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Home Kilas Berita Folding Carton Market Growing at 4% CAGR to hit $47B by 2020
29
May
2017
Folding Carton Market Growing at 4% CAGR to hit $47B by 2020

 

Folding Carton Market

Growing at 4% CAGR to hit $47B by 2020

The global market value of the packaging industry was worth $73825.3 million in 2012 which is projected to reach $25796.6 million by 2018, growing at a CAGR of 5.1%, from 2013 to 2018. India’s current share in the global packaging industry is 4.4%.

One of the major trends in the folding carton market is increase in technological innovations wherein with the use of the latest technologies and designs, vendors are launching new products to address the growing demand for folding cartons. The analysts forecast the global folding carton market to grow at a CAGR of 4.12% during the period 2016-2020.

Growing demand for packaged foods products is driving the growth of the folding carton market. This increase in demand is a result of the rise in population and increase in disposable income of consumers in many parts of the world. This will also lead to a rise in demand for folding cartons used for packaging.

The food products segment dominates the folding carton market and will account for close to 27% of market share by 2020. Increased demand for convenience foods from consumers around the globe and organized retailing has resulted in higher demand for folding cartons. Food vendors are under pressure to offer products with a long shelf life and attractive packaging to gain customer attention. The APAC region accounted for the largest market share of close to 42% during 2015.

The Indian packaging industry is rapidly growing and is spanning across various end-use segments like food and beverages, healthcare, hygiene and home-care among others. The annual turnover of Indian packaging industry is $33.8 billion and is expected to grow at 15%. There are more than 22000 companies registered in the Indian Packaging industry, of which 85% of them are MSME’s. These MSME’s are involved in low value packaging activities like filling, conversion and production.

The packaging market in India seems set for the next level of growth. Strong favourable demographics aside, factors such as increasing disposable income levels, rising consumer awareness and demand for processed food, and the multinational giants taking rapid strides in the food, beverages, cosmetics & toiletries and pharmaceuticals space, are expected to be the key drivers of this growth story. These factors are forcing both packaging suppliers and end-user industry to shift from bulk packaging to retail, and unit-level and small-sized packaging. In addition, exploding organized retail growth and newly relaxed Foreign Direct Investment (FDI) norms in retail and other sectors, augur well for packaging market in India.

The Indian packaging industry is broadly classified into rigid packaging and flexible packaging. Rigid packaging is composed of 80 percent of the market and consists of metal containers, wooden crates, plastic containers etc. Flexible packaging is composed of the remaining 20 percent and comprises of jute, cotton/plastic bags, pouches and paper.

GROWTH STRATEGY

The demand for packaging is growing along with India’s economy. The packaging industry is one of the strongest growing sectors on the subcontinent. India is not only one of the most heavily populated countries in the world, but also has a relatively young population. The per capita consumption of packaging is still well below that of other countries because the vast majority of household articles are bought unpackaged. But economic growth, the dynamically growing middle class, rising incomes and increasing urbanisation are greatly changing consumer behavior. India is one of the biggest food manufacturers in the world. According to a joint assessment of IIM Calcutta and Academic Foundation, the market volume of the food industry will continue to grow by around eleven percent per year and will rise to 65.4 bn. dollars by 2018. India’s market for packaged foods will grow by nine percent per year to a good 100 bn. dollars in 2030 according to McKinsey.

 

THE MARKET FOR PACKAGING MACHINERY

The good prospects for the packaging industry are also enlivening the market for packaging machinery. It will grow by more than five percent per year up to 2020 and then account for a market volume of 64.7 bn. dollar, as forecast by the market research instituted Technavio and Global Industry Analysts. In particular, technological developments and innovations, rising demand in the food, drinks, pharmaceuticals and chemicals sectors and the growing sales market for automated, fully integrated and multifunctional systems are driving growth forward. Sales of energy-saving machines and machines that help to comply with regulatory guidelines (such as the serialisation obligation to mark packaging units with clearly assigned codes) are also rising strongly. Just as for packaging, the Asia-Pacific region offers the greatest growth potential for packaging machinery, too. As early as 2017, China and India together will combine 21 percent of world demand, as estimated by the market research company Freedonia.

TRENDS

Although India is the world’s biggest agricultural producer after China, according to GTAI the further processing degree of eight to eleven percent is still very low. According to estimates, between 18 and 40 percent of harvests spoil on the way to consumers. The Indian government is therefore supporting the food-packaging industry. The importance of organised retail, with supermarkets and hypermarkets and modern shopping centres is increasing rapidly. Whereas in 2015, according to Boston Consulting Group (BCG), 92 percent of all players in retail are still unorganizedhops with fewer than ten employees or stalls on a market, forecasts predict that 24 percent will be accounted for by organised retail by as soon as 2020. In addition, online sales and delivery of food are becoming increasingly popular in India. According to BCG, revenue in online retail and mail order will increase five-fold from the current 14 bn. dollars to 70 bndollars in 2020. The major cosmetics company are also selling an ever-increasing and more diverse range on the Indian market.

FUTURE STRATEGY

Global retailers such as Walmart, GAP or Tesco are intensifying their activities in India. In 2012, the Indian government opened up retail to foreign investment by increasing the upper limit for participation of foreign companies in single-brand retail from the previous 51 percent to 100 percent now. In multi-brand retail, such as supermarkets, the upper limit for participation is 51 percent. The ageing population in India and improved medical conditions are also advancing the Indian pharmaceuticals industry. By 2020, according to the market research company Novonous, it will grow by 18 percent per year, whereas the packaging market for pharmaceuticals products will reach an annual growth rate of 5.5 percent in the same period. The Indian pharmaceuticals industry is currently in a transition phase. It is working on improving manufacturing practices and quality standards so that it will be able to export high-quality, world class products in future. According to estimates from Research and Markets, the Indian pharmaceuticals sector currently represents only around 1.4 percent of global revenue and still has lots of growth potential.

 

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