Shrink Films Procurement Intelligence Report, 2023 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)

Shrink Films Category Overview

The shrink films category is anticipated to grow at a CAGR of 6% from 2023 to 2030. Three primary types of films are used in shrink wrapping or packaging: polyvinyl chloride (PVC), polyolefin (POF), and polyethylene (PE).  Shrink films can be converted into bags, flattened roll stock, overwrap, tubing, and banding. Shrink films can also be segregated into centerfold and single-wound films. These are mainly made from POFs and PE. PVC shrink films are extensively used for non-food goods such as CD and DVD packaging, game and software boxes, and other packaging. This is because PVC is banned in many countries due to its chemical composition and the hazardous byproducts that are generated during its synthesis and decay. Hence, companies such as Walmart take extra precautions and ensure the highest standards for use and disposal when certain manufacturers use this chemical in their packaging.

In the plastics packaging industry, the key trend is the increasing focus on sustainability. Considering the increasing momentum of the anti-plastic movement, there are significant concerns about the usage of shrink wrap/films in the packaging industry. However, most of the films are produced using LDPE, the production of which does not emit polluting agents and is recyclable in most cases. As a result, companies are increasingly trying to implement environmental-friendly plastics or recycled content while manufacturing films or wraps. One such instance is the use of green polyolefin film, which can help companies achieve more than 25% in annual savings.

Strong robust demand from the F&B, electronics, pharmaceutical, and cosmetics sectors has contributed to the increasing requirement for shrink films. By consumption, the F&B sector accounts for the largest share, between 45 - 55% of the total. The rise in canned, packaged, and frozen food and the growing concerns about products during transit has led to the further expansion of shrink-wrap/film packaging. In addition, rising awareness among consumers about packaging is also positively impacting the industry. For instance, in 2022, it was found that 74% of customers are prepared to pay extra money for packaging that is fully recyclable or sustainable.

According to industry experts, as of April 2023, the PPWR proposal particularly in the European region could have a tremendous negative impact on the shrink films/wrap market. The proposed regulation intends to eliminate or drastically cut down on the usage of pallet wraps, shrink wraps, and stretch films made of polyethylene for transit packing. This poses a risk to all European Union producers and users of these wrapping products.

The global shrink films category is fragmented. Regionally, plastics, polymers, and in turn, the shrink films industry is highly fragmented. As a result, the bargaining power for most of the suppliers is moderate to low. Large corporations having long-term agreements with their approved vendors may have higher negotiation power. Most of the manufacturers prefer using POFs due to their excellent durability and versatility properties. It is made of 100% recyclable material, which further helps companies contribute to sustainability. POFs have replaced PVC in many applications, and it also has received FDA certification for food packaging applications. In July 2023, Amcor announced the introduction of a new sustainable production line in its Swansea, U.K. “Flexibles” facility. The line is mainly for shrink films and bags for cheese and meat items. It is produced using thinner material with a formulation that is devoid of PVDC and has a high barrier.

Some of the key cost components associated with the category include raw materials, energy and equipment, labor, facilities and storage, transportation, and others. Other costs can include marketing, repairs, utilities and administrative expenses, tax, etc. The key raw materials for films include POF, PE, or PVC. POFs fall under the thermoplastics family and hence can utilize multiple raw materials such as ethylene, and propylene. These are again obtained from oil and natural gas. As a result, fluctuations in the prices of the raw material can have a significant impact on the cost of shrink film. For instance, price increases in the resin markets at the end of 2021 caused shrink wraps and film prices to increase by 8 - 12%. In the European region, the majority of polymers followed the increases in monomer prices, and polyolefin prices continued to grow in October 2023. Propylene C3 increased by EUR 60/ MT, while ethylene C2 increased by EUR 65 / MT.

The total cost is also impacted by certain variables such as the width and thickness of the film, package height, type of material used, etc. In addition to the unique formulations of the films, there is an increased cost when companies want printed designs. Printed shrink wraps/films are considered a premium option with branding, typography, logo, and graphic dynamics. It is more expensive than transparent or clear films. For instance, clear centerfold shrink films can cost on average between USD 100 - 250. Prices can vary based on roll orders. The cost of a printed pallet wrap order can easily range between USD 5,500 - 6,000, assuming the minimum order is 40 rolls (for machine pallet wrap).

According to Volza's October 2023 estimates, the top exporters of shrink films are China, India, and Vietnam, accounting for 38,769 shipments, 18,349 shipments, and 18,043 shipments respectively. The majority of the world's shrink films are exported to Vietnam, India, and the U.S. APAC dominated the shrink wraps and films category as it held 43% of the share in 2022. Most of the companies procure raw materials from China owing to its huge network of plastics and polymers supplier base coupled with manufacturing capacity. Under sourcing, most of the packaging companies such as Amcor, Mitsubishi Chemical Corporation, and Berry Global have their complete in-house plastics or dedicated flexibles manufacturing plants. Such corporations may have procured raw materials from their approved suppliers, however, film manufacturing from start to finish is done by the in-house team. 

Shrink Films Procurement Intelligence Report Scope