Private Equity Goes Shopping: The Future of the North American Plastic Packaging Industry
In contrast with other packaging sectors, the F&B plastic packaging sector in North America (and globally) is still highly fragmented, due to the variety of product offerings, industries served, and technologies adopted. In light of growing consumer concern around sustainability, companies should exercise caution when investing, but we do not expect investor interests to cool down.
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The global food & beverage plastic packaging industry is seeing heightened deal activities in recent years, both from strategic and financial investors. The consolidation is mainly led by North American players. Both financial and strategic buyers are acquiring domestically, and across the oceans.
With offtaker demand expected to continue, many deals happened as a means to expand the geographical market and customer base to achieve economy of scale. Additionally, as offtakers discover more functionality and versatility, innovation in flexible plastic packaging is increasingly driving consolidation.
Compared to other packaging sectors, the food & beverage plastic packaging sector has a high percentage of active financial investors (e.g. private equity firms). “The sector is stable, with a steady cash flow, and is therefore interesting to financial investors, both directly and indirectly through add-on acquisitions,” says Xinnan Li, Associate Analyst – F&A Supply Chains. North American private equity firms have also been aggressive in building their portfolios in Europe, a unique phenomenon to both regions. “We expect to see more activities down the road, especially in niche high-growth sectors and through the acquisition of standalone assets.”
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Xinnan LiAssociate Analyst - North America Read more
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