Among a series of far-reaching presentations on doing business abroad, one idea rang clear at last month's Flexible Packaging Association Fall Executive Conference: For US converters to prosper in the decades ahead, they need to “follow the money trail” of their customers' moves toward going global. More than 100 industry professionals attended the intensive one-day program, “The Impact of Globalization,” Oct. 4 in Chicago.

During the event, Michael Richmond, strategic business and technical leader for Kalamazoo, MI-based Packaging and Technology Integrated Solutions (www.pti-solutions.com) and Graham Cox of UK market researcher Pira Intl. (www.pira.co.uk) revealed research findings commissioned by the FPA.

Key trends show that while global brand owners are increasing their manufacturing presence in the developing world (referred to as High Growth Opportunity Countries), there is also a clear shift toward more global packaging purchasing (including flex packs) at the expense of regional and local purchasing. In other words, US converters need to follow in the footsteps of their brand-owner customers and set up flex-pack manufacturing plants in HGOCs to serve them. Chief among these locales and their characteristics:

China—1.3 billion population; emerging middle class of consumers; Western names gaining ground in retailing; paper and plastic packaging dominates; packaging supply market is highly fragmented but Amcor, Alcan and Sealed Air each already have a significant presence there.

India—1.1 billion population; 300 million middle-class consumers; high packaging standards; retailers Tesco, Wal-Mart and Carrefour moving into the market; local flex-pack converters supplying $2 billion worth of product annually; not many Western converters present, but interest is growing.

Russia—143 million population; most affluent consumers near Moscow and St. Petersburg; reasonable packaging standards; 4,000 modern retail-format stores in 2004; 72 percent of food packaged in flexibles; flex-pack market growing 12 percent a year; production costs much lower than Central Europe.

Brazil—186 million population; Wal-Mart now the No. 3 retailer; adequate packaging with some value-added features; $3 billion in flex packs make up 25 percent of the total market; major bauxite deposits mean aluminum foil is locally very cost-effective; many large local packaging suppliers.

Unfortunately, the FPA research revealed an important disconnect between US converters and their global brand-owner customers (see chart above). Small, medium and large converters see the US as their primary HGOC, while CPGs are more than twice as likely to view China, for example, as one of their greatest growth opportunities. Brazil, Mexico and Latin America in general are seen by both groups as HGOCs for flexible packaging.