multinationals.8% share held by developed regions.5 18.a.2 7. somewhat lower than the total corrugated growth of 3.1 Corrugated demand for processed foods will grow at an average 3.5 11.0 1.3 3. investment in the local retailing infrastructure.6 14.4 1. The developed regions of the world are now relatively mature and offer below average growth.0 Msm 15262 10465 4008 14473 4948 8456 4929 13385 5622 3796 57485 2016 % 26. The share of the processed foods sector held by emergent markets stands at 36.6 23. as well as moves to smaller households. 2016 MSM. 57 PRIVATE AND CONFIDENTIAL .a. Consumption patterns are influenced by dietary and health issues. reflecting the less developed grocery retailing markets and the importance of industrial and consumer durables exports in emergent markets.0 25.1 7.3 9. Emergent markets are showing better growth. despite being fairly recession proof. 1.9% and the Asia Pacific region will account for 53.8 7.0 18.6 100.8 7.a. Over the next 5 years.END USE MARKET PROSPECTS FOR CORRUGATED – PROCESSED FOODS 2011. with trends towards western style foods. emergent markets will increase their share from 36.4 3.4 3. over the next 5 years. which offer high levels of convenience and consumer choice.7 8.2% compared with the 63.7 3.1% p.5% p. % SHARE Region North America Western Europe Central & Eastern Europe Sub Total Europe Pacific Rim China Rest of Asia Sub Total Asia C&S America Other Regions World 2011 Msm 14266 9749 3369 13118 4692 5799 3433 9233 4779 3218 49306 % 28. notably “food-on-the-go”.5 7.5 100.5 2.2 8.7 9.6 9. Best prospects continue to be centred on frozen and chilled variants and other convenience foods.8 26.8 6.9 19.2% to 40.

END MARKET PROSPECTS FOR CORRUGATED – PROCESSED FOODS – 2011 TO 2016 INCREMENTAL BUSINESS MSM. The Mexican market is showing much stronger growth.6 Msm 14473 2016 % 25. and there is evidence that consumers are economising on food. and growth is now forecast to be slightly below average over the next 5 years. 58 PRIVATE AND CONFIDENTIAL .3. 1. Milk yields in the US are also down as a result of the drought. The processed food market is also particularly subject to pressures from retailers for packaging economies.5 2011-2016 % p. and grain prices are being adversely impacted by the effect of the droughts during 2011.8 10. buying smaller portions to avoid wastage and buying fewer fast foods.4 The share of processed foods in total corrugated consumption in North America fell in 2011.7 7.1 100.9 Msm 15262 2016 % 26. 2.8 16.3 Processed Foods – Europe Region Europe 2011 Msm 13118 % 26.3 50.2 8. % SHARE Region North America Western Europe Central & Eastern Europe Sub Total Europe Pacific Rim China Rest of Asia Sub Total Asia Central & South America Other Regions World Msm 996 716 639 1355 256 2657 1495 4152 843 577 8179 % 12.2 2011-2016 % p.1 32.0 4. are gaining share. fuelled by an increasing population and rising income levels.0 Processed Foods markets in Europe are fairly recession proof and so offer above average prospects for corrugated. such as quick-cook noodles and pasta.a.6 3. 4. cereals and snacks are all weak. Both the US and Canadian markets are mature. Non-traditional convenience foods.a. restricting the growth of the yoghurt and cheese markets. Markets for pasta.2 Processed Foods – North America Region North America 2011 Msm 14266 % 28.5 18.3 7.3.

smaller households. 59 PRIVATE AND CONFIDENTIAL . as time deprived consumers look for easy meal options. especially in the more basic categories such as rice. Health foods are gaining ground across the region and are expected to benefit from an aging population. Limited disposable income has had some impact on the rate of displacement of frozen by chilled foods. an aging population plus smaller families and sluggish economic outlook increasingly limit growth for processed food products. obesity and dental care – with low sugar content formulations growing steadily. ready-made sandwiches and other ‘food-on-the-go’. again largely for health reasons – diabetes. Whilst canned. Japanese imports are popular in Taiwan but lack of supply and concerns over radiation affected sales during 2011. Despite this.1 In Japan. Premium products are showing above average growth. The 2011 tsunami caused a spike in sales of processed food as consumers stocked up on essential foods. bottled and dehydrated convenience foods are benefiting from their relative value for money. Moderate growth is expected in packaged food demand in Taiwan as economic growth picks up.a. Private label brands are gaining share. In South Korea.6 2011-2016 % p. 4. sales of chocolate confectionery continue to grow amongst consumers who are reluctant to sacrifice taste and indulgent pleasures. Sales of sugar confectionery across Europe are flat. but shortly after sales reversed as consumers de-stocked. a higher proportion of women entering the workforce and growth in supermarkets/hypermarkets are driving up demand for frozen and processed foods. Sales of snack foods are growing steadily with the displacement of sweet snacks by savoury products.4 Processed Foods – Pacific Rim Region Pacific Rim 2011 Msm 4692 % 9. Both frozen and chilled foods are benefiting from the trend towards meal occasions at home at the expense of eating out. 1.5 Msm 4948 2016 % 8. vegetable and seed oil. as a result of greater emphasis on quality combined with value for money. with most of the growth in corn-based products. pasta. with demands for potato-based snacks remaining flat. notably for ready meals and pizzas. The reputation of major Taiwan food producers’ was seriously dented in 2011 when dangerous levels of industrial plasticiser were found in a range of food and drinks products.Biscuits.3. frozen and chilled foods still provide the best growth potential. cakes and bakery products are suffering from dietary concerns and a trend from bread towards more convenient forms – notably breakfast cereals.

3. dairy products. 7. 4. while in Malaysia sectors performing well include meal replacements and pasta. Frozen foods is now a highly developed fast growing modern industry with on-going investment in capacity expansion at the two largest producers: San Quan and Synear. greater affluence and an increasing number of single person households. bakery and prepared meats.8 Consumers are increasingly demanding processed foods for convenience.a. canned foods. Indonesia is currently the largest and fastest growing market for packaged food and drink in ASEAN. Convenience foods.leading to over 900 different products being withdrawn from retail outlets in Taiwan. In Thailand. meal replacements and soup.0 Msm 4929 2016 % 8. In Indonesia. Costa Coffee (UK). Foreign companies continue to expand their presence through acquisitions and joint ventures. breakfast cereals. 60 PRIVATE AND CONFIDENTIAL .5 Processed Foods – China Region China 2011 Msm 5799 % 11. meat and eggs. SPR and UBC Coffee (the latter two being Taiwanese). while Malaysia and Singapore have the most developed markets. 7. dried foods.6 Processed Foods – Rest of Asia Region Rest of Asia 2011 Msm 3433 % 7. but growth is moderated by rising input costs.3. Smaller households are driving a trend to smaller pack sizes. Mengniu and Arla have signed a framework agreement for investment in a dairy technology cooperation centre. fast growth is reported in baby foods.5 Processed foods is an important and growing sector for corrugated in ASEAN and India. only 6% of perishables in India are processed giving significant scope for expansion in processed foods with a growing middle class. such as ready meals. 4. japan and South Korea but the longer term impact appears to have been contained.8 Msm 8456 2016 % 14. chocolate confectionery.6 2011-2016 % p. snack foods. In Singapore. sauces and dressings are becoming increasingly popular as lifestyles change with urbanisation. rapid urbanisation and a young population. snack bars. dried foods and ready meals offer the best growth potential. which are also popular amongst low income consumers who may not be able to afford larger pack sizes. Other sectors showing high growth include health foods. frozen foods. rising incomes.a. instant noodles and sandwiches are all showing robust growth. Nestlé recently acquired Yinlu Foods and Hsu Fu Chi. Supply side improvements will help to drive this trend. along with the number of coffee shops and presence of global chains such as Starbucks (USA). In India. Exposure to western style culture and cuisine is encouraging a move away from traditional diets to dairy products.7 2011-2016 % p. frozen foods. Coffee drinking is booming. China.

8 2011-2016 % p. but the continued importance of street markets and corner shops is a limiting factor. with less eating out and more eating in the home. growth in incomes. Most of the larger. 4. The most important sectors in order of size are meat. packaged foods consumption has remained resilient during the economic slowdown. due to price-based promotional activities. food and beverage processing is the second largest industry in Brazil. In South Africa. Private label brands are increasing their share.3 Brazil accounts for almost 60% of the market for corrugated for processed foods in Central and South America and after the oil industry. dried fruit. Chile and. The strong growth in mass grocery retailing outlets in these countries is generating above average growth in demand for Retail Ready Packaging. Kraft and Nestlé.4 In Oceania. the emergence of a middle class demanding more sophisticated packaged food products. dairy. Brazil. to a lesser extent. Columbia are also expanding their exports of processed foods to North America. 61 PRIVATE AND CONFIDENTIAL . The biscuits sector is showing particularly strong growth. 4. and.5 Msm 3796 2016 % 6. Increasing demand for convenience will influence product formats. we expect demand for corrugated for processed foods to be above average in Central and South America.a. with recent inward investment by major multinational producers. and there is not such a strong young element in population growth.a. dairy products and bakery products. where the processed food market is maturing. 3.7 Processed Foods – Central and South America Region C&S America 2011 Msm 4779 % 9. more industrialised countries in Central and South America are seeing strong growth in demand for packaged goods. 3. canned fruit and vegetables and chocolate confectionery.Growth prospects are attracting inward investment by multinationals such as Unilever.3. the Far East. coffee. in particular.6 2011-2016 % p. Convenience and health are key factors underpinning demand. compared with the overall growth of corrugated within the region.3. Global players are increasing investment in manufacturing in canned fruits and vegetables. offsetting more constrained spending. The major exception is Chile. volume growth in packaged foods sales is higher than value growth. Europe and. fuelled by population growth. increasingly. oil and fats.8 Processed Foods – Other Regions Region Other Regions 2011 Msm 3218 % 6. Overall.7 Msm 5622 2016 % 9.

