Western Package for Western Goods: Flexible Package Market in Poland

Poland represents the second largest (after Russia) flexible packaging market in CEE.

Past development of the flexible packaging market in Poland was determined mainly with “external” factors rather than with the domestic demand:

1. Since the mid of the 1990s Poland was selected as the “outsourcing location” with many European FMCG and other consumer good producers – due to high qualification of the working power, low salaries (in comparison with the Western Europe), and attractive geographic position (“bridge between Western Europe and CIS/CEE”)
2. Those plants in Poland were built/acquired with global players mainly for supply in EU countries (not for Polish domestic market – though some volumes were sold domestically); focusing in the EU markets defined the necessity to follow EU standards – including those in package; the next logical step was establishing of flexible package production in Poland – for package supply to those FMCG plants producing goods for EU markets
3. At the next stage the global package producers could evaluate the advantages of establishing own plants in Poland – not only for package supply to FMCG plants located in the country, but also for package deliveries from Poland to EU and global markets

So now the Polish flexible package industry solves two tasks

1. It supplies numerous FMCG/consumer good plants – located in Poland and owned with foreign/global players
2. It exports package to EU and global markets

The organizational structure of the Polish flexible package market is defined with the necessity to solve these two tasks

1. From 30 largest facilities 20 plants are owned with foreign/global package players
2. These players – that define the “face” of the industry and control up to 80% of the domestic production – orient at supply of the FMCG/consumer good “outsourcing” plants owned with multinationals
3. Most of the mid-size facilities (owned with local investors) are orienting at export – that provides 30-60% of their revenues; Russia/CIS and EU are the key markets for such players

About 80 flexible packaging producers operate now in Poland. Grupa Kety, Mondi (with 7 facilities), Constantia Packaging (2 facilities), Nordenia (2 facilities), Grupa Ergis, PPH, Gasior, and Reuther Polska are the largest manufacturers. Grupa Kety, PPH Gasior, Constantia Packaging and Mondi have most diverse product line.

Currently the flexible package producers owned with foreign/global players are dominating in Poland – in terms of domestic production (48%), and share in market (47%). Such players are presented with Mondi, Constantia, Nordenia, Alcan, Amcor, Wipak; the large European package holdings are also actively presented in the market – Suominen, Schur, Veriplast, COEXPAN, MTC Holding, REUTHER, etc.

Such position of the global/foreign producers in total corresponds the share of foreigners in the key package-consuming industries: foreigners control 2/3 of FMCG production (by value), 3/4 of consumer chemicals production, and almost 100% of tobacco industry; so it’s not strange why the foreigners also control package supply to such plants.