Packaging industry has picked up a lot of heat In the recent past. It is basically the business of packing a product, in specific containers, to ensure safe delivery. Strangely enough, packaging is an art, science and a technology rolled in one. Protecting and enclosing the products is an important process. Many different types of glass, paper and fabrics are used in this process.
As the manufacturing cost of almost everything in India is low, packaging production has safely installed itself here. Export houses, most especially give a lot of business to the packaging industry. If you are exporting something delicate or malleable, you need to be very conscious about how you pack it. This industry is worth over 65 crore and the growth is over 15 percent per year. Rigid packaging is losing its charm. People are now opting for flexible packing methods.
Global packaging sales are projected to rise by 3% in real terms to $797 billion in 2013 and grow at an annual rate of 4% to 2018.
Processed food industry, the electronics manufacturers, vegetable houses, and other consumer durables need good packaging technology. Labeling, retaining the freshness and the physical evidence are all very important. They are the strongest drivers of packaging industry’s growth. If market experts are to be believed, the growth pattern is expected to double in the next decade.
The top most packaging companies of our country include Parksons, ITC Limited, Tata Tinplate Company of India , Gujarat Glass Ltd , AMAC Plastic Packaging and The Paper Products Limited etc. They are the major players in this area.
As everything else, the ‘go-green’ motto has caught on to the packaging industry as well. The focus is on reducing the waste that is sometimes caused during packaging. These sustainability efforts are also expected to rise. The main aim here is to meet customer demands, reach a common point where both can benefit and maintaining that the environment hasn’t been harmed in this process.
Giants like the print industry are deeply related to the packaging industry. Our country hugely benefits from the print industry. We are known worldwide for it. Various products of these industry include newspapers, books, business order forms, memos and post cards. All of these are in high demand and so is the print industry. It hugely contributes to our GDP. The demand for newspaper, for instance, will never go out, no matter how digital the world becomes. Other paraphernalia such as can coating printing, marking and coding prints and UV coatings are also in high demand. The growth rate of this industry is up in the sky at the moment.
The growth of the global packaging industry is being driven by a number of trends, depending on various geographical regions. Growing urbanisation, investment in housing and construction, the development of retail chains and the burgeoning healthcare and cosmetics sectors are driving packaging demand in China, India, Brazil, Russia and other emerging economies. An increase in living standards and personal disposable income in the developing regions fuels consumption across a broad range of products, with subsequent growth in demand for the packaging of these goods.
Today, each and every industry needs good quality packaging. Without it, goods will be damaged or ruined in transit, way before they reach the end consumer. Most importantly, without proper packaging and labeling, the goods won’t look presentable and impressive enough to be bought. This will create a huge hurdle for companies to fulfill their sales targets. Hence, the need for good packaging cannot be ignored and must always be kept in mind. This is a technical as well as creative industry and the potential for money making is huge.
Trends and Opportunities in the Indian Packaging Industry
Indian packaging industry will see notable growth over 2016-2021, growing at a CAGR of 9.2% as compared to 6.2% during 2011-2016. The growth of the Indian packaging industry will be heavily influenced by changing demographics such as growing urbanization and the rising proportion of middle class consumers. These changes drive the need for new packaging formats, such as different sizes, materials, and strength.
During the period 2016-2021, the Soft Drinks and Food industries will be the highest packaging market share gainers (by units) with share growth of 3.4% and 1.3% respectively. The growing organized retail sector has been a significant driver of the growth of the Food & Beverage industries, which in turn drives the growth of Indian packaging industry. In addition, innovations in the packaging industry, such as the development of lighter packaging with better barrier properties, add to the growth of packaging industry. In terms of packaging material, Glass and Rigid Plastics will be among the major share gainers, with share growth of 0.7% and 0.6% respectively during 2016-2021.
Indian packaging market expected to reach $32 billion by 2020
Flexible Packaging is the leading pack type in the Indian packaging industry and will grow at a healthy CAGR of 8.9% during 2016-2021, with major contributions from the Food, Household Care, and Cosmetics & Toiletries industries. This growth is largely driven by its low cost and flexibility to suit multiple shapes and sizes, convenience (zip-locks, plastic closures), and low-carbon foot print on the environment as compared to Rigid Plastics. In addition, the increasing prominence of low-density flexible packs in high protein foods is expected to drive the growth in the future.
