Manufacturing News

Food processors to purchase less packaging equipment

Although spending for packaging machinery by U.S. domestic companies is expected to rise by 2 to 3 percent this year -- to approximately $4.9 billion in sales -- spending by the food industry is expected to decline by 1 to 3 percent during the same period, according to a study by the Packaging Machinery Manufacturers Institute (PMMI).

In fact all but two defined market segments -- the other is personal care products -- are forecast to increase spending in 2000. The primary catalysts for growth -- the strength of the economy, new product information, improving manufacturing productivity and profitability with equipment upgrades -- are largely the same market drivers as last year, according to PMMI.

PMMI attributes projected declines in the food and food preparations segment to many factors, including the growth of eat-out and take-out food sales and the fact that supermarkets now devote more shelf space to non-food items. In addition, "As the industry consolidates further in order to achieve better profitability, the number of SKUs produced by larger companies is being reduced," the study notes.

By comparision, companies within the beverage segment are expected to order 9 to 11 percent more equipment this year thanks to continued growth of beverage sales -- especially of bottled water, sports drinks, ready-to-drink iced tea and coffee, and various juices. According to PMMI, the further shift to plastic containers, along with addition of new beverage products, containers and materials (most notably PET and PEN), all bode well for equipment orders. "Moreover, beverage producers appear to be replacing machinery at a higher than average rate to improve profitability," the study says.

The study's findings are based on 401 in-depth telephone interviews conducted with decision makers from essentially all sectors of the market.

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