Global Plastics Issue: Packaging the globe

The global packaging sector is said to be the third largest industry in the world. Smithers Pira estimates the industry will reach a value of $820 billion by 2016 and believes that much of this growth is attributed to an increasing demand for packaging in emerging and transitional economies.

In other words, now is a good time to pay attention to the different packaging demands across the world.

For a refresher, the largest emerging and developing economies are referred to as the BRIC (Brazil, Russia, India and China) and also MIKT (Mexico, Indonesia, South Korea and Turkey).

China and India are often considered to be the largest. In this report, PlasticsToday has compiled interviews with various members of the packaging supply chain to learn more about trends in these emerging markets.

Food driving China's appetite for packaging

China's packaging industry is forecast to reach a total output of $30 billion in 2016, with a compound annual growth rate of 8.0% from 2013-2016, according to a report found on Research and Markets.

Within packaging, plastics account for about 31% of the market size.

At Chinaplas 2013, Gloucester Engineering Co. (GEC) President and CEO Carl Johnson told PlasticsToday that China's emerging middle class is changing many aspects of the country, including demand for packaging. In particular, packaging produced with polypropylene is on the rise.

"There are more and more dual-income families," Johnson said. "People are spending less time at the wet markets and there is a big push, especially here in China, for food packaging items."

Wim Van De Velde, global Millad product line manager for additive producer Milliken & Co., echoed thoughts about a PP trend in China. He cited recyclability as one reason.

"One thing we see in China, for example, is the shifting away from expanded polystyrene, and we're seeing a shift to PP for packaging because of its recyclability," he said. "The general trends in China are that the middle class continues to grow and we see more and more supermarkets offering packaged foods. I think everyone around the world wants a lighter material and that's good for PP because of the density advantage."

The China packaging study claimed that environmentally friendly plastic packaging materials such as PVDC and EVOH with high barrier property and easy degradability will usher in a large market space in the future.

13 markets embracing flexible packaging

PCI Films Consulting recently identified 13 emerging flexible packaging markets comprising of Poland, Russia, Turkey, Mexico, Brazil, India, Indonesia, Thailand, Vietnam, Saudi Arabia, UAE, Nigeria and South Africa. Collectively these markets, valued at $14 billion, have grown by almost 70% since 2006 and now account for 20% of total world demand.

One of the key findings is that although a number of these emerging markets have been affected by the global economic downturn, they have weathered the crisis well, with demand growth averaging almost 11% per year since 2006, led by countries including India, Indonesia, Brazil and Russia. In general, all emerging markets have illustrated strong growth over the past five years, with only three of the 13 posting overall growth of less than 30% between 2006 and 2011.

Report author Steve Hillman said the growth in the markets is attributed to several reasons such as a higher GDP, high population growth, urbanization, the development of retail outlets and a changing consumer lifestyle.

"Also, there's more packaged foods where previously the food supply was not in packaged form," he said. "One thing to note is the demand is mainly driven by packers and converters as well as consumers. Even in emerging markets consumers are becoming more aware of the environment and being eco friendly."

Hillman believes the growth trend in those markets will continue. 

"Strong and sustained growth over the next few years will see these 13 markets offering many investment opportunities for all those involved across the flexible packaging supply chain," he said. "This is particularly the case in terms of building converter expertise in the faster growing sectors, such as high barrier films and retort pouches."  

A closer look at South Africa

Earlier this year, stakeholders and decision makers in the South African plastics industry met for a conference in Johannesburg, which was hosted by Plastic SA, the local industry association.

Plastics SA Executive Director Anton Hanekom said that about 45% of audience members believed that packaging holds the most growth potential for the local plastics industry.

At the same time, he said that packaging has come to symbolize the issue of waste in modern day society.

"We know that [plastic packaging] ensures hygiene and reduces the risk of product wastage due to contamination, providing a physical barrier between a product and the external environment," Hanekom said. "Unfortunately, however, such convenience has come at an environmental price, and the rise in environmental consciousness in recent decades has brought the issue of packaging firmly under the spotlight."

When asked what role brand owners should play in plastic packaging, 51% of the audience members felt they had a responsibility to design the packaging with effective recycling in mind. About 32% believed the brand owner also had a responsibility to educate consumers about the recyclability and recycled content of its products.

"It is clear that there is a great need to raise the profile of the plastics industry and the work that is being done by brand owners and converters to ensure that plastics are manufactured in a way that is sustainable and environmentally responsible," Hanekom said.

Another hot topic that was discussed by the panel was the issue of bioplastics and whether or not it had a real role to play as an alternative in the plastics packaging industry. The vast majority of the audience members felt that bioplastics are not an option due to the high costs and potentially negative impact they can have on the recycling stream.

Different packaging demands for Western and Eastern countries

Jo Stephenson, VP of marketing and innovation at UK-based Linpac Packaging, believes that as emerging markets develop, many are not going through the traditional development steps seen in Western markets, but instead are leapfrogging straight to latest technologies and systems wherever possible.

"For example, Linpac Packaging traditionally develops foam trays and film overwrap systems for the protein packaging market where meat, fish and poultry are prepared back of store, but, over time, we see maturing of the food supply chain and development of third party packers, which demand rigid Modified Atmosphere Packs with extended shelf life performance," she said. "This has been the case in many Middle Eastern and Asian markets where we are seeing quick adoption of the third party packer model and sophisticated pack systems being incorporated."

Scott Collick, technical services & development specialist (TS&D) director at Dow Chemical, agreed and said that eating habits are key drivers in meeting the various consumer needs across the world. For example, there are different packaging requirements to package hummus as oppose to packaging fresh cut apples.

 "There is a great opportunity in both emerging and established geographies for packaging innovation around shelf life and convenience," he said.  "I think there will be growth in emerging geographies for quite some time."