6 100.7 5.2 5.1 Drinks – Global Summary Products included:  Beer and soft drinks  Wines and spirits  Liquid milk and fruit juices END USE MARKET PROSPECTS FOR CORRUGATED – DRINKS – 2011. Saudi Arabia is actively promoting inward investment in processed food operations by major companies in a bid to develop a broader food manufacturing base.1 46.a.5 22.2 2.3 17.9 14.7 25.8 7.9 39. well above the growth for corrugated in total.5 29.0 Msm 3061 3773 1311 5084 3472 7674 4141 11815 544 1698 25673 2016 % 11. In the important soft drinks sector.3 Demand for corrugated in drinks markets is set to grow at an average 4.Expansion of supermarkets and hypermarkets in the Middle East is boosting sales of packaged foods while increasing price competition. % SHARE Region North America Western Europe Central & Eastern Europe Sub Total Europe Pacific Rim China Rest of Asia Sub Total Asia Central & South America Other Regions World 2011 Msm 2777 3579 1137 4717 3279 5276 2888 8163 470 1434 20840 % 13. Efficient cold chain distribution and storage infrastructures are helping to promote sales of frozen and chilled foods.9 16.5 1.1 6.3 13. whilst wine and soft drinks are increasing share.6 15. emphasis on healthy drinks and increasing concerns over dietary issues are creating strong growth in low calorie drinks and bottled water.1 2. Niche products such as energy drinks. 2. Notwithstanding this. 4. are of course subject to weather patterns. The various sub sectors of this market.5 7.8 13. stimulated further by government taxes on high sugar content drinks in the USA and Europe.4 Drinks 4.1 7.9 1.0 2011-2016 % p. 2016 MSM. 62 PRIVATE AND CONFIDENTIAL . notably beer and soft drinks. spirits and beer are losing share in both developed and emergent markets. ready-to-drink teas.3 6.4 4.3% p.0 1.1 19.a.0 3.0 2.9 100..7 3.4. vegetable juices and low alcohol content beers offer good growth potential but from a low base.

but imports are gaining share and now account for more than half of consumption. US beer production dropped in both 2011 and 2012. In Mexico.Moves to shrinkwrap in some regions such as North America are creating some downward pressure. Consumption in Canada is also increasing.0 4.5 100.9 75.6 1. Wine is increasing its share of the alcoholic drinks market throughout North America.0 3.3 Msm 3061 2016 % 11.3% of all the corrugated used for drinks. the Asia Pacific region will contribute a substantial 49.9 4.6% of the additional business forecast as indicated below.6 4.2 Drinks – North America Region North America 2011 Msm 2777 % 13.6 7.a.0 49. 63 PRIVATE AND CONFIDENTIAL . Over the next 5 years. but overall these markets continue to offer good growth for corrugated. due partly to some recovery from poor market conditions for beer and carbonated soft drinks in Canada and the US in 2011. 2. but is losing share to wine throughout the region. and consumption and exports are growing steadily. beer accounts for almost 80% of alcoholic drinks consumption.6 25.0%. and Canadian production is also virtually static. The relatively low share held by the developed regions is influenced very much by the North American market which represents only 13. END MARKET PROSPECTS FOR CORRUGATED – DRINKS 2011 TO 2016 INCREMENTAL BUSINESS MSM.5 5. The share of the drinks market held by the emerging regions of the world currently stands at 52. Wine consumption is much lower in Mexico – less than 3% of the alcoholic drinks market. and continues to grow as a result of a rising population and income levels. but is growing rapidly. % SHARE Region North America Western Europe Central & Eastern Europe Sub Total Europe Pacific Rim China Rest of Asia Sub Total Asia Central & South America Other Regions World Msm 284 194 173 367 193 2398 1253 3651 74 264 4833 % 5. The US is the fourth largest wine producer in the world.9 2011-2016 % p. Beer dominates all three North American alcoholic drinks markets.0 The growth in demand for corrugated in the North American drinks market is expected to be slightly above average between 2011 and 2016.4.

5 Sales of alcoholic drinks in Europe are influenced by health concerns and public policy. However. A number of US states and municipalities have introduced ‘soda taxes’ in response to growing concerns about obesity and links to sugar based drinks. Sales of liquid milk are stable.4. this trend is offset by a move towards packaged beers for take-home consumption. have seen only marginal growth. in Russia. 1. whilst particularly dependent on weather patterns. despite widespread price reductions arising out of over supply.6 Msm 5084 2016 % 19. Bottled water and juices are gaining share throughout the region. with a decline in domestic consumption offset by a modest increase in exports. with significant downgrading to larger format economy packs. Production of wine increased marginally last year. This is particularly the case in Eastern Europe where. The carbonated soft drinks markets in Canada and the US are fiercely competitive. the prospects for corrugated in the European drinks industry are slightly below average. which accounts for 25% of European consumption. 64 PRIVATE AND CONFIDENTIAL .Spirits are losing share throughout the region. Beer sales are suffering from an apparent move from high quantity/low cost products to more expensive drinks sold in smaller quantities. These issues are resulting in rising duties and debates over minimum pricing per unit of alcohol.8 2011-2016 % p.3 Drinks – Europe Region Europe 2011 Msm 4717 % 22. but. in both the US and Canada. particularly if this trend spreads to other European countries. there have been further moves to lighter weight packaging and shrinkwrapping for bottled water. notably in Germany. The market leaders continue to focus on the development of functional and diet drinks to stimulate demand. the minimum price of vodka will increase by around 60% over the new two years. Niche speciality products such as energy drinks and iced tea offer the best growth potential. Sales of soft drinks. As a result. 4. Sales of juices are flattening off as a result of high fruit juice prices. The introduction of sweet and soft drinks taxes in France and Denmark will impact future demand levels.a. whilst sugar-free formulations continue to steadily increase share.

China is the world’s largest importer of wines from the French Bordeaux region. the earthquake had a positive impact on soft drinks demand during 2011. 65 PRIVATE AND CONFIDENTIAL . and gaining access to Tingyi’s distribution network.a. Consumption of beer in South Korea and Taiwan is growing by 1% p. however. PepsiCo entered into an alliance with local food and beverage company Tingyi. In 2011. China’s beer market is growing at a steady rate.4 Drinks – Pacific Rim Region Pacific Rim 2011 Msm 3279 % 15. 7.1 Moderate growth in non alcoholic beverage consumption is forecast across the Pacific Rim. swapping bottling operations for equity. fruit/vegetable juices and bottled water. Brewers have responded by introducing sugar free beers low malt beer. with changing tastes.a. Japanese beer sales have been dampened by health concerns and consumption is declining by about -1.9 2011-2016 % p. which will impact mainly on on-trade beer sales. a producer of speciality drinks.4.0% p.5 million kilo litres in 2012. with targeted sales of 51. 4. with an increasing share of imported premium beers.8 Demand for soft drinks continues to grow rapidly. Road Traffic Safety law amendments were introduced to address problems with drink driving. Less healthy soft drinks such as carbonates. Internationally established brands rather than local producers will continue to benefit from this. rising incomes and dynamic development of healthy beverages such as ready-to-drink tea. In 2011.5 Drinks – China Region China 2011 Msm 5276 % 25. In South Korea and Taiwan. Leading players are actively seeking acquisitions and mergers. Rapid growth is also expected in non-alcoholic beers. Wine and spirits consumption is influenced by the desire to demonstrate wealth and sophistication. Hangzhou Wahaha is reported to be looking for global acquisitions to build overseas drinks distribution networks. vegetable juices and bottled green tea. and are not performing so well. there is a trend towards premium products and increasing consumption of bottled carbonated water. Wine sales are expected to gain as wine becomes more affordable. Detection of plasticiser in some soft drinks in Taiwan in May 2011 had a short term negative impact on Chinese sales.a.a. In Japan.4. Growing interest in healthy eating has helped to drive up sales of health drinks including bottled water. The market is extremely price competitive and very low margins will encourage consolidation to improve profitability. In March 2012.5 2011-2016 % p.4.3 Msm 7674 2016 % 29.7 Msm 3472 2016 % 13. 1. Nestlé acquired a majority stake in Xiamen Yinlu Group. with concerns over radiation leading to significant growth in bottled water demand. which grew by 50% in 2011.

and sales of both beer and soft drinks have also been affected by the withdrawal of a Federal tax exemption in 2011. and sluggish European markets. sports and dietary drinks are benefiting from the growth of middle class consumers. imports are increasing their share of the market. Branded functional. 7.3 Msm 544 2016 % 2. Sales of alcoholic drinks in Pakistan. following a -2. Beer production was up by more than 3% in 2011. Thailand and the Philippines. while in Thailand growth will be limited by government efforts to cut alcohol consumption.9 Msm 4141 2016 % 16.a. assisted by the particularly warm summer weather.4. Smaller local brewers are losing share to the major national brands. 66 PRIVATE AND CONFIDENTIAL .1 2011-2016 % p.1 2011-2016 % p. A leading brewery in Argentina has recently launched a non-alcoholic beer. Again. reinforced by a number of investments by major players. but Argentine exports of bottled wines have suffered both from the effects of inflation on competitiveness. There has been little sign of any improvement in 2012. premium beers are gaining share. Exports of wine from Brazil have continued to grow strongly.7 Drinks – Central and South America Region Central & South America 2011 Msm 470 % 2. 3. Beer sales in Chile and Argentina increased by 4% in 2011. Alcoholic drinks are often aspirational purchases and rising incomes as well as reductions in import tariffs will make imported brands more affordable. Health concerns are driving up sales of fruit and vegetable juices. in particular Indonesia.4. Indonesia and Malaysia are limited by their Muslim populations.0 Brazil accounts for 60% of corrugated consumption for drinks in Central and South America. In India. wine consumption is gaining share from beer. carbonated drinks are gaining popularity with innovation in pack sizes making products more affordable. 4.4. However. In the Philippines. Strong growth is forecast for beer consumption in India and Vietnam. Beer is by far the largest Brazilian alcoholic drink market followed by spirits. and premium brands are gaining share.5 Robust growth continues in the soft drinks sector across most countries.0% drop in 2011. Kirin of Japan and Carlsberg’s acquisition of Hanoi Beer and Beverages. slightly higher than its share of processed foods. but consumption of wine is growing strongly.6 Drinks – Rest of Asia Region Rest of Asia 2011 Msm 2888 % 13. Vietnam is benefiting from inward investment including PepsiCo of USA. functional drinks and bottled water.a. on the downside.

While most is sold in bulk. 3. Recent investment in beverage can production is likely to result in an increase in the share of lighter weight packaging and a growth in shrinkwrapping.8bn litres of which 3bn litres was beer. fruit juices.6 2011-2016 % p. Ready-to-drink tea products are also performing well. with consumers being more cautious in their buying habits during the slowdown. New Zealand is following a similar trend with declining beer consumption.0% per annum. Growth is affected by the economic outlook.2mn litres. an increase in the share held by imported premium beer and a switch to wine consumption. Bottled wine exports from Chile were also down by about -3. 67 PRIVATE AND CONFIDENTIAL . Sales of carbonated soft drinks in 2011 slowed in Brazil. Consumption is growing by around 2. slightly up on the previous year but lower than in 2010/11. Wine consumption increased by 2% in 2011/12. A growing proportion of wine is shipped in bulk.a. bottled wine sales are reported to have performed well in the first three months of 2012. and actually fell by -1. with bottled wine now accounting for just 50% of total exports. up 41mn litres from 2011.4 In Oceania carbonated drinks are losing share to bottled water. with all sectors showing positive gains. Increasing health consciousness is influencing soft drinks consumption in Saudi Arabia with growing demand for bottled water. non carbonated health and sports drinks. helped by low prices and abundant supplies. with increasing volumes shipped to East Africa. Low alcohol and premium imported beers are gaining share.9 Msm 1698 2016 % 6. South African wine production in 2012 is estimated at 872. Soft drinks consumption in South Africa slowed during 2011 as sales of carbonated drinks fell back. 4. but exports of wine in bulk to China are increasing. and low calorie carbonated beverages.0% in Argentina.4. Constraints on spending and health concerns have encouraged a switch to tap water. growth prospects are better for juices. Australian beer consumption is falling due to health concerns and stricter drink driving laws.8 Drinks – Other Regions Region Other Regions 2011 Msm 1434 % 6. Russia and Japan. low calorie and functional drinks. following inflated growth in 2010 due to the world cup competition.0% in 2011. Wine exports from Australia in 2012/13 are expected to reach 712 million litres. Total alcoholic drinks consumption in South Africa was 3. Rising penetration of supermarkets into rural areas will help to drive growth in the future. but in Argentina the lack of investment funds for new filling lines is providing some protection from pack substitution. bottled water. but the market in Chile has continued to grow.In Chile. and the industry has not recovered from the effects of the recession and the earthquake in 2010. In all three countries. wine consumption has been falling for years.

