Market Trends of Canada Flexible Packaging Industry
The Food Industry is Expected to Witness Significant Growth
- The Canadian food industry is a significant consumer of flexible packaging, driven by the increasing demand for convenient and small packaging solutions. The growing consumer preference for ready-to-eat products has led to a rise in demand for snacks and convenience foods in small or single-size portions. Additionally, there has been increased spending on short-run ready meals, coffee and hot chocolate sticks and pouches, dehydrated foods, snack foods, nuts, and bakery products. These products are major consumers of flexible packaging solutions.
- Statistics Canada reported a 1.7% increase in national food sales, marking the first growth since December 2023. Although modest, this increase was significant given Canada's growing population and persistent inflationary pressures. These factors are expected to drive food sales over time. Since mid-2021, food sales in Canada have exhibited a rollercoaster pattern, reflecting economic uncertainties and consumer hesitancies during the pandemic and post-pandemic.
- Strict government regulations on food product safety and labeling made flexible packaging the preferred choice for printing and marketing. The Food and Drugs Act and Regulations, Division 23, Section B.23.001, govern the safety of all materials used in food packaging. The increasing number of product launches in the market also drives the adoption of flexible packaging. As food manufacturers invest more in innovative and informative packaging, the market's potential grows.
- According to Statistics Canada, the sales of snack food in Canada amounted to USD 334.99 million (CAD 454.09 million) in June 2023 compared to USD 271.72 million (CAD 368.32 million) in June 2022. This amounted to an increase of over 23.28% compared to the same month in 2022. Such growth in the sales of snacks is anticipated to drive the demand for flexible plastic packaging as it is mostly used for snack food packaging, providing opportunities for vendors to develop new products to cater to a wide range of customer needs and gain market share.
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Paper Packaging is Expected to Hold a Significant Share
- The surge in e-commerce sales in Canada significantly boosted the demand for paper packaging. As online shopping becomes more prevalent, businesses need reliable and sustainable packaging solutions to protect products during shipping. Additionally, the growing emphasis on sustainable practices has led to increased demand for paper-based packaging materials over plastic alternatives. For instance, according to Statistics Canada, e-commerce retail sales in Canada reached a record of USD 2.73 billion (CAD 3.7 billion) in January 2024, with an increase of 7.1% compared to sales in January 2023. In January 2021, it reached a record high of USD 3.25 billion (CAD 4.4 billion).
- In response to the growing demand for paper packaging across various end-user industries, vendors operating in the market are focusing on the supply of high-quality kraft paper. For instance, in July 2023, Mondi PLC agreed to acquire the Hinton Pulp mill, with a production capacity of 250,000 tonnes per annum, in Alberta, Canada, from West Fraser Timber Company Limited (West Fraser); it was completed in February 2024.
- Mondi plans to enter a long-term partnership with West Fraser to access local, high-quality fiber from a well-established wood basket. Subject to pre-engineering and permitting, Mondi plans to invest EUR 400 million in expanding Hinton. This expansion would primarily focus on a new kraft paper machine with a capacity of 200,000 tonnes per annum, expected to be operational in the latter half of 2027. By acquiring the mill and investing in the paper machine, Mondi aims to fully integrate its operations in the Americas and secure a long-term supply of high-quality, cost-competitive kraft paper for its network of 10 paper bag plants in the region, positioning Mondi to better support the growing demand for industrial and mailer bags.
- The foodservice industry in Canada is growing rapidly, driven by changing consumer behaviors and new food trends. The increasing frequency of online food orders is further boosting the demand for paper packaging solutions in the Canadian market. For instance, according to DoorDash Canada’s annual Online Ordering Trends Report, 20% of consumers increased their takeout orders compared to 2023, while 18% ordered more deliveries. Furthermore, 33% of consumers reported placing repeat orders at least once a week.
