Slowing economy impacts packaging-equipment sales

March 22, 2003
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Capital spending for packaging machinery will take a hit this year, according to the fourth annual purchasing plan study by the Packaging Machinery Manufacturers Institute, though food companies are cited as one of the stronger buyer categories.

Food manufacturers are projected to increase spending 1 to 3 percent this year, or $20 million to $60 million over last year's $2 billion outlay, the PMMI-commissioned forecast concludes. That would offset most of the downturn in other categories, including beverage, where a 2 to 4 percent dip from last year's $875.5 million in spending is forecast. Double-digit increases occurred among beverage manufacturers the last few years, while food was expected to drop 1 to 3 percent in 2000.

The forecast is based on interviews with more than 400 companies operating 1,895 U.S. plants. Interviews were conducted in January and February. Because of subsequent economic deterioration, "it is highly probable that expenditure plans reported by at least a portion of the study's respondents have been revised downward," the PMMI report points out. The pharmaceutical industry remains bullish with about 6 percent higher spending expected, but that's less than half the category's 2000 growth.

Frozen vegetables, pet foods, baked goods, confections and snack foods are expected to be among the most active food groups in changing packaging, particularly conversions to flexible packaging. Non-carbonated soft drinks, beer, wine and bottled water will buoy the beverage market, though not to the levels of recent years. "Many industries, especially beverage, spent heavily on new packaging machinery the past few years," points out PMMI president Charles Yuska.

Together, food and beverage companies account for approximately 58 percent of domestic spending on packaging machinery.

The last straw in drinking water

The venerable Tetra Brik will begin turning up this summer in a new application in supermarket aisles. AMS Beverage, a Chicago start-up firm, introduced WaterBox brand spring water in an aseptic box with a straw for children 3 to 6 years old at last month's FMI Show.

The company hopes to capitalize on growing concern over excessive juice consumption and the "uniquely child-friendly package," according to Anne Sherman, a principal in the firm. "Kids would drink juice all day if you let them, and there's concern that the sugar in juice can kill their appetites and result in under-consumption of proteins and other foods."

The 4.23-oz. boxes are shrink-wrapped in four-container bundles, with a suggested retail price of about $1. The container is identical to the 125-ml single-serve juice boxes typically sold in three-packs. AMS hopes the familiar packaging will make WaterBox the spring water of choice for the preschool set.

The product is copacked by Pleasant Springs Farm Inc., Tiger, Ga. Water is micron-filtered and ozone treated, then heat pasteurized before packaging, according to AMS. Aseptic packaging equipment had to be installed at Pleasant Springs' plant to handle the new product.

The aseptic package costs three times as much as a comparably sized PET bottle, AMS officials say, but fill rates are higher. An 8-oz. package with modified graphics to appeal to older children also is planned.

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