7 5.0 20.9 100.1 5. 2016 MSM.5.7 30. but corrugated demand continues to increase in some Asia Pacific countries.0 2011-2016 % p.4.5 0. in line with the total corrugated market.0 100. Global pharmaceutical companies are currently contending with a large number of drugs coming off patent.0 Msm 6347 3730 1184 4915 2150 4269 3033 7302 1686 1398 23798 2016 % 26.a. increased spending on health insurance and increased government spending on health care. 68 PRIVATE AND CONFIDENTIAL .6% of corrugated demand in this sector. for obvious reasons.6 Corrugated demand in non-food consumables markets is forecast to grow at 3. Health and beauty products offer the most promising growth driven by aging populations. creating increased cost pressures and a drain on resources.6 2.1 6.3 3. The global cigarettes and tobacco sector is in long-term decline.5 7.1 21.6 25.6% by 2016.1 Non-Food Consumables – Global Summary Products included:     Health and beauty products Household products.9 10.5 7.2 2. Emergent markets account for only 39.5 Non-Food Consumables 4.a.7 15. % SHARE Region North America Western Europe Central & Eastern Europe Sub Total Europe Pacific Rim China Rest of Asia Sub Total Asia Central & South America Other Regions World 2011 Msm 5849 3325 1013 4338 2051 2980 2114 5094 1413 1192 19937 % 29.7 9.6 3.9 12. but this is forecast to grow to 44.5 7. demand is growing marginally but is suffering from brand downgrading and concentration of detergent and dishwashing formulations.3 3.8 10..3 14.3 16. In the household product sector. including detergents and cleaning materials Pet foods Cigarettes and tobacco END USE MARKET PROSPECTS FOR CORRUGATED – NON FOOD CONSUMABLES 2011. notably India.5 3.9 7. 1.7 5.7 7.6% p.0 17.

supplies of toiletries and home care products across the Mexican border are increasing as a result of the lower peso exchange rate. Consumption of cigarettes and tobacco in the USA and Canada continues to decline. 1. The continued increase in share of more concentrated detergents and household care products is also reducing the amount of packaging required. cosmetics and household care products have been particularly subject to pressure from retailers and packers to reduce packaging costs and weights.0% of North American corrugated consumption. END MARKET PROSPECTS FOR CORRUGATED – NON-FOOD CONSUMABLES – 2011 TO 2016 INCREMENTAL BUSINESS MSM.9 2.a. conversely.5 4.a.2 7. Growth had dropped to below 3% p.0 4. Generics account for about 80% of the market and nine of the worlds top ten generic drug manufacturers are US based. in 2008 and 2009.2 Non-Food Consumables – North America Region North America 2011 Msm 5849 % 29.4 100. The growth rate was back to 6% in 2011 but cost pressures will continue to intensify as a number of major drugs come off patent.6 Non-food consumables account for almost 15. influenced by the impact of job losses on the number of people covered by health insurance.9 10. The Canadian and Mexican pharmaceuticals markets are primarily supplied by imports. % SHARE Region North America Western Europe Central & Eastern Europe Sub Total Europe Pacific Rim China Rest of Asia Sub Total Asia Central & South America Other Regions World Msm 497 405 172 577 98 1289 919 2208 273 207 3861 % 12. 69 PRIVATE AND CONFIDENTIAL .6 33.5.1 5.8% of the total.4 23.As with other markets. Canadian manufacturers have been adversely affected by the high exchange rate of the Canadian dollar compared with the US dollar.3 Msm 6347 2016 % 26.5 14.7 2011-2016 % p. There has been a modest recovery in pharmaceuticals production in the US. the Asia Pacific region will contribute the bulk of the additional demand forecast over the next 5 years.8 57. estimated at 59. but toiletries.

Mexico has increased the amount of land devoted to tobacco cultivation.9 Pacific Rim In Japan. Strong growth was recorded for cosmetics sales in South Korea during 2011 with fashion being a major influence on the market through styles and branding. 4.5. compared with 9. a steady move towards concentrates is impacting corrugated volumes. Pressure on health systems by governments and insurers is resulting in some price cuts as well as continued moves towards generic drugs. and advertising bans. as a result of an aging population and increased consumer concerns over health issues. smoking restrictions in public places.3 Msm 2150 2016 % 9.5 Sales of pharmaceuticals continue to grow steadily. an aging population is underpinning a trend to anti-aging cosmetics and toiletries and other products targeting older people. with demand for laundry products remaining flat.Over the past few years. However. the main issue facing the European pharmaceutical sector is the large number of products going off patent. Health concerns are also driving a trend to natural ingredients. 4. which continue to grow slowly.5% of GDP. Demand for cleaning products is growing marginally. Currently.4 Non-Food Consumables – Pacific Rim Region 2011 Msm 2051 % 10. The European cigarettes and tobacco industry is in long-term decline.a.6% 5 years ago. influenced by repeated substantial increases in tobacco taxes. but local consumption is declining due to health concerns.a.8 Msm 4915 2016 % 20. with more dramatic growth evident in Central and Eastern Europe.7 2011-2016 % p. 70 PRIVATE AND CONFIDENTIAL . as large multinationals have relocated production from Canada to Mexico. Overall. 2. The cosmetics and toiletries sector will continue to offer steady growth. with most of the growth in the dishwashing sector. so R&D expenditure will continue to create a drain on resources. growing health consciousness. the total healthcare sector in Europe is swallowing up 10. 0. Brand leaders report a significant down trading from premium products to mid-market and bargain-basement offerings.0 2011-2016 % p. and smoking has been banned in public places since 2008.3 Non-Food Consumables – Europe Region Europe 2011 Msm 4338 % 21.5.

However. the market for homecare products is showing moderate growth. Liquid detergents exceeded powder detergents sales with growing use of frontloading washing machines. greater hygiene awareness and changing lifestyles demanding increased convenience. such as Zhejiang Hisun Pharmaceuticals. Multi national pharmaceuticals companies. health concerns. an aging population and increasing incidence of diet-related health problems. 71 PRIVATE AND CONFIDENTIAL . cosmetics and toiletries demand is also benefiting from high growth in disposable incomes. In Taiwan. High growth in sales of household cleaning products are driven by rising income in urban and rural areas. Local companies are consolidating as a result of government action to concentrate the domestic pharmaceuticals distribution systems. Foreign companies.5 In China. while in South Korea concerns over dust influx from Japan following the earthquake have led to an increase in sales of personal hygiene products. 4. with rises in private spending alongside government spending on healthcare reforms. Across the Pacific Rim. to supply generics which currently have a market share of over 25%. In Taiwan. such as L’Oreal (USA) and Shiseido (Japan). In Japan. Tobacco consumption will be influenced by growing awareness of health risks and stricter regulation but despite this cigarette consumption is expected to continue to increase.9 Msm 4269 2016 % 17. are driving up healthcare and pharmaceuticals spending. In Japan.5 Non-Food Consumables – China Region China 2011 Msm 2980 % 14.9 2011-2016 % p. Hot summer weather resulted in higher purchases of home insecticides.Japanese sales of home care products continued to increase in 2011. South Korea remains one of the world’s largest smoking populations and attempts to reduce consumption are proving difficult. such as obesity and heart disease. There is increasing pressure for cost and political reasons to shift to generics away from branded products. such as Pfizer.5. Toilet care.a. competitive pressures are encouraging consolidation amongst pharmaceuticals producers. air fresheners and surface cleaners are becoming increasingly affordable amongst affluent consumers who are expected to trade up to mid and premium products as affluence grows. Pharmaceutical sales are expected to double over the next 5 years. 7. government anti-smoking policy and tax rises contribute to the decline in demand for tobacco. Tougher negotiating by the government with foreign pharmaceutical producers will put pressure on margins. are exploiting their strong brand positioning at the higher end of the market. are collaborating with local generics producers. and a spate of new product launches. there is a shift to low-tar cigarettes and taxes on tobacco are rising. weak economic growth is slowing this trend.

a. from relatively low per capita consumption levels. Demand for household cleaning products will continue to grow as affluence rises. 3.1 2011-2016 % p. 72 PRIVATE AND CONFIDENTIAL .6 Non-Food Consumables – Rest of Asia Region Rest of Asia 2011 Msm 2114 % 10. but is still expected to rise sharply over the next five years. to take advantage of the fast growing local beauty products market. 4.5. growing wealth and an apparent lack of social stigma attached to smoking. This particularly applies to the personal care market. The trend to smaller households will increase demand for smaller pack sizes.5 Healthcare spending in Asia has been lagging economic growth.1 Msm 1686 2016 % 7. Tobacco consumption remains strong in many of the less developed countries of the region but is expected to moderate as action to stem smoking takes effect. A number of countries in the region are trying to promote the use of generics over patented drugs. driven by rising populations. Multi nationals including Unilever and P&G are benefiting from strong growth in demand for cosmetics and toiletries across Asia through investment in local facilities. 7. the other more industrialised countries in the region are also showing strong growth.7 2011-2016 % p. merger and acquisition activity is expected to increase.a. these products are becoming viewed as less of a luxury so providing resilience during economic downturns. Vietnam has been identified as a potential long term high growth market for cigarettes and tobacco. Investment by major multinationals such as Kao Corporation of Japan will underpin their presence in the region. due to its population size. despite the various issues impacting on final demand. Singapore is an important producer with a strong established biomedical sector. increasing incidence of chronic diseases and growth of hospitals and clinics. Tobacco is a particularly important corrugated sector in India and local respondents anticipate continued growth here. L’Oreal recently opened a major factory in Indonesia – their largest one in the group.6 Msm 3033 2016 % 12. as major foreign drug companies seek to exploit growth potential in the Indian market. However. In India. generic drug production is an important sector and as the number of drugs coming off patent falls. Pressure on India to tighten drug patent and licensing laws is increasing. which will support local industry and help to reduce costs.7 Non-Food Consumables – Central and South America Region Central & South America 2011 Msm 1413 % 7.5. rising incomes and the growth of the consumer middle class. Key growth drivers are rising personal incomes.6 Brazil accounts for almost two thirds of the consumption of corrugated for non food consumables in Central and South America.4. In many parts of the region.

brand extensions and product launches that save time. inward investment by multinationals is expanding regional production of household products. Brazil is a net importer of pharmaceutical products but a strong local manufacturing base is emerging. with the share held by generics on the increase. 4. 73 PRIVATE AND CONFIDENTIAL . along with formula concentration. with growth of chemical free and natural products. Most products in this sector are showing above average growth. Less than 20% of the Oceania population now smoke and further reductions in the number of smokers are expected with tough government legislation. tobacco consumption is growing. In New Zealand. with increasing uptake amongst the younger population. other Central and South American markets are dominated by imports. while private labels are competing hard to reduce the strength of major premium brands.8 Non-Food Consumables – Other Regions Region Other Regions 2011 Msm 1192 % 6. Despite a tighter pricing environment. but will pick up as the economic outlook improves from 2014 onwards. strong growth is expected to continue.3 In Oceania. In the Middle East. in relation to total corrugated consumption. reinforced by inward investments by global players targeting the Brazilian pharmaceutical market.0% of the US level. Growing population and health awareness will drive up demand for pharmaceuticals in the Middle East and Africa. In the Australian household products sector. In the Middle East and Africa. but currently local manufacturing is fragmented and geared to generics.5. UAE and Saudi Arabia are attracting the world’s leading beauty care retailers and manufacturers.9 2011-2016 % p. combine functions and make life easier are adding market value. Pharmaceuticals sales in Oceania are rising as demand for healthcare increases and the population ages. demand for cosmetics and toiletries – in particular luxury items – will soften due to weak consumer confidence. but per capita spending on pharmaceuticals is only about half the level in Mexico. 3. Income growth and government healthcare policies both play an important role. In general. In the Middle East and North Africa.a. and 5. the beauty and personal care sector is growing in most product categories with cosmetics performing particularly well. however.0 Msm 1398 2016 % 5.Brazil is the largest pharmaceutical market in Latin America. the focus has been on health.

