From device to doorstep

Unsurprisingly, worldwide retail e-commerce sales grew an estimated 27.6% in 2020, for a total of $4.2 trillion.[2] With a global consumer base more reluctant to shop physically - and in most cases unable to do so due to local restrictions –  companies have risen to the challenge of online service provision and increased delivery options. Amazon, for example, saw a record performance in 2020 with annual revenue up 38% to $386 billion.[3]

It’s unsurprising, therefore, that the packaging required to make these deliveries has, in our view, seen an increase in production too. As the order books continue to thrive while the anticipated demand for e-commerce grows, this trend looks set to continue.

Within the packaging space, however, it’s corrugated cardboard that tops the charts. As companies and investors seek out sustainable alternatives for ‘business as usual’, the increase in value and requests for this type of delivery material has increased globally, with the market growing 3.7% annually and expected to reach $300 billion in 2023.[4] Coupled with increasing government regulation (e.g. the EU’s single-use plastic directive),[5] this looks set to drive packaging for the foreseeable. Subsequently, the demand for e-commerce is unlikely to decrease rapidly – bricks and mortar retailers need time to reach pre-pandemic normality and some countries continue to battle third and fourth waves of Covid-19 infection.  With this trajectory, packaging suppliers are well placed to capitalise on the momentum.

No single leader

Despite a global Covid-19 experience, packaging is very much a fragmented market, fuelled by the aforementioned regional sustainability agendas, local logistics and the variety of packaging materials.

Lumber - Activity within the lumber market has experienced strong growth during the pandemic in the US - and equally higher multiples - as more people moved to rural areas or began home renovations. However, in our experience, valuations in the space can tend to shrink as no one is convinced that the market peaks will continue for long, mirroring the high multiples at market troughs. Investors often value these companies on mid-cycle EBITDAs. Other regions, such as India, have not witnessed this same level of activity in our view, instead seeing more growth in cardboard or plastic packaging.

Corrugated and plastic packaging – However, the demand for lumber has not been reflected as equally across Europe, where a focus on personal care and hygiene has generated appetite for corrugated and plastic packaging. We believe this demand has generated considerable scope for consolidations in the space driven by trade buyers. An example being Berlin Packaging, the world’s largest hybrid packaging supplier’s acquisition of Spanish and Italian plastic packaging companies, Repli and Pentapacking.[6] Consolidations such as this demonstrate the increasing demand and globalisation of the market.

This demand has in some instances put a significant amount of pressure on the operations of manufacturers. For example, Italy-based Pro-Gest, a manufacturer of containerboard, cardboard and food packaging, refinanced its debt issuing a €200 m private placement financing subscribed by Carlyle Credit.[7]

Flexible Intermediate Bulk Containers (FIBC) - The FIBC space has also been a strong area of focus for the industry – particularly for China and India. Although we’ve seen some activity across the West in this space, they do not meet the levels seen in the East, in our view. We anticipate demand for FIBC to grow due to the increasing interest in durable and cost-efficient packaging – largely driven by the activity seen in the food products & agriculture, building & construction and pharmaceuticals industries.[8] We believe that while key operators continue to drive innovation and adopt digital transformations, the overall competitive ecosystem for FIBC is largely dominated by market leaders and emerging players with niche offerings.

Outlook for 2021

Given the labour intensive nature, and tendency for the global packaging market to largely track GDP growth, we anticipate the vaccine rollout will increase productivity and thus, generate economic growth across Europe, the US and Asia. In turn, we expect this to accelerate investment activity within the packaging space over the coming year.

Those seeking to invest in the space should therefore look for:

  1. Emerging players in the FIBC market offering niche solutions
  2. Opportunities with suppliers offering innovative and sustainable packaging solutions
  3. Commodity packaging manufacturers looking to capitalise on current market conditions



[1] Insights on the Global Packaging Market 2020-2024: COVID-19 Analysis, Drivers, Restraints, Opportunities, and Threats – Technavio, businesswire, 2 September 2020

[2] Global Ecommerce Update 2021, emarketer, 13 January 2021

[3] Amazon’s Net Profit Soars 84% With Sales Hitting $386 Billion, Forbes, 2 February 2021

[4] Five key trends that are changing the future of the corrugated packaging market, Smithers, 27 March 2020

[5] Single-use plastics, European Commission, 2 July 2019

[6] Berlin Packaging's expansion in Europe continues with the acquisitions of Repli and Pentapackaging, PR Newswire, 16 December 2020

[7] Pro-Gest Group Announces the Issuance of New Private Placement Notes for a total of up to €200,000,000, Pro-Gest, 23 December 2020

[8] How Expansion of the flexible packaging industry is Spurring Growth of Jumbo bags Market: Future Market Insights Report Analyzes, FIM, 25 February 2021