| The rise in organised retailing in India’s second-tier cities made for a competitive packaging market in 2008. Companies like Hindustan Unilever Ltd, Procter & Gamble India Ltd, Nestlé India Ltd, ITC Ltd, Coca-Cola India Ltd, PepsiCo India Ltd and Dabur India Ltd became very aggressive in this period, and packaging became a big tool for launching new, India-specific products in different shapes and sizes, as per Euromonitor International. The review period witnessed a flux of partnerships and joint ventures, with many foreign packaging players entering the scene to gain a slice of the large pie. Due to lower manufacturing costs, India is fast becoming a preferred hub for packaging production. The Indian packaging industry has made a mark with its exports that comprise flattened cans, printed sheets and components, crown cork, lug caps, plastic film laminates, craft paper, paper board and packaging machinery. The fastest growing packaging segments are laminates and flexible packaging, especially PET and woven sacks. On the global scene ruled by the World Trade Organisation, it is imperative for India to upgrade its packaging standards through innovative technologies in order to be on a par with the world’s best practice. Almost all the major players were seen to expand their existing capabilities to tap into the fast growing export market for Indian packaging products. Many flexible and paper-based packaging manufacturers experienced difficulties relating to the rise in the cost of paper as well as high oil prices during the first half of 2008. High oil prices during the first half of the year affected the businesses of polymer-based packaging providers who also found it tough to survive in the market. Environmental concerns are fast catching the attention of all the stake holders in the Indian packaging industry. The expansion of packaging as a profitable industry in India, dragged along by that of the retail and FMCG sectors, has brought with it environmental concerns. Organizations such as the Indian Centre for Plastics in the Environment were actively seen promoting awareness in this regard in order to promote the packaging industry and make people aware of the real concerns about the environment. Plastic packaging will make further inroads into paper in India as per a report by Freedonia. In 17 selected markets where plastic and paper compete as packaging materials, plastic is expected to increase its share of the market to 49% (in volume) in 2014 as it makes further inroads into paper applications. The percentage understates plastic’s share since less plastic is required than paper in most applications due to its lighter weight. In addition, plastic has greater ability for lightweighting than paper. Plastic has made the greatest gains in primary packaging but remains much less significant than paper and paperboard in secondary packaging and shipping containers. Plastic packaging growth by volume is expected to outpace that of paper packaging through 2014 in nearly all competitive markets and is forecast to expand 2.3% pa through 2014. Advances for plastic will be the result of its competitive cost and performance advantages, including light weight, moisture resistance, enhanced barrier properties and puncture resistance. Plastic has continued to expand its share in a number of markets despite the sharp spike in resin prices in recent years. More moderate resin pricing through 2014 and the development of new applications for biodegradable plastics should make plastic even more competitive against paper. Though paper packaging will post more limited advances or continue to decline in the majority of markets through 2014, paper will log relatively favorable gains in a handful of markets including foodservice, protective packaging, and soy and other nondairy beverages; and maintain a substantial lead over plastic. Opportunities in the foodservice and protective packaging markets will also reflect improved outlooks for consumer spending and manufacturing activity. Moreover, increased emphasis on packaging sustainability will enhance the competitiveness of paper in some applications based on environmental advantages including recyclability, renewability and biodegradability. Rigid packaging demand in competitive markets will expand at a slightly faster pace than that of flexible packaging based on above-average growth for tubs and cups, trays and other plastic containers such as clamshells and two-piece high visibility plastic containers. Gains will also be helped by rebounds in demand for shipping drums and protective packaging following a depressed base in 2009. Based on the widespread use of products such as folding and gabletop cartons, ovenable trays and paper-based protective packaging, paper will maintain its lead over plastic in rigid packaging through 2014. However, plastic will continue to gain ground in competitive rigid packaging. Flexible packaging gains will be aided by above-average growth for protective packaging and pouches. Improved manufacturing output and Internet sales will bode well for products such as air pillows and bubble packaging, which provide cost-effective options in the protection of goods from shock, vibration, abrasion and other damaging effects of shipping and handling. Pouches will make further inroads into rigid packaging and other types of flexible packaging based on attributes of cost effectiveness, enhanced barrier properties, space savings, lighter weight, aesthetic appeal and source reduction capabilities As per packaging.indiabizclub.com India’s flexible packaging market has accelerated on account of several factors including: • A growing middle class of over 300 million. • The conversion of the more traditional rigid packaging into flexible forms. • A favourable government tax structure, reduction in excise duty • Globalization and the influx of multinational companies. • Modern plants and equipment available to the flexible packaging industry. The Indian packaging industry is a combination of organized large Indian and International companies and the unorganised small and medium local companies. The organized sector of the industry may be less than 5% of the companies in the overall industry but it nevertheless controls over 70% of the market by volume. The organized sector operates in the laminated product segment such as form-fill-seal pouches, Tetrapacks and lamitubes.
There are around 13,000 converters in India with majority in the small and medium sector located in all parts of the country. It is estimated that there are more than 200 flex-pack (flexible packaging) converters in India – 50 units in the organized sector constituting 40% of the Indian flexible packaging industry and about 150 in the unorganized sector that make up the remaining 60%. Most small operations have processing capacities of less than 250 tons a month and produce over wraps, co extrusion films, and polysacks. At least 10 flex-pack converters process more than 4,000 tpa and are on par with leading international operations. These larger Indian flexible packaging companies include: • Flex Industries Limited • Paper Products Limited (Huhtamaki Group) • Positive Packaging • Multiflex • Paharpur Industries Limited According to industry experts, annual flexible packaging consumption per capita in various parts of the world is roughly as follows: • N. America : US$45, Japan : US$31, West Europe : US$25, South Korea : US$15, Thailand : US$3, China : US$2, India : US$1 It is also observed that a mere 20% of the population in India consumes 80% of the packaged production. There exists an exceptional gap in India between the necessary and actual demand for packaging of essential commodities and this is one of the major reasons why the growth of flexible packaging is not an alternative here but is rather an imperative. The consumer market dominates the global packaging industry and accounts for an estimated 70% of sales, with industrial applications taking the remaining 30% of the share. The food industry is the single largest end-user market, valued at around US$145 bln, followed by the beverage industry at approximately US$75 bln. A high degree of potential exists for almost all user segments in India which are expanding like Processed Foods, Mouth Fresheners (pan masala), Beverages, Confectionery, Bakery Products, Spices, Edible Oils, Soaps and Detergents, Drugs and Pharmaceuticals, Cosmetics and Personal Care, Chemicals and Fertilizers, Office Stationary, Engineering Products. India makes most of the equipment needed by the converting industry, including rotogravure printing presses, laminators, slitters, and pouching machines. A full range of semi-automatic to fully automated filling, sealing and wrapping machines is manufactured in India. These machines are of high quality and are very competitive in price and are exported in a big way to developed countries as well. There are some 600 to 700 packaging machine manufacturers, 95% of which are in small and medium sector and located all over the country. |
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