Packaging Industry in India
The current wave of economic development in India is being seen from all over the world. As infrastructure, manufacturing, agriculture, and services grow at high rates the packaging industry is also showing great variety and depth in its growth. India’s packaging industry may achieve an annual turnover as high as US$ 5 billion in the current financial year with a growth rate nearly 25 per cent in significant segments. Leading companies in the Indian packaging industry show a compound annual growth rate of 30 per cent, and the Indian Rupee is strengthening against the US dollar at annual rate of 4 to 5 per cent. Even then, the US$ 5 billion figure would represent about one per cent of the current global packaging industry.
In 2001, the packaging industry worldwide generated an annual estimated turnover of US$ 417 billion. The major regions that made up this total include Europe, US$ 129 billion; North America, $116 billion; and Japan, US$ 81 billion. India’s consumer packaging accounted for just US$ 2.3 billion in that year, that is about half of one per cent of the global packaging volume.
Packaging in India in 2001
Today, packaging is produced more quickly and efficiently. It is generally lighter in weight, uses less material, is easier to open, dispense from, reseal, store, and dispose. Packaging has evolved from a relatively small range of heavy, rigid containers made of wood, glass, and steel, to a broad array of rigid, semi rigid and flexible packaging options increasingly made from specialized lightweight materials.
Flexible packaging consists of multi-layer laminated sheets of plastics (PVC, LDPE, HDPE, BOPP, BOPET), paper, cloth, or metal foils that are used separately or in combination for various packaging applications. However, this article discusses flexible packaging as laminates of plastics that have a unique set of properties that ensure toughness, moisture resistance, aroma retention, gloss, grease resistance, heat sealability, printability, low odour and taste. These find use in packaging food, tea, coffee, spices, chewing tobacco, bakery, confectionary, oils, and in certain other non-food applications such as household detergents, health and personal care, soaps, and shampoos.
Causes of Flexible Packaging
Flexible Packaging Demand in India and Worldwide
- Protection:Flexible Packaging gives total consumer protection by keeping the product clean and protecting it from pilferage and adulteration
- Barrier:It provides good barrier properties against moisture and gases and protects food from damage and wastage
- Convenience:It provides convenience of handling and disposal after use
- Cost Saving in Material:Flexible Packaging is light — a one kilogram oil pack weighs less than 10 grams compared to at least a 40 gram HDPE jar or 32-35 gram of PET, thereby giving tremendous saving in raw material cost.
- Cost Saving in Storage and Transport:It fits closely to the shape of the contents and saves cost of storage and transport.
- Savings in Raw Material Consumption:Tremendous saving in raw material consumption, serving the national cause by extension of usage at least times four times.
- More Per Pack:It provides much more product per a given amount of package. Good examples include coffee, nuts and snacks that come in foil brick packs and pouches rather than in cans or jars; juice sold in pouches rather than in rigid containers, and household cleaner refills that come in thin pouches rather than in glass bottles.
- Smaller Units Possible:Thus the option to buy only the required quantity at a time.
- Conservation of Energy:Considerable conservation of energy for conversion. For a steel coffee can to be efficient as a foil brick pack, the can would have to be recycled at a rate of 85 per cent. However, steel cans are currently being recycled at a rate of about 45 per cent.
- Important in Lifestyles:Convenience foods, individually packed small servings, microwaveable meals, “easy opening” packaging, secure packaging for pharmaceuticals and hazardous substances, are all examples of packaging playing a role in assisting and promoting our lifestyles.
- Builds Brands:Helps product manufactures enhance brand images, increase sales and realize new market opportunities
World demand for converted flexible packaging will grow at more than 4 per cent per year through 2005 to nearly 14 million metric tons, with a value exceeding US$ 50 billion. The best gains are expected in the world’s emerging markets, including Eastern Asia, Eastern Europe, Africa, and Middle East. India holds largely untapped markets with a potential of double digit market growth. The flexible packaging industry in India is currently estimated to be US$ 1 billion and records a high growth rate of approximately 20 per cent.
The expansion of the Indian flex-pack market has accelerated due to :
- A growing middle class of over 300 million.
- The conversion of the more traditional rigid packaging into flexible forms.
- A favourable government tax structure. Excise duty that was once 24% has been reduced to 16%.
- Liberalization of the Indian economy since 1991.
- Globalization and the influx of multinational companies.
- Modern plants and equipment available to the flexible packaging industry.
Considering these factors it is only obvious that flexible packaging has a very bright future in India and is here to stay and grow in a big way.
The major Indian players in flexible packaging
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 per cent of the companies in the overall industry but it nevertheless controls over 70 per cent of the market by volume. The organized sector operates in the laminated product segment such as form-fill-seal pouches, Tetrapacks, and lamitubes.
