The fastest growing applications are chilled ready meals and ambient foods which are both growing at around 6 percent per annum, according to the UK group. Dairy products, such as yoghurt pots, butter and margarine containers, are the largest application with 23 percent of the market.

AMI said: “Underlying industry volume has held up comparatively well during the recession, but still the industry has been buffeted by changing stock levels and strong price pressure from retailers and brand owners. Structural change is being driven too by rapid developments in polymer properties, pricing and sources.”

It noted successful grade development in retortable and microwaveable PP and the growing use of recycled PET in thin-walled packaging applications.

The largest producers in Europe –- Huhtamäki, Klöckner Pentaplast, Linpac, RPC Group and Veriplast –- were responsible for one-quarter of European production of thin walled packaging in 2008.

“The large producers have been in the vanguard of change as they fight to secure profitability in the face of the price and innovation requirements of their customers,” said AMI.

Strategic reviews by major producers are leading to restructuring as they look to rationalise manufacturing, reduce overheads, strengthen certain business segments and exit from unprofitable or non-core ones.