Asia. % SHARE Region North America Western Europe Central & Eastern Europe Sub Total Europe Pacific Rim China Rest of Asia Sub Total Asia Central & South America Other Regions World 2011 Msm 2988 3041 303 3344 3256 1762 1012 2774 2710 941 16013 % 18.a. Fresh fruit and vegetables account for the bulk of corrugated demand in the fresh foods sector.0 6. Corrugated will continue to take business from wooden containers in fruit and vegetables markets.2 1.9% p.6 -0. END USE MARKET PROSPECTS FOR CORRUGATED – FRESH FOODS/PRODUCE 2011.8 4. 2016 MSM.1 6. Very little corrugated is used in cutting and boning plants because of problems with lack of moisture resistance and this is also applies to the wet fish sector.7 2.9 20.3 1.6 Fresh Foods 4.9 100. but will lose marginal business to reusable plastic crates (RPCs) in most regions. which has affected harvests in North America.6 13. Central and South America and Oceania. Accordingly. freshly prepared meat products (including sausages and bacon). poultry and fish sector consists of packaging used for cutting and boning plants.0 18.7 16. poultry and fish. output and corrugated use is subject to the vagaries of the weather.9 Corrugated demand is forecast to grow over the next 5 years at an average 2.9 5.0 1.4 7. 74 PRIVATE AND CONFIDENTIAL .0 Msm 3455 2995 328 3323 3441 2402 1459 3861 3297 1076 18454 2016 % 18.9 -0.9 5.7 19.8 100.3 11.3 17. well below the average for corrugated as a whole. poultry and fish Flowers. 2.1 1.9 17.4. The fresh meat.a. with the exception of North America.0 2011-2016 % p.0 7.6.0 2.8 18. Europe. including cut flowers and pot plants.9 20.6 6.1 Fresh Foods – Global Summary Products included:    Fruit and vegetables Fresh meat.3 16.9 20..

berries. harvests were average in 2012. In general.6. However. since the trade in these products is primarily within North America. % SHARE Region North America Western Europe Central & Eastern Europe Sub Total Europe Pacific Rim China Rest of Asia Sub Total Asia Central & South America Other Regions World Msm 467 -46 25 -21 185 640 447 1087 587 135 2441 % 19.8% of corrugated as a whole.6% over the next 5 years.1% of the incremental business forecast to be generated. but apple and peach harvests were severely affected by the warm winter followed by frosts.1% of the total. but this will increase to 49.7 2011-2016 % p. Imports of strawberries. compared with 8. its effect on the regional corrugated growth is small.2 Fresh Foods – North America Region North America 2011 Msm 2988 % 18. 2. but harvests in California and Florida were average.5 100. lettuce and grapefruit.1 -1. table grapes and tomatoes are increasing share in the US market. most of the corrugated demand is concentrated on the pre-packed and fresh prepared meat and poultry sectors.1 5. and the Asia Pacific region will generate 52. Emerging markets account for 41. END MARKET PROSPECTS FOR CORRUGATED – FRESH FOODS/PRODUCE – 2011 TO 2016 INCREMENTAL BUSINESS MSM.2 18.9 The USA is a net importer of fresh fruit and vegetables.5 24. avocados. Canadian harvests have generally been less volatile than those in the US. oranges & tangerines.7 Msm 3455 2016 % 18. although the Ontario apple crop was hit by an unseasonably warm winter followed by frosts.6 26. Citrus crops in Texas have been hit by the drought.a.9 7.For this reason.3 44. and these are an important growth driver in the Mexican corrugated market.0 -0. but is also a significant exporter of apples. The share contributed by North America to this additional business will be the highest across all market sectors estimated at 18.9 1. and storm 75 PRIVATE AND CONFIDENTIAL .0 4.9%.

a. have been normal. were also badly hit.6.a. 76 PRIVATE AND CONFIDENTIAL . Scandinavia.1 As in other regions. we expect an above average increase in corrugated shipments over our forecast period. However. Central Europe and Russia. This year in particular has seen poor crop yields with high temperatures causing many fruit and vegetables to stop growing and ripen early. Other harvests.damage in July has affected cherry and peach yields.0 2011-2016 % p. The general trend in all three countries towards healthier eating and fresher foods will be reinforced by a modest net gain against returnable wood and plastic containers. poultry and fish sector consists of packaging for fresh prepared meat products (including sausages and bacon). including Benelux. France.6 2011-2016 % p. -0. including salad products. salad vegetables and the repacking of imported produce are offering good growth potential. due to animals being slaughtered early because of high feed prices and dried out grasslands. Flowers.3 Msm 3441 2016 % 18. The fresh meat market in the US is expected to show an increase in the second half of 2012. A corresponding dip is expected in 2013. 4. Most of the corrugated in the fresh meat. In South Korea. Italy was hit by its worst drought in nearly 10 years. 4. Beef production is primarily affected by the poor grazing. Overall. compulsory packaging of agricultural products has increased demand for corrugated packaging.9 Msm 3323 2016 % 18.6. The importance of the pork industry and concerns of meat containing growth hormone ractopamine in Taiwan has lead to strong opposition to the easing of meat import restrictions from the USA and this is adversely influencing exports and output. but several other countries.1 Per capita consumption of fruit & vegetables and meat & fish is increasing steadily across the region.4 Fresh Foods – Pacific Rim Region Pacific Rim 2011 Msm 3256 % 20. longer term prospects for corrugated in fruit and vegetables markets will suffer from the continued penetration of reusable plastic containers (RPCs). 1.3 Fresh Foods – Europe Region Europe 2011 Msm 3344 % 20. while pork is more affected by the high feedstuff prices. demand for corrugated in European fresh foods markets is subject to the vagaries of the weather. poultry and fish.

0 2011-2016 % p.6 Fresh Foods – Rest of Asia Region Rest of Asia 2011 Msm 1012 % 6. the government is promoting the planting of staple food crops – in particular rice – in a bid to restore national self sufficiency in food.0 77 PRIVATE AND CONFIDENTIAL .3 Msm 1459 2016 % 7. high food inflation. The Philippines banana industry has been affected by new regulations for fresh produce imports in China.5 Fresh Foods – China Region China 2011 Msm 1762 % 11. a practice which is already common among foreign supermarkets. meat and vegetables is transported via the cold chain in China. Thailand is an important exporter of agricultural products. and development of cold chain logistics will be key to reducing food decay in transport.6. only around 15% of food. but flooding in 2011 caused extensive damage to rice crops.a. lack of cold chain logistics and quality control continue to present problems to the fresh foods sector.7 Fresh Foods – Central and South America Region Central & South America 2011 Msm 2710 % 16. as greater affluence leads to rising per capita consumption of meat.6 India is the world’s largest milk producer and second largest producer of fruit and vegetables.6. increasing availability and improving quality standards. Cost issues are driving a trend to direct sourcing from the farm by local retailers.9 2011-2016 % p.9 2011-2016 % p.0 Msm 2402 2016 % 13. and to limit the shift to more lucrative cash crops such as coffee and cocoa. 6. this sector will continue to suffer from rising input costs and supply problems.4. 4.a. Currently. In Indonesia. Water resources are a major challenge to the industry with extreme weather such as the drought in 2010 having a major impact on output.6.9 Msm 3297 2016 % 17. 4.4 In China. and a resulting fall in demand for banana boxes is expected to be reversed next year.a. fish and produce. Developments to improve production and the supply chain over the medium term offer huge potential to corrugated packaging along with competing alternatives such as RPCs. 4. As a result. 7.

8 2011-2016 % p. Argentina also suffered weak demand in Europe. this also affected Colombia. although the knock on effects of the US drought and higher feed costs will adversely affect the competitive position of Brazilian exporters in 2013. exports of tropical fruit are increasing faster. In Brazil. primarily to the US and Europe. 4. However.a. with export sales. and also for meat and poultry. and Nicaragua is developing a growing presence in the world market. its main export market. Chile and Argentina are also major consumers of corrugated. In contrast. In Chile. because Asian and Middle Eastern customers are showing a preference for wood and plastics packaging rather than corrugated. are growing their pineapple exports. efforts to develop new export markets are resulting in a reduction in the market share of corrugated. Heavy early frosts in southern Argentina hit apple and pear crops. A third of this total is for banana exports. notably table grapes. but also to weaker demand from European export customers. banana exports from Costa Rica. Guatemala. increasing by 8% compared with the previous year. and no major breakthrough is anticipated. Argentine exports have been poor. but growth in the citrus. Taking the region as a whole. both for fresh fruit and vegetables. But Brazil.a. In 2012. such as Guatemala. at 2– 3% p. the other major supplier of bananas to the European market. 2. Peru. Overall. but Argentine citrus fruits were also less competitive in export markets.. Costa Rica consolidated its position as the world’s leading exporter of fresh pineapples. However. influenced by an outbreak of Sikatoka disease. but there are fluctuations each year. exports of bananas from Ecuador have been poor.Almost 22% of corrugated shipments in Central and South America are for fresh foods and produce – by far the largest share globally. primarily from Ecuador. due to the impact of the high domestic inflation rate on costs. Brazilian exports of poultry and pork have benefited from recently more favourable exchange rates. the principal reason was flooding early in the year. due to the high inflation rate and fixed exchange rate. The potential for further growth from Costa Rica will be restricted by production constraints but other countries.8 Fresh Foods – Other Regions Region Other Regions 2011 Msm 941 % 5.9 Msm 1076 2016 % 5. Exports of fruit from Brazil and Argentina fell in the first half of 2012. and also to difficult trading conditions in the various exporting countries.6.7 78 PRIVATE AND CONFIDENTIAL . the banana market is growing at 1–2% p. Brazilian corrugated suppliers report small gains from wood and plastics in the domestic market for fruit packaging due to customers’ recognition of the benefits in terms of logistics costs and hygiene.a. avocados and kiwi fruits helped to offset the decline in other products. wood remains plentiful and cheap. Colombia. Fruit exports from Chile were also down overall. due partly to harvest variations across the region as a whole. Central America and the Caribbean and a further 8% is for tropical fruit exports from the same countries and from Brazil and Argentina. which affected the papaya and mango crops. Chilean exports are also showing strong growth. During 2011. the Dominican Republic and Honduras have fared better.