Converted Flexible Packaging Demand
| By Material Polyethylene
| By Market Nonfood
| Paper and Foil
There are around 13,000 converters in India — a 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 per cent 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 overwraps, coextrusion films, and polysacs.At least ten flex-pack converters process more than 4,000 T/annum and are on par with leading international operations. These larger Indian flexible packaging companies include
Demand in India
- Flex Industries Limited
- Paper Products Limited (Huhtamaki Group)
- Positive Packaging
- Paharpur Industries Limited
The current demand for flexible packaging in India, stands at about 500,000 tons.
Consumption of Flexible Packaging — India in Comparison to the Rest of the World
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
- W.Europe : US$25
- S.Korea : US$15
- Thailand : US$3
- China : US$2
- India : US$1
It is also observed that a mere 20 per cent of the population in India consumes 80 per cent of the packaged production whereas the remaining 80 per cent of the population have an access to only 20 per cent of the packaged production. There exists an exceptional gap in India between the necessary and actual demand for packaging of essential commodities and this is one of the major reasons why the growth of flexible packaging is not an alternative here but is rather an imperative.
The consumer market dominates the global packaging industry and accounts for an estimated 70 per cent of sales, with industrial applications taking the remaining 30 per cent of the share. The food industry is the single largest end-user market, valued at around US$ 145 billion, followed by the beverage industry at approximately US $75 billion.
A high degree of potential exists for almost all user segments in India which are expanding appreciably:
- Processed Foods
- Mouth Fresheners (pan masala)
- Bakery Products
- Edible Oils
- Soaps and Detergents
- Drugs and Pharmaceuticals
- Cosmetics and Personal Care
- Chemicals and Fertilizers
- Office Stationary
- Engineering Products
According to Freedonia, food and agricultural markets dominate the sales of converted flexible packaging in India and will continue to expand on account of several factors — rising consumption of packaged foodstuff; the increasing presence of multinational food and beverage firms in India; the trend towards additional processing of food grains and fresh produce; ongoing efforts to improve sanitation and food safety.
Key markets include rice, other grains, food crops, various processed foods, and chewing tobacco. Personal care products such as cosmetics and toiletries are also important with fast growing Indian markets. Growth is seen in the pharmaceutical sector also due to expanding penetration of a large drug-producing industry.
The Indian processed food industry stands at about US$ 30 billion and accounts for about 13 per cent of the country’s exports and involves 6 per cent of the total industrial investment in the country. Of this packaged food stands close to only about US$ 0.85 billion. Thus there is a tremendous potential for growth of flexible packaging in the food and processed food sectors.
In 1999-2000, the total production of rice in India was 90 million tons. If even 5 per cent of the rice produced were to be packaged it would alone generate a demand for 75000 tons of flexible packaging material.
The total wheat production in India was 75 million tons. Even if 7 per cent of it were to be packaged it would create a demand for 90000 tons of flexible packaging material. The total sugar produced in India was 24.84 million tons. If 5 per cent of this was to be packaged it would alone generate a demand for 50000 tons of laminates. The total salt produced in India was 5 million tons. Packing 25 per cent of this quantity would generate a demand of 150,000 tons of flexible packaging. This clearly shows the tremendous potential for the growth of flexible packaging in India.
Flexible packaging materials in India
Going by the available data, an estimated 250,000 tons of flexible packaging materials for retail sales in the form of laminates and co-extruded films were consumed in India last year to pack a very large spectrum of products covering processed and convenience foods, fruit juice, beverages, dry and malted products, spices, tea, coffee, edible oils, toiletries, cosmetics, motor oils, and other products. Almost all the raw materials required in flexible packaging such as BOPP, PET, PE granules, aluminium foil, adhesives, and printing inks are made in India. These inputs are of international quality and are exported worldwide.
Packaging Equipment Manufactured in India
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.
The Indian market for food packaging equipment amounts to about US$ 80 million. Currently, a mere 2 per cent of India’s food production is being processed, and there are plans in place to increase the food processing level to 10 per cent over a period of ten years thereby increasing the demand for packaging equipment manifold. Another sector with a large demand for packaging machinery is the Indian cosmetic packaging segment that is expected to grow at a rate of over 20 per cent in the next few years.
The flexible packaging industry has a very crucial role to play in the lives of the ordinary people of India and thus has a great future here. Every broad industry or agricultural sector that consumes flexible packaging has its own unique and dynamic set of requirements. The huge possibilities latent in each of these sectors have to be defined and cultivated. India is indeed a dynamic, developing and demanding market and most of its potential has not yet been identified, leave apart conquered or covered. As new aspects of this market and its consumers’ behaviours are defined and chalked out everyday, the need for new solutions unique to the Indian market emerge.
Quality processes such as Six Sigma, waste minimization, the optimisation of supply chain efficiency through, for example, eCommerce initiatives, can contribute much to improved performance. So can “added value” products and services and an imaginative approach to meeting customers’ needs. In a world where commoditization is a fact, it’s evident that companies that develop unique products and services that are “genuinely out of the box” solutions to end users’ problems will gain a significant competitive edge. Goethe rightly said, “Knowing is not enough, we must apply. Willing is not enough, we must do.”