India and Indonesia will be among the fastest growing national markets for bulk packaging , according to an analyst with the Freedonia Group, Inc, a Cleveland-based industry market research firm.
Growth in China’s manufacturing sector is beginning to decelerate after a few decades of world-leading growth -- but advances in bulk packaging demand in China will still be among the world’s fastest, he pointed out .
The fastest gains will be in developing regions such as the Africa/Mideast region, the Asia/Pacific region, and Central and South America, he added
At the same time according to a report, flexible packaging is the fastest-growing sector of India’s packaging industry. The shift from traditional rigid packaging to flexible packaging on account of its attractiveness, cost effectiveness, and strength is largely aided by increasing consumer demand for processed food, the report observed
While packaging has an annual global turnover of about $550 billion, and India’s share is about $16.5 billion per annum. According to a recent Mckinsey report, there will be a 10-fold increase in India’s middle class population by 2025, which will further trigger the consumption of packaging materials. This will bring another growth spurt to packaging, says the Mckinsey report, which also notes that the country needs more packaging professionals.
According to the Packaging Industry Association of India (PIAI), packaging in India is one of the fastest growing sectors, partly because it spans almost every industry segment. Right from packaging of food and beverages, fruits and vegetables, drugs and medicines, to highly dangerous products, packaging has led to greater specialization and sophistication over a period of years.
At present, the Indian packaging industry is ranked 11th in the world. According to an analysis, the global packaging industry is likely to grow to $820 billion by 2016, and the Indian packaging industry will grow at a rate of about 18 percent annually. Packaging of essential products like food, beverage, milk, vegetable, food grains, and pharma are the key driving segments because of the huge domestic consumption.
According to some of the experts, in coming years the Indian packaging industry will see substantial growth. The increasing awareness regarding clean water, safe food, and pharmaceuticals will drive this growth. As the retail sector grows, the concept of track and trace devices, especially for product identification such as 2D barcodes, radio frequency identification (RFID) etc. will penetrate aggressively into Indian packaging.
With strong favourable demographic factors such as increasing disposable income levels and rising consumer awareness and demand for processed food ,the packaging market in India seems set for the next level of growth.
On the one hand there is a rise of the Indian middle class, which is expected to go from today’s 50 million to 583 million in 2025 ,on the the, the world’s multinational giants are taking rapid strides in India’s food, beverage, health and beauty, and pharmaceuticals sectors. This will also drive the growth in packaging. These factors are forcing both packaging suppliers and end users to shift from bulk packaging to retail, unit-level, small-sized packaging. In addition, exploding organized retail growth and newly relaxed investment norms in retail and other sectors augur well for the packaging market in India.
While the forecast for packaging in India is promising, there are some challenges. According to a report conducted by the New Delhi based Centre for Market Research & Social Development, packaging in India is highly fragmented and has 22,000 firms, including raw material manufacturers, machinery suppliers, and providers of ancillary materials and services. Moreover, 85 per cent of these firms are Micro, Small & Medium Enterprises (MSMEs). As the industry grows and matures, there is expected to be a trend towards consolidation as supply side companies merge and acquire smaller companies to increase scale, reduce competition, and improve bargaining power with customers, the report said.
The main problems faced by MSMEs are lack of available sources of credit, high cost of packaging materials, lack of skilled labour, irregular power supply, and an underdeveloped sense of how to market, brand, and distribute.
The future of the Indian packaging industry is bright, if investment materializes, the report notes. The growth of the domestic market will be good and export potential is substantial, too, if it’s properly addressed. If organized retail takes off as expected, growth opportunities are substantial, and enormous potential exists in converting wasted food into valuable product.
To maximize the potential that packaging represents, the Indian government is in consultation with a number of industry experts. For example, PIAI is formulating effective policies and guidelines aimed at helping Indian companies gain in the international market.