Rigid Metal packaging is expected to grow at the highest CAGR of 11.5% during 2016-2021, driven by the rise in packaged and canned food sales, aerosol products, and the popularity of Metal Cans within the Beer, Cider, and Carbonated Drinks industries. Furthermore, India accounts for a significant proportion of global trade and exports, wherein Rigid Metal packaging play a significant role due to its mechanical strength and reusability, augmenting the growth of the pack type.
Glass packaging in India is also expected to witness healthy growth, driven by rising demand in the Soft Drinks, Alcoholic Beverages, and Food industries. The novel features of Glass packs (colors, shapes, and designs), as well as its barrier properties and re-usability, make it a preferred medium for packaging in the Food and Beverage industries. Furthermore, improving economic conditions, disposable incomes, and the expanding middle class will see an increase in the demand for premium products, in turn contributing to the growth of Glass packs.
Indian Packaging Industry Market
- The Indian packaging industry itself is growing at 14-15% annually. This growth rate is expected to double in the next two years.
- According to the Indian Packaging Institute, Indian Packaging industry is USD 14 billion and growing at more than 15% p.a. These figures indicate towards a change in the industrial and consumer set up.
The growth in the packaging industry in India is mainly driven by the food and the pharmaceutical packaging sectors. The large and growing Indian middle class, along with the growth in organized retailing in the country are fueling growth in the packaging industry. Another factor, which has provided substantial stimulus to the packaging machinery industry is the rapid growth of exports, which requires superior packaging standards for the international market. With this the need for adopting better packaging methods, materials and machinery to ensure quality has become very important for Indian businesses.
The Indian packaging industry is dominated by plastic flexible packaging. The traditional rigid packaging users have also been seen to shift to flexible packaging in recent times. According to industry sources, the main reasons for this is that flexible packages are found aesthetically attractive, cost-effective and sturdy. Consumer preference for the use of convenient packaging and packaged products in affordable quantities in laminates is also one of the main reasons that have contributed to the growth of flexible packaging in India. The food-processing sector is the largest user of flexible packaging, accounting for more than 50 percent of the total demand. The flexible packaging segment is estimated to be growing at over 35 percent annually. Major players in the flexible packaging sector are Paper Products Ltd. and Flex Industries.
The packaging industry in India is a mix of both organized medium to large players as well as very small players with a localized presence. The industry is comprised of a large number of manufacturers of basic materials, converted packages, machinery and ancillary materials. Domestic demand for packaging has been anticipated to grow rapidly within the next five years. Recognizing this trend, the industry is gearing itself to adopt scientific and functional packaging.
Three specific segments can be identified for opportunities in packaging equipment in the Indian market.
- The unorganized sector represents the larger opportunity, given the increasing quality-consciousness of end customers. The cost of equipment and upgrades hold the key to success in this segment.
- Large companies, primarily the multinational corporations (MNCs), which comprise another segment would be guided for the choice of such equipment by the global policies and standardization of their parent company.
- The organized segment, which caters to the major food and pharma companies are conscious about quality and the ability to produce various packaging products, thereby enabling them to address a larger market.
The Indian market for packaging equipment is characterized by a few large manufacturers with a nationwide presence along with a large number of small players in the unorganized sector with a regional presence.
- Laminated products including form-fill-seal pouches, laminated tubes and tetra packs are growing at around 30% p.a.
- There are about 600-700 packaging machinery manufacturers, 95% of which are in the small and medium sector located all over India.
- Germany and Italy are the latest suppliers of packaging machinery to India but focus is now shifting on Taiwan, Korea and China.
- Indian packaging machinery imports are USD 125 million.
- Indian packaging machinery exports are rapidly growing.
- India’s per capita packaging consumption is less than USD 15 against world wide average of nearly USD 100.
- The large growing middle class, liberalization and organized retail sector are the catalysts to growth in packaging.
- Food and Pharma packaging are the key driving segments.