0 9.4 66.7.6 2.9 4.5 3. over the next 5 years.0 7. greater concern for health has raised demand for fresh agricultural products and poultry.5 1.3% p. 2016 MSM.7 5. while demand for dairy products and red meat has declined.9 3. The volume of Chinese investment in production of fruit and vegetables in Africa is increasing with the aim of creating a well developed agricultural infrastructure.9 100.3 51.9 17. has suffered from droughts and.0 Msm 1415 1855 734 2590 2192 12080 4505 16585 365 451 23599 2016 % 6.9 3.7 Domestic Appliances and Electrical Goods 4. More favourable weather is needed to help the industry recover.3 1.1 11.9 1. more recently. 79 PRIVATE AND CONFIDENTIAL .7 2.2 6.1 70.0 100.3 Use of corrugated for domestic appliances and electrical goods is forecast to grow at an average rate of 4.0 10.Australian domestic per capita consumption of vegetables & fruit and meat & fish is growing at a steady rate.1 -0.2 1.5 48.3 4. 2.1 13.0 2011-2016 % p. an important export sector.3 0. A free trade deal with China is boosting exports of some products.1 Domestic Appliances and Electrical Goods – Global Summary Products included:  White goods  Brown goods  Small electrical appliances  Consumer IT and telecoms products END USE MARKET PROSPECTS FOR CORRUGATED – DOMESTIC APPLIANCES AND ELECTRICAL GOODS 2011.a. from floods. designed to make the region a major player in food supply to China and this is expected to stimulate demand for both corrugated and reusable plastic containers. 4.2 19. In New Zealand.a. Production of livestock and livestock products.3 5. % SHARE Region North America Western Europe Central & Eastern Europe Sub Total Europe Pacific Rim China Rest of Asia Sub Total Asia Central & South America Other Regions World 2011 Msm 1274 1888 594 2482 2019 9363 3326 12690 305 391 19160 % 6.6 9.

2 2. credit restrictions and a slow down in new house starts.1 US production of domestic appliances has continued to decline.7 3. Whilst a trend towards miniaturisation is affecting packaging volumes in such hightech sectors. This share will increase still further in the future. Emerging regions account for a substantial 75. domestic appliances and electrical goods represent one of the better growth sectors for corrugated.7% of the additional business forecast for the next 5 years.2 -0.9 61. Production of audio and video equipment is now recovering strongly.0 4. and showed a modest improvement (up 1.4 100. 80 PRIVATE AND CONFIDENTIAL . with a knock on effect influencing export volumes from the emergent economies.4 1. with significant growth coming from the consumer IT and telecoms sector.a.7.6 87.9% by 2016.8 1. However.5%) in 2011. production of small appliances was not as badly hit by the recession.0 2011-2016 % p.4 3.0% of corrugated demand in this sector.6 Msm 1415 2016 % 6. with a further increase through 2012. Despite this.2 26. Production is now back to over 90% of 2006 levels. The Asia Pacific region is forecast to account for as much as 91. % SHARE Region North America Western Europe Central & Eastern Europe Sub Total Europe Pacific Rim China Rest of Asia Sub Total Asia Central & South America Other Regions World Msm 141 -33 140 108 173 2717 1179 3896 60 60 4438 % 3. END MARKET PROSPECTS FOR CORRUGATED – DOMESTIC APPLIANCES & ELECTRICAL GOODS – 2011 TO 2016 INCREMENTAL BUSINESS MSM. end use demand continues to grow strongly. and is approximately one third lower than in 2006. in most developed regions.2 Domestic Appliances and Electrical Goods – North America Region North America 2011 Msm 1274 % 6. reaching 8. as indicated below. after a massive decline between 2006 and 2010. 2.Recent demand levels have suffered from low levels of consumer disposable income and.

alarm clock. Canadian market trends are similar to those in the US. as strong competition keeps up the pressure on margins. Despite this. underpinned by strong domestic demand growth. etc. games console. 81 PRIVATE AND CONFIDENTIAL . Examples include the move from desktop computers. with production almost 10% above 2006 levels.). Growth will be slower in value terms however. camera. the reduction in size of computer printers. Volume growth will be driven by falling prices and rising obsolescence resulting from the roll-out and continued convergence of digital technology. The consumer IT/telecom sector is showing solid growth. electronics and medical equipment is increasing steadily. deteriorating personal liquidity/credit restrictions and a slow down in the housing market. GPS system. There has also been further inward investment by multinationals setting up facilities. high growth in end user demand contributes to create well above average growth for corrugated. requiring less corrugated to perform the same function.9 Demand for domestic appliances across Europe is influenced by limited consumer disposable income. assisted by the low peso exchange rate. with the exception of a dip in 2010.7. Corrugated volumes for electronic products are being influenced by a strong trend to smaller products. to laptop computers. and good performance in export markets.3 Domestic Appliances and Electrical Goods – Europe Region Europe 2011 Msm 2482 % 13. and the increasing sophistication of smartphones which may replace the function of several different items (audio equipment. Medical equipment and supplies is another area showing well above average performance. Despite these trends. the domestic appliance market in Central Europe has benefited from inward investment and reverse business migration from the Asia Pacific regions. 0. smartphones and tablet computers.0 Msm 2590 2016 % 11. but Canadian manufacturers have continued to lose share in both domestic and export markets as a result of the high exchange parity of the Canadian dollar. 4. targeted at both the Mexican domestic market. and exports to the US and Latin America.0 2011-2016 % p.a. and is now more than 25% above the 2006 level – the largest increase of any US manufacturing sector. Mexican production of home appliances. where replacement is driven by both rapid obsolescence and also deeper penetration. the growth in personal and mini audio systems. Among the markets with significant potential will be e-readers. to tablets.Production of computer and electronic equipment has continued to show healthy growth.

developed to compete with media tablets.Eastern Europe is expected to remain a low-cost production centre and continues to attract business migration from Western Europe and from electronics companies located in Asia Pacific. Electronics sales in South Korea are driven by rising demand and falling product prices and. a high valued Yen is badly affecting external and internal competitiveness for Japanese products. Sales of personal computers.5 Msm 2192 2016 % 9. 4.a. tablets and smartphones are benefiting from product convergence. Following recovery from the disruption caused by natural disasters in 2011. conditions tightened as the domestic economy suffered a downturn. In 2012. Orders from China for electronic components. could be transferred to producers in other countries due to political conflict between China and Japan. but sales of personal computers awaiting release of Window 8 operating system are expected to pickup in the second half of 2012. 1. On the supply side. Sales of domestic appliances and electrical goods in Japan during 2011 were helped by incentives to assist troubled electronics manufacturers. exacerbated in 2012 by a downturn in economic prospects in key export regions.7% during the first 8 months of 2012. and the need to diversify supply sources following the Japanese earthquake and tsunami. including passive components and flexible printed circuit boards.4 Domestic Appliances and Electrical Goods – Pacific Rim Region Pacific Rim 2011 Msm 2019 % 10. notably Japan and South Korea. Shipments of Ultrabooks.3 2011-2016 % p. previously dominated by Japanese companies. Taiwan and South Korean producers have also been badly hit by the downturn in export sales during 2012. sales have been affected by a weak housing market. are not performing as well as had been hoped largely because of their price. a rising Yen exchange rate. In Taiwan.7 Domestic appliances and electrical goods accounts for about 10% of corrugated use in the Pacific Rim with the impact of the disaster in Japan recovered in the second half of the year. 82 PRIVATE AND CONFIDENTIAL . improvements to Internet services and broadband infrastructure development. recently.7. even exports of electronics are reported to have declined by -1.

but uncertainty over the economy could encourage consumers to delay spending decisions.4.2 2011-2016 % p. portable devices such as netbooks. Fierce price competition between retailers and online sellers is squeezing margins to very low levels. Domestic appliance sales have benefited from domestic spending stimuli targeting rural households. growth is driven by upgrades and replacement demand. Growth is expected to continue.7. output of electronics and electrical goods and components has suffered significantly over the last year from poor performance in export markets. Across the region. due to rising electricity and water prices and supportive government policies.a. uncertainty of the US outlook and concerns over growth in China.7.0% in 2012. 5. Foxconn and other Chinese-based producers are looking increasingly to automation and moving production inland to reduce and contain rising costs.9 Msm 12080 2016 % 51. Philippines semiconductors and electronics production benefited from temporary relocation from Thailand.4 Msm 4505 2016 % 19.6 Domestic Appliances and Electrical Goods – Rest of Asia Region Rest of Asia 2011 Msm 3326 % 17. Energy efficient appliances in particular are gaining popularity. although rising income levels and growing use of the Internet is resulting in growing demand for personal computers and other Internet-enabled devices including smartphones and tablet computers. Flooding in Thailand and the earthquake in Japan caused serious disruption of supply chains and relocation of some capacity.5 Domestic Appliances and Electrical Goods – China Region China 2011 Msm 9363 % 48. Sales of flat screen TVs are underpinned by a shift from conventional cathode ray tube sets. and growing disposable incomes. despite their higher prices. due to the Eurozone crisis. exporters have suffered from a downturn in global trade and the outlook remains soft for the coming year. well below trend.2 In China. 4. and retailers are establishing their own online sales presence. The consumer electronics market is forecast to grow by 9. but moderated as government subsidies ended. Domestic appliance sales within the emerging countries in the region have been more upbeat as incomes rise.a.3 Across the ASEAN group. 6. Air conditioner sales have performed particularly well.1 2011-2016 % p. In more developed markets such as Singapore. e-readers and tablet computers are 83 PRIVATE AND CONFIDENTIAL .

gains in real incomes and tax incentives are all stimulating strong demand for domestic appliances and electrical goods in Brazil. The market share of local producers is increasing in Brazil. 3.5 2011-2016 % p. with more than 20 producers.6 Msm 365 2016 % 1. In Vietnam the number of joint ventures between foreign manufacturers and local partners is increasing and includes Samsung and LG of Korea and Toshiba. assisted by government tax incentives. and Brazil’s hosting of the 2014 Football World Cup and the 2016 Olympics will buoy up demand for the latest technologies. Washing machines and freezers are among the household goods with low penetration rates. Sanyo and Sony of Japan. Demand for consumer electronics products is also growing strongly in Argentina and in Chile. improved employment conditions. Smartphones are also performing well. Malaysia has identified electricals and electronics as one of 12 national key economic growth sectors for transforming the country to a high income nation by 2020 resulting in significant inward investment. Countries such as the Philippines and Vietnam will benefit from some permanent relocation of pan-regional production of semiconductors and electronics out of Japan and Thailand to alleviate disruption to supply chains in the event of a natural disaster. Foxconn has major plans to invest in a mobile ‘phone factory by the end of 2012. while the recent more favourable Real exchange rates are helping Brazilian exporters. Demand for laptop and tablet personal computers.7 The wider availability of credit. assisted by government incentives. 4.a. with personal computer penetration remaining low in many countries. Costa Rica has established a world leadership position in medical devices. Among the smaller countries.proving popular. Argentina and Venezuela. indicating potential for growth. HD TVs and smartphones is particularly strong. Regional investment by major producers is affected by the uncertain global economic outlook but continues.7. Corrugated suppliers see scope to gain share from EPS on environmental grounds. 84 PRIVATE AND CONFIDENTIAL . providing an alternative access to the internet.7 Domestic Appliances and Electrical Goods – Central and South America Region Central & South America 2011 Msm 305 % 1. Inward investment in tablet computers and cell ‘phones is primarily targeted at import replacement on the domestic market. which is one of the most sophisticated consumer electronics markets in Latin America.