In the Indian packaging industry, processed food packaging represents 48 per cent of the total, personal care packaging is 27 per cent, pharma is six per cent, and the rest is 19 per cent
In the meanwhile according to a new study from the Freedonia Group, Inc., the world demand for bulk packaging is projected to increase 5.0 per cent annually to $59.2 billion in 2018. This will represent an improvement over the performance during the 2008-2013 period, when growth in demand was particularly sluggish in the world’s most developed markets, especially Japan and Western Europe. Accelerating growth in global manufacturing activity will be the primary impetus for demand gains.
In developed markets, advances will be more modest. In the US, gains will be driven by increased demand in food and chemical applications, as growth in both food and beverage processing and chemical and pharmaceutical production are expected to accelerate. These same developments are expected to drive demand in Western Europe and Japan, though gains will be somewhat muted as the manufacturing slump in these areas has been more enduring, and the recovery is expected to be less explosive.
Flexible bulk packaging will register slightly faster growth than rigid packaging. Gains in flexible bulk packaging will be led by film wrap and flexible intermediate bulk containers (FIBCs). Film wrap will post healthy gains due to its increased use in securing pallets and other packaging formats during shipment, and the growing use of film to bundle bulk and multi-pack items in retail settings such as warehouse-style stores. FIBCs will register strong advances due to the advantages they offer in terms of efficiency advantages, loading and unloading products, and their ability to handle greater quantities of product per container. In rigid bulk packaging, rigid intermediate bulk containers (RIBCs) and material handling containers are projected to register faster growth than the somewhat more established drums and pails. Drums will remain the largest rigid bulk packaging product type, even as they surrender market share to FIBCs and competitive rigid formats.
According to another Freedonia study , US demand for rigid bulk packaging is projected to reach $7.3 billion in 2018.Growth will represent an improvement from the performance of the 2008-2013 period as manufacturing output and construction activity recover from post-recession troughs. Additionally, gains will be driven by expanded use of larger, higher value containers that are more cost effective than smaller containers with shorter service lives.
The fastest gains are expected for rigid intermediate bulk containers (RIBCs) and material handling containers. In addition to an improved outlook for production activity, gains for these containers will be boosted by cost benefits over smaller or single-trip containers arising from factors such as greater re-usability, and storage and handling efficiency. While RIBCs and material handling containers have higher initial costs than shorter life containers, their longer service lives and handling efficiencies can offer long term cost benefits to large scale users, especially in closed-loop distribution systems.
Plastic drums will also post above average gains based on cost and performance advantages over steel drums as well as enhanced corrosion resistance and barrier properties. Preventing faster gains will be competition from RIBCs as well as the entrenched position of steel and fibre drums in certain applications. RIBCs possess cost and space efficiency advantages over plastic drums in packaging large volumes.
Drums, the leading rigid bulk packaging segment in value terms in 2013, will face continued inroads by larger capacity containers. Nonetheless, drums will remain widely used due to their relatively low cost and re-usability, along with a good safety profile in the transport of hazardous materials. Drums are also favoured by smaller volume users and those not able to accommodate RIBCs.
The fastest market advances are expected in chemical and pharmaceutical uses. Growth will be fuelled by a recovery in the manufacturing sector, which will fortify heightened demand for chemicals used in a wide range of manufactured goods. All major chemical segments will post improved performances from the 2008-2013 period, with pharmaceuticals expected to enjoy the fastest advances. Gains in the plastic, rubber, and fibre market will also accelerate, boosted by a rebound in demand for materials used in large volume markets such as construction and motor vehicles. Increased requirements for these basic materials will result in greater demand for packaging used with bulk quantities of chemicals, plastics, rubber, and fibre. In the food and beverage market, rigid bulk packaging opportunities will be helped by population gains, improved consumer spending growth, a recovery in the broader economy, and favourable prospects for value added food types. Growth in the agricultural and horticultural market will reflect a recovery in the housing market, leading to heightened demand for horticultural consumables.
Durable goods markets will register a significant improvement, fuelled by a marked acceleration in durable goods output, with healthy gains anticipated for products used in construction. Continued efforts to improve manufacturing efficiency via the implementation of just-in-time manufacturing and closed-loop distribution systems will also favourably impact demand.