Food Pads 2007: A Tale of Two Markets
nonwovens' penetration of this growing market depends on geography
By Philip Mango, Philip Mango Consulting
The worldwide food pad market in 2007 consisted of a little more than 20 billion pads, with about nine billion each in North America and Europe. Growth through 2012 is projected at 5-7%. This equates to an approximate potential market of almost 60,000 metric tons of nonwovens in 2007, growing to approximately 80,000 metric tons by 2012.
Currently, worldwide utilization of nonwovens is estimated at about 18,000 metric tons, most of which is airlaid. Nonwovens’ penetration is about 30% globally. Growth in nonwovens in food pad applications is expected to be much higher than for the overall food pad market, projected at more than 11% per year through 2012.
The major competitive materials to nonwovens in food pads are formed fluff pulp and wetlaid tissue, with or without superabsorbents.
Global Growth Driven By Consumption
And Packaging Changes
Despite occasional retreats due to animal-borne health threats (most recently avian influenza or bird flu), worldwide consumption of meat is growing at around 2% per year. More importantly, poultry consumption is growing much faster (up to 4-5% per year). Poultry is the most demanding meat product from a food pad perspective, having the highest exudable liquid content and a relatively high ionic content to that liquid (compared to beef, pork, lamb, veal, fish and shellfish). This means that food pads for poultry need higher absorbency capacity and, if some of that capacity comes from superabsorbents, the amount of superabsorbent must be higher to contend with the high ionic content of the exudates. So, modest overall meat consumption growth, coupled with higher growth rates for the more demanding poultry segment, accounts for some of the worldwide nonwovens food pad growth.
The remainder of the growth is due to packaging changes. Case-ready meat—that is, meat ready to go straight to the retailer’s shelf—is growing worldwide, with North American poultry packaging already nearly 100% case-ready. Case-ready typically requires a higher performance pad due to the longer service time. The same is true for modified atmospheric packaging (MAP) systems, which also extend the shelf-life of packaged meats. The pad must absorb liquids under load and retain them for longer periods of time. In-store prepared meats might be sold wrapped in paper or in a package prepared for very short-term use. Contaminated and tainted meat problems have also mandated cleaner meat packaging. An 18-month study by a major food retailer disclosed that about 35% of all consumer complaints were due to free liquids in the package or leaking packages.
Case-ready saves a processing step, MAP extends shelf life and reduces spoilage losses and clean, liquid-free packages minimize consumer complaints—all cost savings to the food retailer. And it is the food retailer (or processor) who specifies food pads, not the consumer.
North American Market—Key Producers
While the potential market for food pad applications in North America is about 28,000 metric tons of nonwovens per year, only about 4,000–5,000 metric tons per year are currently used. This relatively low penetration (about 16% overall) is due to several reasons.
In North America, the food pad market is dominated by two large producers—Sealed Air (Cryovac division) and Paper Pak Industries. Sealed Air (with approximately 60%) and Paper Pak (with approximately 25%) prevail over the total pad market, but important smaller producers like Pactiv, Tekni-Plex and International Tray Pads and Packaging make a disproportionate share of the higher absorbency, higher performance pads targeting poultry and other demanding meat segments. Nevertheless, growing nonwovens’ share in North America does mean going head to head with these two large players.
Sealed Air (Cryovac division) has a product line built around formed fluff absorbent cores (with or without superabsorbents). They have installed fluff-forming equipment, and converting equipment, optimized and depreciated. Their cost to produce an acceptable pad for most products is currently lower than the cost to buy and convert airlaid nonwovens. So, while an airlaid product, especially one with superabsorbents, should be higher performance and present savings in use to someone installing new converting equipment designed for nonwovens, the cost is still higher for a converter with older, established systems designed for a formed fluff core. For airlaid producers who have fought this battle over baby diapers for a decade, this must seem like déjà vu!
Paper Pak has two integrated wetlaid tissue mills supplying their food pad core, again with or without post added superabsorbents. Again, depreciated, installed, optimized systems are compared to higher performance, higher cost newer products. It is unlikely that Paper Pak will select airlaid nonwovens from an outside supplier over its own, lower cost and established products.
Making matters worse for nonwovens…airlaid today is tighter supply-wise and higher priced than it has been in many years. Food pad cores are specialty products here; currently, Concert, Gatineau, Canada, is the major supplier of this product in North America.
