Market Profile: Barrier Film Research

by Sharon P. Derbyshire

Barrier Film Market for Pet Foods Should Reach $61 Million in Sales in 2008, led by Stand-Up Pouches

In 2003, there were 75 million pet cats and 60 million pet dogs in the U.S. with 55% of households having at least one cat or dog. The pet food market (dogs and cats only) was estimated to be about $13 billion in 2003, growing at 6% annually. This is a growth market compared to human food, which is increasing at 3% per year. Although pet ownership is increasing at only about 1% annually, pet owners demanding higher quality pet food for their beloved Fido or Fifi are fueling the pet food market.

There has been a shift from wet to dry food, particularly in the U.S., where dry dog food currently accounts for nearly 80% of all dog food sales. Dry food is more convenient and less expensive, while satisfying pets' total nutritional requirements. This trend is expected to continue with dry dog food sales growing at about 10% annually through 2008, compared to wet dog food sales increasing only 2% per year. Dry cat food accounts for 60% of total cat food sales in the U.S. and is expected to grow 5% annually, while wet cat food sales are growing at less than 2% per year.

Packaging formats

In the U.S., 70%-80% of the pet food market lies in the dried food sector. Larger quantities of dry pet food, usually over 10 lbs., are packaged in multi-wall bags (2-4 layers) based on natural brown Kraft with a bleached, gloss coated outer-ply and inside coating of a grease resistant material. Plastic square bottom bags and stand-up pouches are the preferred packaging for quantities less than 10 lbs.

Square bottom bags manufactured from roll stock on high-speed vertical form/fill/seal (F/F/S) equipment are lighter in weight than traditional multi-wall paper structures and cost about the same. However, conversion to plastic from paper requires a significant capital investment in F/F/S equipment. Plastic bags run at about 60-70 bags per minute and two lines may be required to equal the output of one paper bag line. Bags and pouches for dry food are typically constructed of polyethylene terephthalate (PET) or polypropylene (PP) with a linear low-density polyethylene (LLDPE) sealant layer, where the most important requirement is grease resistance. Some of the larger sizes are fabricated with carry handles and pour spout for added convenience.

Pet snacks, representing approximately $1.7 billion of the pet food category, come in dry and semi-moist varieties. Kraft Milk Bone and Del Monte hold approximately 70% of the sector. Semi-moist snacks make up about 55% of all treats and are more sensitive to moisture loss and oxygen degradation than dry. These products are most often packaged in stand-up pouches constructed of reverse printed PET adhesive or extrusion laminated to metalized PET with a sealant layer. Approximately, 10% of these films are being imported from overseas, predominately Asia. About 15% of stand-up pouches are fabricated from clear structures based on polyvinylidene chloride (PVdC) coated PET film.

In general, pouches and bags are either pre-made or manufactured from roll-fed material run on vertical F/F/S machinery. Depending on size, pouches 4" wide by 6" tall with no gussets can be fabricated at speeds up to 200 packages per minute. Larger size pouches, 12" wide by 15" tall with 5" gussets run about 80 packages per minute. Average size for semi-moist pet snacks is about six inches wide by nine inches tall with a 2" gusset. Pouches and bags are usually heat sealed at around 300 degrees Farenheit.

Key barrier film applications

Stand-up pouches for semi-moist pet snacks are the primary applications of barrier film in the pet food category. There were approximately 1.5 billion stand-up pouches used to package pet food in 2003, expected to double to 3 billion by 2008. Stand-up pouches with billboard graphics, space-saving storage, consumer-friendly ease of opening, and built-in zippers to retain freshness are ideal for packaging snacks and wet pet food. In fact, stand-up pouches have been attributed with spurring the 10% growth rate in the snack sector of the pet food category. Some pouches are even fabricated with a punched slot for pegboard display.

Consumption of barrier film for packaging pet food was estimated at $46 million, in 2003, forecasted to grow at 6% annually to $61 million by 2008. The primary barrier film applications (excluding foil) are metalized and clear PVdC coated PET films for semi-moist pet snacks in stand-up pouches.

Performance in-use properties

Pets are often times more sensitive to "off" or unusual odors and flavors than humans. Packages of pet food are typically gas flushed and hermetically sealed to protect and preserve the product. Likewise, pets are equally sensitive to product contaminants and spoilage. Both multi-wall bags and film structures offer excellent protection of organoleptic properties, odor and grease barrier, puncture resistance, drop and compression strength, low seal-initiation temperature and hot-tack strength. Oxygen and moisture barriers are critical to preserving the freshness of some pet foods, and the oxygen transmission rate (OTR) and moisture vapor transmission rates (MVTR) of semi-moist pet snacks are typically sufficiently low to deliver the desired 18-month shelf life.

Reclosablity is another key characteristic of pet food packaging and is often accomplished through built in zippers. The main spoilage concern for pet snacks is oxidation of lipids. Reclosable, oxygen barrier packaging can decrease the availability of oxygen resulting in extended shelf life while retaining flavor and aroma. Graphics are also important for impulse purchase appeal. Square bottom bags and stand-up pouches offer retailers eye-catching graphics.

Trends, growth, and drivers

There has been significant growth in the large bag segment where multi-wall paper bags are widely used to package larger quantities of dry pet food. Strides have been made in sealing up seams and folds of multi-wall bags, decreasing the potential for bug infestation.