South African consumer electronics growth is set to moderate during 2012 to 6% following buoyant growth during 2011. and bigger ticket items such as personal computers and notebooks are boosting growth. a strong exchange rate is keeping down prices for many of these imported items. with discounted items gaining in the short term from the economic slowdown.9 2011-2016 % p.8 Domestic Appliances and Electrical Goods – Other Regions Region Other Regions 2011 Msm 391 % 2. rising populations and income growth. In New Zealand.1 Durable Goods and Clothing – Global Summary Products included:  Ceramics and glassware  Clothing.8. games and sports goods  Wooden goods and furniture. Demand for electronics will vary depending on the stage of development and wealth of individual countries. textiles and footwear  DIY. Strong sales in large screen TVs.a. motor and garden products  Toys. Middle East demand for domestic appliances will be underpinned by developments in household formation.7. 85 PRIVATE AND CONFIDENTIAL . Limited disposable income of Australian households will restrict spending on non essential goods.0 Msm 451 2016 % 1. 2.4. 4. new product roll outs and lower prices will help to boost growth in sales of electricals and electronics. Sales of appliances picked up during reconstruction after the earthquakes and will be boosted by a mild pick up in the housing sector over the medium term.9 In the other regions. However. local production of domestic appliances and electrical goods is limited by the high share for imports. Tightening immigration policy will slow the growth of household formation. but labour shortages could result in a softening of immigration policy in future.8 Durable Goods and Clothing 4. affecting demand for household appliances and other items.

2%.9 60.0 Msm 5824 3340 947 4287 1931 10721 3121 13843 1228 700 27813 2016 % 20. well below the industry average.5 0. the Asia Pacific region will contribute the vast bulk of the incremental business forecast.8 5.4 6. As with the domestic appliances and electrical goods sectors.4 2.e.8 4.5 4.9 Output in this sector is forecast to grow at a modest 2.7 100.4 7. the impact of “off shoring” has had a further dampening effect on corrugated prospects.5 100. estimated at 53.0 2.6 1.7% by 2016.3 0. estimated at 85. 2016 MSM.7 2.6 2. % SHARE Region North America Western Europe Central & Eastern Europe Sub Total Europe Pacific Rim China Rest of Asia Sub Total Asia Central & South America Other Regions World Msm 357 -78 175 97 71 2254 878 3132 30 53 3739 % 9.4 100.8 0.. there is some evidence of “re shoring”.2 0. END MARKET PROSPECTS FOR CORRUGATED – DURABLE GOODS & CLOTHING – 2011 TO 2016 INCREMENTAL BUSINESS MSM.5 11.8 4. a repatriation of activities exported off shore. 1.4 15.0 86 PRIVATE AND CONFIDENTIAL . although for some durables.7 14.3 23.3 -0.2 17.a.7 35.8 1.9% p. Emerging markets account for quite a relatively high proportion of total corrugated demand. % SHARE Region North America Western Europe Central & Eastern Europe Sub Total Europe Pacific Rim China Rest of Asia Sub Total Asia Central & South America Other Regions World 2011 Msm 5467 3418 772 4190 1860 8467 2244 10711 1198 647 24073 % 22.2 3. i.7%.5 5.a. notably furniture.5 1.9 38. and this is forecast to rise to 57.2 49.5 83.0 3.END USE MARKET PROSPECTS FOR CORRUGATED – DURABLE GOODS & CLOTHING 2011. Most of the products in this sector in the developed regions of the world are mature and offer little scope for growth.5 -2.0 2011-2016 % p.9 12. Furthermore.2 9.8 6.3 44.1 4.

a. tend to be sourced from the Asia Pacific region. However.3 There are signs of an improvement in the US housing market. the economic recovery has been led by durables. particularly for big ticket purchases. 87 PRIVATE AND CONFIDENTIAL . and also by increasing inroads by imports – US production is now more than a third lower than it was in 2006. resulting in increased demand for furniture and fittings. furniture production has been one of the areas hardest hit by the off shoring of production. with production up almost 5% in 2011. but. helped by protective measures against Chinese imports. clothing and footwear throughout North America has also been badly hit by off-shoring – US production is down by more than a third.a.5 These markets are particularly vulnerable to the depressed economic conditions that Europe is currently experiencing and accordingly sales will be well below trend. demand is likely to recover modestly in 2014. In the US and Canada.9 2011-2016 % p.8. However. There has been a slight recovery in the US in 2011 but future growth is still expected to remain very limited. Cross-border shopping is a continued concern for Canadian suppliers. an important and growing sub sector. There is anecdotal evidence of some ‘re-shoring’ of high-end furniture production. both in the domestic market and in export markets.4 Msm 4287 2016 % 15. due to the high parity of the Canadian dollar.4 2011-2016 % p. Clothing and footwear markets will continue to face pressure from higher commodity prices and emerging market labour costs (notably in China and Vietnam). by companies wishing to minimise damage in transit and improve logistics links. such as ceramics/glassware and furniture are mature sectors and are currently suffering from a downturn in the housing market. 4. DIY. 1. But there are now some signs of recovery in the US. the production of consumer durables remains very weak.4.3 Durable Goods and Clothing – Europe Region Europe 2011 Msm 4190 % 17.2 Durable Goods and Clothing – North America Region North America 2011 Msm 5467 % 22. notably the US. Household durables. Private labels.7 Msm 5824 2016 % 20. compared with 2006. motor and garden products continue to offer good growth but with varied regional prospects. Production of textiles. 0. in Canada. Mexican producers have also lost out to Asian competition. both from domestic suppliers and also from Canada and Mexico. In contrast. prospects for Mexican clothing and footwear production are now improved. In the US and Mexico.8. as much of the Canadian population is concentrated in a narrow strip along the border.

a.3 Msm 3121 2016 % 11.2 2011-2016 % p. Manufacture of low-end apparel and footwear has already moved to lower cost countries and there is increasing focus on higher value designer and branded products. 88 PRIVATE AND CONFIDENTIAL . 6.8 In China. In Taiwan demand for luxury goods including jewellery. Footwear exports from Vietnam continue to grow but will be under threat from this trend. Many leading textiles producers in Taiwan have shifted production abroad to lower cost production centres.a. A weak household sector is affecting sales of furniture in South Korea. where a luxury goods tax on imported items keeps prices high. Latin America. but is expected to improve over the medium term.5 2011-2016 % p. Expenditure on clothing and footwear is rising along with disposable incomes.8. Exports within the region are growing.5 Durable Goods and Clothing – China Region China 2011 Msm 8467 % 35.8.8 Clothing and textiles sectors have been affected by disruptions caused by natural disasters in Asia and economic problems in Europe and USA. despite continued weakness in developed regions.4. but will pick up again from 2013 as the market recovers. A lack of DIY culture inhibits development of retailing in this sector by western companies such as B&Q and IKEA. 4.8.9 2011-2016 % p. 4.a. while major markets in Europe and USA remain sluggish. 0. India and China.2 Msm 10721 2016 % 38. export demand for toys and games in 2011 accelerated to 3% in 2011. but the government is developing textile clusters across the country to discourage this trend.6 Durable Goods and Clothing – Rest of Asia Region Rest of Asia 2011 Msm 2244 % 9. with increasing focus on fashion items and luxury goods. watches and gifts is benefiting from increasing tourism from China.8 Thai footwear producers and raw material suppliers are expected to set up new factories in Myanmar and other countries in the region.7 Msm 1931 2016 % 6. 4. Expenditure on household furniture and textile products is set to slow in 2012 due to a slowdown in house sales. with strong growth in exports to Eastern Europe.4 Durable Goods and Clothing – Pacific Rim Region Pacific Rim 2011 Msm 1860 % 7.

textile output declined by around -1% in 2011/12 following strong growth in previous years. Indonesian furniture production has suffered from lack of investment. Implementation of a bilateral trade treaty is expected to lead to a sharp rise in China’s share of imports to New Zealand. there are some signs of recovery in the Brazilian textiles and leather markets.5 2011-2016 % p. exports of textiles and garments rose by a substantial 38% in 2011. Indonesia is gradually shifting its focus on raw textile exports – fibres and yarns – to finished products. with continued stiff competition from Asian suppliers in both domestic and export markets. Reconstruction will encourage sales and a pick up in the housing sector whilst easing credit availability should help sales over the medium term.5 Growth prospects for other durables remain very limited throughout Central and South America. concerns over quality and increasing competition from China and Vietnam.4 2011-2016 % p. as a result of protectionist measures and the growth of the local middle class market.8 Durable Goods and Clothing – Other Regions Region Other Regions 2011 Msm 647 % 2. In New Zealand. efforts to curtail spending are resulting in a shift to cheaper brands of clothing and footwear. sales of household products fell during the first half of 2011 as a second earthquake hit. 0. 1. but are expected to perform less well in 2012. In Australia.6 The share held by the durable goods and clothing sector forecast to decline steadily in the future due to limited end use demand and an increasing share of imports. 4. In Vietnam. luggage.In India. Furniture exports from Vietnam are growing fast and now account for over 80% of total output. Demand for furniture and household textiles in the Middle East will be underpinned by the region’s growing young population and on expanding numbers of households. 4.8.7 Durable Goods and Clothing – Central and South America Region Central & South America 2011 Msm 1198 % 5.7 Msm 700 2016 % 2. 89 PRIVATE AND CONFIDENTIAL . A strong Australian dollar is making imports of household goods and furniture more affordable.a.a. Thai garment manufacturers are reducing costs by moving to provincial areas or neighbouring countries. handbags and footwear sectors grew by 4%.8.0 Msm 1228 2016 % 4. however. However.

