Packaging Industry in Italy - Growth, Trends, COVID-19 Impact, and Forecasts (2023-2028)

The Italian packaging industry is expected to grow at a CAGR of 3.1% over the forecast period. Packaging materials serve as a means of material containment and preservation, safe transportation, and disclosure of material properties and contents to end users. The development of packaging items is greatly influenced by various social factors and upcoming market trends in economically developed markets.

Key Highlights

• Several market developments influence the packaging sector in Italy. This is due to the rising living standards and personal disposable incoming, and consumers are buying more variety of goods to pamper and treat themselves, which is driving up demand for packaging for goods including food and drink, cosmetics, pharmaceuticals, and other products.
• Additionally, increasing the adoption of lightweight packaging due to its small weight, plastics are a material that is being used more and more. Even though plastics are used for packaging more than 50% of all European goods, just 17% of the weight of the packaging is made up of plastics, according to Custom-Pak. According to a study by Custom-Pak, equivalents (such as paper and paperboard, glass, steel, aluminum, textile, rubber, and cork) are, on average, 4.5 times heavier than plastic.
• Italian government laws also contributed to the expansion of this business. For instance, the nation's dairy packaging regulations are growing more stringent. Milk and dairy products must be prominently labeled to indicate the product's origin (milk) in the country where it is processed and packaged. The entire packaging business is anticipated to be impacted by the growing importance of e-commerce in Italy. For instance, according to Politecnico di Milano, the value of purchases of Italian consumers on e-commerce platforms increased almost twofold from EUR 27.5 billion (~USD 29.21 billion) in 2018 to EUR 45.9 billion (~USD 48.75) in 2022.
• However, fluctuating raw material prices are expected to hinder the demand for some packaging materials. For instance, according to Flexible Packaging Europe (FPE), growing economic uncertainty has affected demand from converters and end users as consumers are being more cautious due to high inflationary pressures across various packaged goods. Also, the price for 60gsm one-sided coated paper climbed (up 11%), while 7-micron aluminum foil and 15-micron BOPA held steady at their price.
• FAS Rome reported that Italy's consumer food service was severely impacted by the COVID-19 lockdown and restrictions in 2020, causing a 33% decline in sales value compared to 2019. Additionally, the substantial rise of teleworking, especially in large cities, impacted food service, with a general reduction of consumption during lunchtime, as people ate lunch at home. Further, the Russia-Ukraine war affects the overall packaging ecosystem with increased raw material prices and energy costs.

Italy Packaging Market Trends

Plastic Packaging to Hold Significant Market Share

• The demand for plastic packaging is expected to increase moderately in the region, as there is a slight fluctuation expected in the GDP during the projected time frame. Due to the surging demand for consumer goods, the country is pushing the growth of packaging materials such as glass, paper, metal, and plastic.
• Additionally, the increasing demand for hygiene products since COVID-19 has supported the need for plastic packaging products such as plastic. Also, people preferred buying hygiene products from large retailers and other channels. For instance, according to Cosmetica Italia, in 2021, approximately EUR 710 million (~USD 753.91 million) of body hygiene products were purchased in large retail and other channels. In contrast, perfume shops registered the lowest consumption value of body hygiene products, with roughly EUR 25.5 million (~USD 27.07 million).
• Furthermore, the increase in retail and e-commerce sales also drives the need for packaging. In response to this megatrend, flexible packaging solutions are increasingly used that deliver the ultimate protection for these products. This encourages the use of plastics for packaging. It can meet diverse packaging needs, from electronic components to shelf-able packaging for food products, making plastics the preferred form of packaging.
• Additionally, the interest in social commerce was exceptionally high among TikTok users in Italy compared to any other social media platform. Also, the ongoing trend of following social media influencers is expected to influence the consumer's buying behavior, thus positively impacting the demand for packaging in Italy.

Increasing Demand for Food Industry Expected to Witness Significant Growth

• Italy is the second-largest European manufacturer, with a strong industry in producing machinery, clothing, food, automotive components, and medicines. It is a major exporter of wine, pasta, canned tomatoes, cheese, and olive oil. Organic foods, functional food, and low-fat products have potential demand in the Italian market.
• Additionally, paper packaging companies in Italy are entering into a partnership with various end-user segment companies to offer sustainable packaging solutions to a broader audience. For instance, In April 2021, Seda International Packaging Group, a paper-based packaging company in Italy, announced its partnership with McDonald's and Comiecoto to support the over 600 McDonald's restaurants in Italy to adopt 90% of paper-based packaging. The company aims to drive an initiative that will massively raise customers' awareness of the importance of sustainable packaging.
• Also, according to ISMEA Istituto di Servizi per il Mercato Agricolo Alimentare, ISMEA (Italy), the food spending by people in Italy has increased, especially in Cereal products, Milk and dairy products, Beverages (wine included) which has fueled the demand for packaging in Italy. Also, spending on cereals was the highest and accounted for 13.70 % in 2021.
• Furthermore, the e-commerce rise fuelled by the pandemic has further driven rapid growth in the packaging industry in Italy, with demand for paper packaging in particular also fed by a de-plastification push by the government initiatives. Moreover, to fulfill the growing demand for sustainable packaging solutions, the vendors operating in the market are making significant investments in capacity expansion and product innovation. They are establishing partnerships with leading packaging companies to gain expertise and visibility.
• For instance, In October 2021, Smurfit Kappa Group plc announced that it had completed the acquisition of the Verzuolopaper mill at a purchase price of EUR 360 million (~USD 381.46). The customary closing conditions have now been fulfilled. In the past Verzuolo'sPM9 machine was converted into an advanced recycled fiber-based paper-making machine for corrugated cardboard production, with a capacity of 600,000 tons of paper. It complements Smurfit Kappa Group plc's existing businesses, strategically located near the Port of Savona. It is expected to offer significant benefits to the Group and its customers.

Italy Packaging Market Competitor Analysis

The packaging industry in Italy is cohesive and cohesive. It is a unique market space with multiple vendors, such as Tetra Pak Italiana SpA, Smurfit Kappa Italia SpA, and Wipak Bordi SRL. DS Smith Packaging Italia SpA, Rotofil SRL, and Vetreria Etrusca, among others, are operating and working to improve their revenue share. Many companies are investing in R&D activities across the country to help the industry to grow. On a global level, mergers and acquisitions also impact the competition in the domestic market.

In May 2022, Investment firm Peninsula Capital agreed to buy Italian premium packaging firm ISEM Bramucci, which makes luxury boxes and folding cartons to hold fragrances, cosmetics, and champagne bottles, and whose customers include L'Oréal and Shiseido in a deal worth around EUR 90 million (~USD 97 million), and targeted further acquisitions in the industry.

In April 2022, US-based hybrid packaging company Berlin Packaging acquired Italian glass and metal packaging supplier Panvetri. Based in Modugno, Panvetri serves wine estates, cooperative wineries, oil mills, and food manufacturers primarily in Italy's Apulia and Basilicata regions. In addition to wine and olive oil packaging, the family-owned company supplies beer, spirits, sparkling wine bottles, olive oil cans, food jars, and closures.

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