There is also an increasing trend toward convenience packaging that offers easy open, reclosability and ease of carrying features highly desired by consumers. Multi-wall bags are economical but do not offer consumers the convenience features of stand-up pouches with reclosable zippers. Stand-up pouches are particularly popular in packaging semi-moist pet snacks where they are replacing more expensive composite cans.

Retortable stand-up pouches with zippers capable of withstanding temperatures of 250??qF for 30 minutes are making significant inroads in replacing metal cans in packaging wet pet food. Retortable pouches are typically constructed of film/foil laminates with low OTRs to ensure the 24-month shelf life required by most wet pet food manufacturers. Stand-up pouches are particularly eye catching on store shelves and even come in silhouette shapes of dogs and cats.

Tetra Pak Recart™, a retortable carton originally developed for vegetables, soups, ready-to-eat meals, fruit, and other foods traditionally packed in metal cans or glass jars, has been adopted by Nestlé Pet Food for Friskies and Alpo brands wet, shelf stable dog food. The carton incorporates highly moisture resistant fiberboard and proprietary plastic polymers that allow its low-acid contents to be retorted at temperatures up to 262° F for two hours, promising a shelf life of 18-24 months. Tetra Pak is offering two six-layer Recart™ carton structures for shelf-stable foods: Savor-Lok™, a PP/foil/treated paperboard lamination, and Oxy-Loc™, a higher barrier structure incorporating ethylene vinyl alcohol (EVOH).

While the finished carton somewhat resembles Tetra Pak's F/F/S aseptic drink boxes, the Recart line erects, fills and seals pre-formed blanks. The line is capable of running wet, shelf-stable foods that contain any sizes particles, such as beans and rice, at speeds of up to 400 packages per minute. Due to their space-efficient shape, three cartons can be placed in the same shelf space as two metal cans or glass jars they are designed to replace. And, a truckload of blanks contains the same amount of packaging as about 16 truckloads of similarly sized empty cans. The package is said to cost about the same as a metal food can and compete with stand-up pouches for pet food flexible packaging conversions.

Not all pet food manufacturers are abandoning metal cans in favor of retortable pouches or cartons. Iams resized its Eukanuba brand canned dog food into squattier 10-oz., two-piece, 307/207-coated draw/redraw aluminum cans with easy-open end and plastic resealable overcap. The redesigned can is said to draw more attention to the product on store shelves.

Key converters

Here is a sampling of key converters in the U.S.:

Alcan: Alcan Packaging, with $6 billion in sales, is the world's leader in flexible packaging for food and pharmaceuticals, second in tobacco, with a leading position in cosmetics. Alcan Packaging solidified its position as a leading full-service supplier with global reach when it acquired Pechiney Plastics Packaging in 2003. Alcan Packaging operates 187 facilities with plants in 26 countries.

Bemis (Curwood): Bemis is the leading supplier of flexible packaging in the Americas and a major supplier of pressure sensitive materials. Founded in 1858, the Company reported 2003 sales of $2.6 billion, of which $2.1 billion was from the flexible packaging business segment. The primary market for the company's products is the food industry, which accounts for over 65% of sales. Other markets include medical, pharmaceutical, ag/chem products, printing and graphic arts, and a variety of other industrial end uses.

Printpack: Privately held Printpack, with sales of over $1 billion, is the fourth largest converter of flexible packaging. It is the largest supplier of converted films for snack food. Other markets include beverages, bakery, confections, cookies and crackers, produce, meat and dairy, frozen food, pet food, and personal care. It is a leader in stand-up pouch technology with applications in pet food, snacks, cookies and crackers, and ag/chem products.

Exopack: Exopack has the largest pouch making capacity in the U.S. and is one of the top ten flexible packaging companies. They are a leading supplier of bags and pouches for pet food, lawn and garden, cement, agricultural, and chemical industries. Exopack is a forerunner in retort pouches technology incorporating Slide-Rite® Advanced Closure System zippers that they license from Pactiv.

Five-year outlook for barrier films

Stand-up pouches for semi-moist snacks will continue to be the primary application for barrier films in packaging pet food. Metalized PET, with 85% of the sector, is the barrier film of choice due to enhanced graphics and economics. Stand-up pouches of PVdC coated PET are available for clear applications at a 15%-20% price premium. New introductions in stand-up pouches and conversions from composite cans are expected to continue to drive the growth rate for barrier films at 6% over the next five years.

This article is based on an excerpt from the extensive Kline & Company multi-client report "High-Performance Barrier Packaging Films 2004" (see sidebar). For a prospectus of the study visit the company website at www.klinegroup.com/y381a.htm.

High-Performance Barrier Packaging Films 2004: Business Analysis and Opportunity Assessment

Objective: In addition to an objective and thorough business analysis, this study will offer an unbiased, forward-thinking assessment of how key industry trends are impacting the new generation of barrier packaging films in the U.S. The report will assist barrier resin and film suppliers, converters, end users, and others in focusing efforts towards exploiting the best potential opportunities.

Report methodology: Kline's research approach places the greatest emphasis on primary research to ensure that the foundation of business intelligence and insight is accurate and current. We are conducting in-depth discussions with knowledgeable industry participants to define and verify the nature of the current and competitive business environment.

For more information: Contact Gillian S. Morris, Industry Manager, Kline & Company, Inc. at 630-761-9587, or Sharon P. Derbyshire, Senior Associate, Kline & Company, Inc. at 919-931-1358.