9 100.5 Corrugated use for industrial applications is forecast to grow at an average rate of 3. % SHARE Region North America Western Europe Central & Eastern Europe Sub Total Europe Pacific Rim China Rest of Asia Sub Total Asia Central & South America Other Regions World 2011 Msm 7305 11156 2203 13359 2789 15646 2989 18635 1279 901 44268 % 16. hide some significant differences year on year.0 Msm 7642 11141 2713 13854 3061 21470 4268 25738 1285 1006 52585 2016 % 14.9 0.5 7. 0. China and some ASEAN countries. including motor spares. 2016 MSM.a.1 2. This 5-year trend does.4.4 1. Prospects for the global automotive industry are mixed.7 1.0 100. notably in South Korea.2 3.9.0 4. however.0 2011-2016 % p. output is being encouraged by inward investment by multinationals.8 40. although the share of the manufacturing component in the industrial production series is expected to decline steadily.8 42. over the next 5 years.9 2.9 Industrial and Machinery 4. components and accessories  Paper.1 2.1 Industrial and Machinery – Global Summary Products included:  Chemicals  Mechanical engineering and metal manufacture  Electrical and electronic components and assembly  Automotive sector.2 5.2 5.3 35.5 21. resulting in high inventories and temporary shut-downs. in general.3 5.3 0. which is forecast to increase by 3.1 48.7 0.2 6. This is similar to growth in global industrial production.2 26. In emerging markets.3 6. in line with total corrugated demand.9 2.4 6.5 25. 90 PRIVATE AND CONFIDENTIAL .9 6.5% p. These differences are. Whilst recovering in the US.0 30. automobile output in Japan and Europe is well down.a.a.8 8.6% p. packaging and printing END USE MARKET PROSPECTS FOR CORRUGATED – INDUSTRIAL & MACHINERY 2011. a reflection of trends in global levels of industrial production.

because of the commitment of the major multinationals to production in Canada.0 15.1 1. US production of chemicals is recovering relatively well. with the exception of pesticides and fertilisers. their share will continue to grow strongly.5 2011-2016 % p.4 0.0% by 2016.Emerging markets currently account for 49.5 Msm 7642 2016 % 14.2 Industrial and Machinery – North America Region North America 2011 Msm 7305 % 16. Mexico has gained due to changing currency parities and both domestic and export sales continue to grow strongly.4 85.9.7% of incremental business forecast for the next 5 years. The Canadian market is less vulnerable to currency related loss of share experienced by other markets. 0.0 4.9 North American automotive markets have recovered strongly over the last 2 years.0 3. and production of construction materials throughout the region is benefiting from the tentative recovery in the US housing market. but still remains almost 15% below 2006 levels.a. As in other markets.1 6.3 70.7% of corrugated demand in the industrial sector. with the Asia Pacific region accounting for 88. 91 PRIVATE AND CONFIDENTIAL .0 -0. US production of motor vehicles and parts increased by almost 12% in 2011 and continued to increase rapidly in the first half of 2012. forecast to grow to 56. % SHARE Region North America Western Europe Central & Eastern Europe Sub Total Europe Pacific Rim China Rest of Asia Sub Total Asia Central & South America Other Regions World Msm 337 -15 510 495 272 5824 1279 7103 6 105 8318 % 4. END MARKET PROSPECTS FOR CORRUGATED – INDUSTRIAL AND MACHINERY – 2011 TO 2016 INCREMENTAL BUSINESS MSM.2 6.3 100.

4. However.3 2011-2016 % p.9.9 The share held by industrial products is rising over the medium term. growth in industrial production is forecast to be much more positive.7 million vehicles were produced in South Korea in 2011. with output expanding by 3. such as electric and hybrid cars are a focus for future development.2 Msm 13854 2016 % 26. governments no longer have such funds available and car makers are forced to shut plants and lay off workers in response to a slump in vehicle sales and in the face of every increasing inventories. A strong yen exchange rate is affecting exports and encouraging outward migration of manufacturing. Over half of Japanese produced cars are exported . 0. In Western Europe. Taiwan vehicle production remains small but with a growing export sector due largely to relocation of some production from Japan by Toyota. and the impact of the earthquake and tsunami.2% in 2013 and 4. Environmentally friendly vehicles.7% in 2012. In Central and Eastern Europe. In the reality of 2012.a. The European Automotive sector has been particularly badly hit. Japanese new vehicle sales for 2011 were down by nearly 20% on 2010.9. industrial output is forecast to decline by -2. although a temporary fall in share is expected in 2012 owing to poor export sales.8 2011-2016 % p. The Chinese island ownership dispute with Japan is adversely affecting Japanese auto brands sold in China.3 Msm 3061 2016 % 5. as well as increasing imports of components. notably construction and manufacturing. 92 PRIVATE AND CONFIDENTIAL .primarily to the US. the medium term outlook for car sales is subdued due to demographic issues and rising popularity of public transport by city dwellers. followed by zero growth in 2013 but with some recovery anticipated from 2014 onwards. 1. due to an ending of government tax breaks and new car purchasing subsidies. Some 4. better prospects are anticipated from 2014 onwards.7 Prospects in the industrial and machinery sector are reflected by recent depressed levels of industrial production. In 2008/09.4. accounting for 5.9% of world production.8% in 2014. The chemicals industry in Europe is currently suffering a marginal decline with weaknesses in major end use markets. scrap-page bonuses and other life-support subsidies. Despite growth of 10% in 2012. as well as having to deal with increasing input costs. South Korea car makers continue to benefit from increasing demand for lower priced smaller vehicles in depressed economies. Chinese demand is largely met through local Chinese production. 4.a.3 Industrial and Machinery – Europe Region Europe 2011 Msm 13359 % 30.4 Industrial and Machinery – Pacific Rim Region Pacific Rim 2011 Msm 2789 % 6.2% in 2012. the industry benefited from massive state loans.

8 Msm 4268 2016 % 8. agricultural machinery. Delphi and Johnson Controls of the US.a. especially in western and central China. Component supplies are also expanding to meet the growing needs of vehicle production. Sales growth will moderate after 2013 as restrictions are imposed on car use in major cities. while commercial sales will be down by -3% to 3. machine tools. The China Association of Automobile Manufacturers forecasts passenger car sales growth of 11% to 16 million vehicles in 2012. 6.8 2011-2016 % p. Average growth of 13% per annum is forecast between 2012 to 2016.2% in the first 8 months of the year. Taiwan’s machinery exports increased marginally by 0. China’s 12th five year plan has as one of its main aims to upgrade the chemical industry which will encourage companies to invest. Recovery in external markets is hampered by an uncertain global economic environment. 4. Growth in the chemicals industry in China is moderating. A rise in exports to SE Asian countries including Singapore. The presence of major foreign carmakers through joint ventures with domestic firms are boosting capacity and sales.6 Industrial and Machinery – Rest of Asia Region Rest of Asia 2011 Msm 2989 % 6. China’s production of industrial machinery grew by 18% in 2011. Political tension with Japan is causing disruption to Japanese automobile joint ventures located in China. and textile machinery. and cancellations of car orders as consumers decided to boycott Japanese products.1 2011-2016 % p. 4.7% year on year in the second quarter of 2012. 7.3 Msm 21470 2016 % 40.9.Japanese core machinery orders declined -1.4 ASEAN and India’s automotive industry continues to grow with rising domestic demand and investment in export bases.5 Growth in car sales in China slowed in 2011 as subsidies were gradually withdrawn. upgrade and innovate new products and processes.a.9. While South Korea machinery sales have suffered through 2012.9 million units. Slower growth is the result of depressed external markets and slower economic growth as a whole. As a result there has been major investment in vehicles parts manufacture by international parts suppliers such as Bosch of Germany. Rapid growth in the automotive components sector is driven by increasing car ownership and demand for replacement parts. Supply chains continue to be affected by components shortages out of Japan.5 Industrial and machinery – China Region China 2011 Msm 15646 % 35.2 million vehicles will be imported and exports will be around 1 million. Thailand and Indonesia are credited with this modest increase. 93 PRIVATE AND CONFIDENTIAL . Important sectors are materials handling machinery. 1.

the remaining industrial markets for corrugated are unexciting.9 Msm 1285 2016 % 2. leading to strong competition for inward investment by major auto industry players. the two leading automotive markets. A softening of investment across the region as producers delay or cancel projects will impact on industrial equipment sales. Growth is also anticipated as a base for exports of powertrain components to Europe and North America. but this does not appear to be affecting Argentine growth unduly. Brazil and Argentina. Malaysia.8 Industrial and Machinery – Other Regions Region Other Regions 2011 Msm 901 % 2. fuelled by both domestic and export demand.9. Outside of the automotive sector.7 Industrial and Machinery – Central and South America Region Central & South America 2011 Msm 1279 % 2. Indonesia and other low income economies.9. 2. 94 PRIVATE AND CONFIDENTIAL . Philippines and Vietnam are adopting policies to encourage growth in automotive related production. 4. small fuel efficient cars are the most popular models.4 2011-2016 % p. and tariff protection. Investment in infrastructure development could however stimulate sales of heavy construction related machinery.2 Poor economic outlook and loss of comparative advantage in export markets is affecting automotive and components production in Australia. is expected to encompass investment in auto parts manufacturing over the medium term to longer term.a. Sales were dented in 2011/12 by rising inflation. continue to grow rapidly.1 In Central and South America. Local firms and foreign majors are increasing their investment activities. including some restrictions on imports from Argentina. Automotive production in Venezuela remains depressed. The Brazilian government is stimulating domestic demand with tax concessions. Saudi Arabia’s industrial clusters development programme.Thailand’s position as an automotive industry hub for the ASEAN region could be weakened. due to disruptions caused by natural disasters highlighting the need for more dispersed production. 4. Countries across ASEAN including Indonesia. Outward migration from China to lower cost locations offers opportunities for Vietnam. but are expected to pick up in the current year.a. helping the push towards economic diversification. preferential vehicle financing terms.9 2011-2016 % p. 0. high interest rates and petrol prices.0 Msm 1006 2016 % 1. In India. subject to an adequate supply of labour.

5 15.2 8. 4. Europe and Japan.7 4.a. the developed regions of the world account for 75.1 4. where additional corrugated is used to provide additional packaging for subsequent delivery to the consumer.2% of corrugated consumption in this sector.0 6.10 Other Sectors 4.9 3.0 3.7 4.7 5.1 Other Sectors – Global Summary “Other Sectors” include corrugated use which cannot be attributed to a specific market sector and comprises:  Mail order/Internet shopping  Point of sale and display packaging  Gift/promotional packaging. 95 PRIVATE AND CONFIDENTIAL .10. Currently.2 5.3 3.4 8.5 3.5 0.1 100.4 8. for the market as a whole.7 31.9 Demand for corrugated is forecast to grow at an average 3.a. This is very much a reflection of the Internet usage levels in the USA.9 13.0 3.9% p. compared with 3..7 18.7 37. The main driver is mail order business linked to Internet shopping.The Middle East is seeking to reduce its dependency on oil and gas production to diversify its economy.1 37. 2016 MSM. the Point-of-Sale and display sub sector has contributed to much of the growth in this “Others” sector.3 100. Historically. but currently its influence is of minor importance compared with the mail order segment.5% p.a. and to promote development of its plastics industry and downstream petrochemicals industry. Low cost feedstock gives the region a strong competitive advantage.9 8. 1.0 2011-2016 % p. END USE MARKET PROSPECTS FOR CORRUGATED – OTHER SECTORS 2011. notably in Europe.6 30.0 Msm 3271 3631 798 4429 1053 1565 678 2243 368 486 11851 2016 % 27.6 6.7 3.9 4.9 10.8 8. % SHARE Region North America Western Europe Central & Eastern Europe Sub Total Europe Pacific Rim China Rest of Asia Sub Total Asia Central & South America Other Regions World 2011 Msm 3006 3033 600 3633 870 1047 445 1492 359 420 9779 % 30.

96 PRIVATE AND CONFIDENTIAL . North America and Europe will contribute 51.2 Other Sectors – North America Region North America 2011 Msm 3006 % 30.a.0 4. Online sales are also growing rapidly in Mexico.0 11.4 2011-2016 % p.6 2011-2016 % p.3 36. where the flexibility of a freestanding unit fits well with local flexible format retailing structures.9 25. and below 15%.10. whereas the Asia Pacific will contribute 45.5 38.10.2%. There are now more than 30 broadband connections per 100 people in both the US and Canada. but broadband penetration is much lower.Over the next 5 years.a. gift/promotional packaging – offer particularly attractive opportunities for corrugated. Point-of-Sale displays continue to show rapid growth in the US and Mexico.2% of the incremental growth forecast for the next 5 years.3 0.4 8. % SHARE Region North America Western Europe Central & Eastern Europe Sub Total Europe Pacific Rim China Rest of Asia Sub Total Asia Central & South America Other Regions World Msm 265 598 198 796 184 518 234 751 9 67 2072 % 12.2 100. mail order/Internet retailing offers by far the best growth potential.7 Msm 3271 2016 % 27.9 9. END MARKET PROSPECTS FOR CORRUGATED – OTHER SECTORS 2011 TO 2016 INCREMENTAL BUSINESS MSM. Point-ofSale and display packaging.7 In the US and Canada. 4.2 Msm 4429 2016 % 37.8 28.3 Other Sectors – Europe Region Europe 2011 Msm 3633 % 37.0 All the sub-sectors classified under “Other Sectors” – mail order/Internet shopping. 4. However. online retail sales (excluding travel and finance) increased by more than 15% in 2011 in the US and now hold a 5% share of total retail sales.5 3. 1.