Is there any hope for growth in the North American nonwovens food pad market? There are some positives: case-ready packaging is further along in North America than anywhere else in the world, North American consumers are sensitized to tainted and contaminated meat problems, and poultry has a larger share and higher growth rate than other meat products and other geographical regions. These factors combine to require a higher performing meat pad, with higher absorbency and retention under load for longer times. Airlaid with superabsorbents are ideal products for these needs.
Also, McAirlaids has announced a new hydrogen bonded airlaid line for installation in Virginia in 2008. McAirlaids has developed products and a business model built around high performance, low cost airlaid core combined with in-line lamination capabilities that can deliver a very cost-competitive product to the food pad market. When the McAirlaids plant starts up, airlaid nonwovens will begin to attack the lower and moderately priced products in this market.
One potential stumbling block is the Arizona tare weight issue. Arizona’s Bureau of Weights and Measures wishes to assure that the consumer only pays for meat and not packaging materials; unfortunately, their methodology currently involves physically removing and “squeezing” liquid out of the packaging material, then weighing that packaging material and subtracting that weight from the total package weight. For fluff or tissue food pads, this works fine; however, liquid does not “squeeze” out of superabsorbents, presenting a potential problem. An acceptable alternative solution is being sought by all parties.
In summary, for North America, unfortunately there will be more of the same for the next three to five years, with a good nonwovens growth rate from a relatively small starting point. Growth is expected to average 11%-12% per year over the next five years, with nonwovens volumes reaching 7000-8000 metric tons per year in 2012.
European Market–Specialty Commodities
In Europe, the potential nonwovens market today for food pads is about 25,000 metric tons per year, but here the nonwovens (mostly airlaid) share is about 50%-55%. Again, there are several reasons for this difference.
First, there are no overwhelmingly dominant players here. Sealed Air and Paper Pak participate, but among many other strong players. Additionally, while case-ready packaging is progressing, it still lags the penetration it has in North America. Europe as a market is much more heterogeneous than North America and there still are many local butcher shops and small local meat retailers who want food pads they can cut to size on location. Also, meat safety regulations are further along in Europe than North America; there are regulations already prohibiting the absorption, then desorption of liquids in food pads. In other words, once liquid from a food product is absorbed, it must stay absorbed. All of these factors favor a more flexible food pad product.
Flexible and heterogeneous are key concepts here. At one end of this market, there is a significant need for low-cost, high absorbency and simple structures. Some examples of this need are bulk fish packaging, where the liquid is mostly water from ice, and the food pad is used mainly by the food processor. Another example is the local butcher shop, where a roll of absorbent pads can be cut to size and is applied immediately prior to sale. McAirlaids in Germany has been a major force in these types of markets, coupling low cost hydrogen bonded airlaid core with inexpensively in-line laminated films or nonwovens.
On the other end of this market is the highly specialized, ready-to-use products where product cost may be higher, but “cost-to-use” is acceptable. Some examples here are retail food pads with in-line laminated nonwovens, film or foil on both sides with heat sealable edges. Dan-Web and Danish Airlaid Technology both make very specialized products for this market, where case-ready and high performance are both requirements.
Both the commodity and specialty segments of this market will grow. The commodity segment will grow because of additional, relatively low cost, good performance hydrogen bonded airlaid from McAirlaids taking business from non-airlaid substrates. The specialty segment will grow as meat packagers concentrate more heavily on case-ready packaging, specialty meats and longer shelf-life items. Concerns with food safety will also cause consumer interest in clean, attractive packages.
The nonwovens food pad market in Europe will continue to grow at a high rate (11%-12%), from a strong base. By 2012, volume for food pads in Europe is projected to be 22,000 to 24,000 metric tons of nonwovens per year.
The Bottom Line…
It is the bottom line, as in the profitability for the food retailer or processor, that will determine the growth of nonwovens in the food pad market. In North America, installed converting capacity and integrated plants built around formed fluff pulp and tissue, coupled with supply issues and relatively high cost for airlaid, will continue to moderate the growth of nonwovens in this market. In Europe, heterogeneity in both food pad producers and food presentation will favor the customized, specialty capabilities of a variety of nonwoven producers. The presence of nonwovens manufacturers like McAirlaids who specifically target this segment will also contribute to higher growth here.
Globally, animal-borne diseases and product contamination have become major issues in the worldwide production and trade of meat products. High performance nonwoven-based food pads will become increasingly valuable in this market and increasingly important to the bottom line.