Although substrates like plastic have gained vast acceptability, attractiveness of paper and paperboard consumption remains. Currently, India is ranked 15th in the world for its paper and paperboard consumption and is expected to improve its rank in the future. Paper is the fastest growing substrate segment with a growth rate of 6-7%. The total demand for paper currently is estimated to be around 6 mn tones, of which about 40% is consumed by the packaging industry. If the demand for paper continues to grow at the same rate, total paper consumption is expected to reach 9.5mn tones by 2010.
Increasing investments by both domestic and foreign companies in the Indian food processing sector, especially in beverages, dairy products, processed food, edible oil, and marine products have expanded the market for packaging machinery. The food processing industry has contributed in a major way to the growth of the packaging industry. According to the Indian Institute of Packaging (IIP), only two percent of India’s total processed food is packaged compared with 70 percent in western countries. This forecasts large growth in this sector.
Some important Packaging sub-sectors
Corrugated Packaging & Situation in India
- A flourishing organised retail have raised the expectations that consumption of corrugated packaging will begin to expand again as the number and volume of goods packaged in corrugated increases. MNCs are demanding corrugated boxes of international standards and the pattern of buying the packaging is changing.
- Prices of corrugated sheet and converted boxes have remained low due to the over-capacity, manual operations and low productivity. Besides, transport constraints and high freight costs have meant that small to medium sized corrugated box plants are located near the customers.
- The over 4,000 corrugated board and sheet plants are highly labour-intensive, employing over half a million people – both directly and indirectly. The industry is converting about 2 million tons of Kraft paper into corrugated boxes. Factories are spreadout in all parts of India, even in the remote industrially backward areas.
- This present scenario is already being challenged by the sweeping changes that are beginning to take shape. More and more in-line automatic plants are being set up, as corrugated box makers gear up to meet the new demands for high precision boxes with attractive graphics and large integrated production capacities.
- Inline Automatic Board and Box making plants will ease out the present semi automatic production processes.
- Deployment of Folder Gluers, Rotary Diecutters will be on the increase.
- Use of corrugated for display/promotional packs, POPs and dispensers.
- Advances in multicolour, flexo printing will facilitate in-house flexo printing and do away with screen printing, contract printing on offset presses.
Pharmaceutical Packaging & Situation in India
Pharmaceutical packaging occupies a considerable portion of the overall drugs and pharmaceutical market in India and is growing steadily with the same pace of the industry. Pharmaceutical packaging consists of various types of glass, pet bottles, strip and blister packs, injectibles, ampoules, bulk packs, etc.
The Indian pharmaceutical packaging industry is witnessing a spurt in growth. Today, the packaging industry in India is considered a sunrise industry and its linkages are extensive and highly employment creating. On one side, it involves manufacture (and sometimes import) of a wide range of packing material – paper, paperboard, cardboard, a range of polymer products including rigid and flexible packaging material, aluminium foil, tin and good old wood and steel. Other backward linkages of packaging including printing, labeling and binding/adhesive tapes etc. Of course, machinery for making/processing these products and for packing/packaging is another segment closely linked to this industry.
Growth will follow upward trends in global medication consumption, which will expand at a strong pace as aging demographic patterns lead to an increasing number of diseases and disorders. Pharmaceuticals will assume an expanding role in worldwide health care delivery based on new product introductions and economical advantages over other forms of patient treatment.
Besides upward trends in medication consumption, the adoption of stricter regulations and standards governing the production, storage, distribution and labelling of pharmaceuticals will boost global growth opportunities for packaging products and accessories. Historically, pharmaceutical packaging requirements focused exclusively on preserving the quality of enclosed medication. These requirements are now being extended to cover such criteria as the prevention of product tampering and counterfeiting, the assurance of product dispensing accuracy and the promotion of patient compliance with product dosage schedules.
The packaging industry is growing at a fast pace and is expected to do so in the next 5 years as well. Changing consumer perception, more focus on sustainability and renewable packaging, and the advent of nanotech-enabled smart packaging materials are some of the major factors that would shape the future of this billion dollar industry in the near future. Asia has been expected to be the fastest-growing market with India and China leading the race. Moreover, the ever-increasing competition in the market has enabled the use of packaging as a strategic tool. Big brands are focusing on new and durable materials that are both efficient and unique enough to make the brand product stand out amidst the crowd. Under this scenario, packaging industry is sure to gain in the times ahead.