10. In Japan. clothes. regardless of their size or specialisation. US-based Boston Consulting Group estimated e-commerce sales will amount to Rmb2 trillion (US$335bn) by 2015. Rakuten and Amazon are the largest online retailers and local specialist online retailers are growing fast. 97 PRIVATE AND CONFIDENTIAL . traditional retailers. Alibaba Group is China’s top e-commerce firm. Joyo.4 The number of Internet users in China is estimated to have exceeded 509 million by 2011. although growth is well below that of mail order/internet shopping.In the longer term. corrugated has little to gain because of widespread use of plastic carriers and reusable plastic containers. music and films. The main opportunity for corrugated arises out of the additional transit outer packaging that is required for distribution from the retailer/distribution centre to the consumer. Taiwan is fast developing but is further behind. will face increasing competition from online retailing. consumer electronics. South Korea is reported to be one of Asia’s fastest growing online retail sectors. Solid expansion is expected as e-retailing continues to progress from traditional online products. Foreign online retailers remain marginal players. corrugated is used extensively and will continue to grow as the range of products marketed and distributed via on-line retailing continues to expand.4% share of total retail sales.10. However.5 Other Sectors – China Region China 2011 Msm 1047 % 10. 4. holidays.9 Msm 1053 2016 % 8. increasing product choice and improved payment security will all continue to make on-line retailing more convenient and cheaper.a.9 High Internet penetration and popularity of smartphones offers huge potential for online and mobile shopping in Japan and South Korea. In the grocery sector. E-commerce is experiencing huge growth. Low overheads. white goods and furniture.9 2011-2016 % p. 8. with their company Taobao being the dominant player. owing to problems with over regulation of e-commerce which has now been eased. 4. Gift/promotional packaging is an important user of corrugated in the region. for most other products.2 2011-2016 % p. with the exception of Amazon through its local subsidiary.4 Other Sectors – Pacific Rim Region Pacific Rim 2011 Msm 870 % 8.a. to gain a growing share of the market for groceries. rising broadband penetration. with access by mobile ‘phone being as popular as personal computer access. take-up of mobile devices.7 Msm 1565 2016 % 13. taking a 7. such as books. 3.

7 Other Sectors – Central and South America Region Central & South America 2011 Msm 359 % 3. Online shopping is becoming increasingly popular across the countries in this region.a. 4.5 Msm 678 2016 % 5. more women in the workplace and opportunities for cost savings will help to drive future growth.3 Msm 486 2016 % 4. 4. Eretailing is dominated by consumer electronics. encouraged by infrastructure developments supported by government.10.7 2011-2016 % p.a. whilst weak payment and delivery systems are also inhibiting growth. The rapid growth in mass retailing is generating strong demand for Point-of-Sale displays in the more industrialised countries. The current level of penetration varies between countries and is affected by access to broadband and the quality of the local infrastructure. 98 PRIVATE AND CONFIDENTIAL . and is growing by double digits every year. 4. with 46 million users.6 Other Sectors – Rest of Asia Region Rest of Asia 2011 Msm 445 % 4. Online shopping is estimated to account for around 5% of retail spending in 2012. at 10 broadband connections per 100 people in 2012. 8.5 Brazil is by far the largest online market in Central and South America. Brazilian consumers have readily adapted to electronic social media.8 Other Sectors – Other Regions Region Other Regions 2011 Msm 420 % 4.1 2011-2016 % p. Convenience benefits for the rising number of single person households. Brazil is the second global Facebook market. with online retailing forming an important source of business. Elsewhere in the region. Although broadband penetration is still relatively low.10. with the increasing popularity of smartphones and growing online presence of retailers.0 E-commerce is undergoing fast growth in Oceania.7 Msm 368 2016 % 3. 3.1 2011-2016 % p. 0. but Internet shopping will continue to be the main driver in the “Other Sectors”.8 “Other Sectors” is a small but growing sector for corrugated packaging.Point-of-Sale and gift/promotional packaging will also see good growth. low broadband penetration and logistics issues restrict the growth potential for e-retailing. second to the USA.a.10.

99 PRIVATE AND CONFIDENTIAL . developed to attract tourism to the region. where ownership of credit cards is limited and security of payments is poor.Increasing provision of new payment services by government and private companies setting up electronic wallet services is facilitating development of online shopping in the Middle East and Africa. Use of corrugated for Point-of-Sale and display applications is likely to benefit from growth in luxury retailing in Middle East countries such as Dubai and UAE.

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1 Regions The report covers the same regions as last year’s edition: North America Canada Mexico USA Western Europe Austria Belgium Denmark Finland France Germany Greece Ireland Italy Netherlands Norway Portugal Spain Sweden Switzerland Turkey United Kingdom Central and East Europe Czechia Hungary Poland Romania Russia Slovakia Ukraine Others Pacific Rim Japan South Korea Taiwan Asia China India Indonesia Malaysia Pakistan Philippines Singapore Thailand Vietnam Central and South America Argentina Brazil Caribbean Islands Central America Chile Others Other Regions Oceania:  Australia  New Zealand Africa:  South Africa  Rest of Africa Middle East Central Asia 101 PRIVATE AND CONFIDENTIAL .0 RESEARCH SCOPE 1.1.

333. motor & garden products Toys. 329 321.1. 316 326.2 End-Use Markets The Report quantifies regional demand for corrugated in each of the following markets. 3117 335 335 335 334 327 313. 325. 339 Durable Goods & Clothing Industrial & Machinery Other Sectors 102 PRIVATE AND CONFIDENTIAL . 327. 323. we have included the NAICS codes that most closely match these categories. 326 3221. textiles & footwear DIY. 335. They apply specifically to the corrugated industry and whilst they do not relate specifically to NAICS classifications adopted in the US. 329 326. 331. 326 3111 3122. 3115 325 325. with forecasts of the anticipated shift in business from developed to developing regions: – Processed foods – Drinks – Non-food consumables – Fresh foods/produce – Domestic appliances and electrical goods – Durable goods and clothing – Industrial and machinery – Other sectors The sub markets contained in each main market are the same as last year and are listed overleaf. 3113. poultry & fish Brown goods White goods Small domestic appliances Consumer IT & telecom products Ceramics & glassware Clothing. 332. 3116. 314. confectionery & snacks Dry foods & beverages Canned & bottled foods Frozen & chilled foods Dairy products Beer & soft drinks Wines & spirits Liquid milk & fruit juices Health & beauty products Household products Pet foods Other non-foods Fruit & vegetables Meat. Market Processed Foods Drinks Non Food Consumables Fresh Foods / Produce Domestic Appliances & Electrical Goods Sub Markets Biscuits. 315. games & sports goods Wooden goods & furniture Automotive Chemicals Other industrial NAICS Codes 3112. 3222 111 112. 114. 3118 3119 3114 3117 3115 3121 3121 3121. 337 336 324. 326. 336.

PRISM estimates include litho laminated containers manufactured by cartonmakers and other converters not affiliated to corrugated National Associations. with the exception of the USA. The main reason for this is that. are often slightly lower than PRISM estimates.3 Base Year.4 Definitions Statistics published by the ICCA that are sourced from National Associations. notably in Europe. All estimates are based on area and weight off the corrugator. In Europe some of these companies report to ECMA but some are not captured by either the corrugated or folding carton Associations. Estimates and forecasts are expressed in terms of million square metres (Msm). 103 PRIVATE AND CONFIDENTIAL . Estimates and Forecasts The base year is 2011 with forecasts for 2012 to 2016.1. billion square feet and thousand tonnes (KT). taking due account of changes in average substance weights. 1. Historical data is provided for 2006 to 2010.

Trade and Industry Million Million square metres Packaging Research Intelligence Strategies and Marketing Returnable Plastic Crates Retail Ready Packaging Regular Slotted Case Square metres Shelf Ready Packaging Chinese Taipei Corrugated Case Association Vietnam Pulp and Paper Association World Economic Outlook 104 PRIVATE AND CONFIDENTIAL .5 Glossary of Abbreviations An alphabetical list of abbreviations used in the report is provided below: ACCCSA ADB ABPO AICC ASEAN Bsf Bsm CPA CPF FEFCO FICCI FMCG GDP Gm2 IMF IP JCCA KCCA KT MENA METI Mn Msm PRISM RPC RRP RSC Sqm SRP TPCIA VPPM WEO Corrugated Association for Caribbean Central & South America Asian Development Bank Brazilian Corrugated Association Association of Independent Corrugated Convertors Association of South East Asian Nations Billion square feet Billion square metres Chinese Paper Association Chinese Packaging Federation The European Federation of Corrugated Board Manufacturers Federation of Indian Chambers of Commerce and Industry Fast Moving Consumer Goods Gross Domestic Product Grams per square metre International Monetary Fund Industrial Production Japan Corrugated Case Association Korean Corrugated Case Association Thousand Tonnes Middle East and North Africa Japanese Ministry of Economy.1.

converters. The principles adopted concerning which source to take were as follows:   Where PRISM has undertaken original fieldwork in the relevant countries. using similar sources of information to those used last year’s edition. or differ from estimates obtained from important locally based producers. The Economic Intelligence Unit (EIU) was commissioned to provide forecasts of industrial production for all of the countries under review. In total we carried out 62 high level interviews at senior executive level with major mills. Otherwise.0 RESEARCH METHOD The starting point for the research was the PRISM Global Corrugated Database built up from research carried out by PRISM.2. as well as fieldwork with leading mills and producers supplying that country. and the 2011 statistics published by the ICCA. trade associations and other industry experts in each region of the World. we have found that some of the ICCA statistics sometimes differ from those published by the local association. these estimates have been taken as the most reliable available. A summary of the interviews carried out is provided below: Region North America Europe Asia Pacific Central and South America Other TOTAL Number of Interviews 13 17 20 8 4 62 From our investigations. we have relied on the local corrugated associations. 105 PRIVATE AND CONFIDENTIAL . We have therefore altered the ICCA figures where appropriate. Forecasts of GDP were obtained from the IMF and the Asian Development Bank.

106 PRIVATE AND CONFIDENTIAL .Economic commentary is based on the following information sources:           IMF – World Economic Outlook The Economist Wall Street Journal The Federal Reserve Bank Production Statistics and Beige Books and the US Department of Agriculture (for the USA) US Bureau of Labour Statistics (for the USA) Eurostat (for European countries) Bank of Japan and Japanese Ministry of Economy Trade and Industry (for Japan) Asia Development Bank Development Outlook (for Asian countries) The Federation of Indian Chambers of Commerce and Industry (for India) Internet research for key countries adding items of specific interest. notably in respect of the current political and economic state of the country under review.