Flexible packaging market bright

Flexible packaging manufacturers in the GCC region operate in a high-potential market but are facing several constraints that hurt their margins

The flexible packaging market in the GCC region earned revenues of $680 million in 2009 and these are estimated to grow to $1.2 billion in 2016 at a compound annual growth rate of 8.5 per cent, according to a new Frost & Sullivan analysis.

The analysis also found that the volume of flexible packaging could rise from 273.2 kilo tonnes (kt) in 2009 to 480.95 kt in 2016.

The Frost & Sullivan research covered various product types including polypropylene, polyethylene, polyvinyl chloride, polyethylene terephalate and others (polyamide, polyolefin and polycarbonate).

'The food industry is growing at 18 to 20 per cent annually in Saudi Arabia, and pre-packaged food constitutes 50 per cent of the industry,' said a Frost & Sullivan research analyst. 'There has been a shift in attitude among the local population, especially urbanites, who are willing to spend on processed and packaged food,' he added.

Like most other areas, the GCC region is rebounding from the economic downturn and segments such as retail and consumer goods are on the upswing, creating opportunities for the flexible packaging market.

Several advantages

Flexible packaging scores over rigid packaging on several fronts including long-shelf life, barrier properties and aroma retention capabilities, which are essential for packaging moisture-sensitive products. Flexible packaging also offers rigid packaging’s benefits of stand-up pouches and re-closable packs, which provide merchandising and marketing advantages to fast moving consumer goods (FMCG) manufacturers.

'The traditional benefits of rigid packaging can be realised from flexible packaging with the added advantages of lower cost and greater flexibility,' observes the analyst. 'Consequently, plastics are estimated to account for 70 per cent of packaging across the GCC states, against the world figure of 50 per cent.'

Despite the potential, there is a lack of awareness about flexible packaging solutions. There is also severe pricing pressure from film manufacturers, which is constantly eroding packaging manufacturers’ margins. Therefore, small converters operating in the GCC region have started procuring raw materials from countries such as India and China due to the ease of procurement and increased credit period. To stave off this challenge from foreign countries, local manufacturers should start providing converters with a credit period as opposed to the current zero credit period terms, the Fred & Sullivan research found.

'To further distinguish themselves in this intensely competitive market, manufacturers have to demonstrate superior quality and back it up with enhanced customer relationship management,' notes the analyst. 'With rising commercial and consumer interest in this market through 2015, it is important to strategically position products to create brand loyalty and retain customers.'

As well as credits and maintaining cordial relations with customers, manufacturers can also beat the competition by creating product niches. The market will also get a leg up from improved production in the GCC region, which will result in higher utilisation of flexible packaging, he adds.

Related News

no news in this list.