8 SEEING INSIGHT & OUTLOOK: Packaging consumption
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THE
BIG PICTURE
Anniversary
Packaging is involved in nearly every aspect of human life due to the use of different products. Importantly, it has also been able to meet the increasing needs of customers. This review illustrates the factors, shifts and trends that influence the packaging industry. P V Narayanan
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he economic environment in the country is influenced by four key forces, viz rapid sustained growth, liberalisation, demographics and conducive development of business environs. The demographics in terms of households can be broadly viewed under five major categories, viz ‘Have All’, ‘Have Lots’, ‘Have More’, ‘Have Some’ and ‘Have Nothing’. The ratio is about 0.3:1.3:0.5:10.0:0.3. This is essentially based on annual income. The third and fourth categories are predominant, ie the middle income and higher middle income. Trends in recent years are a clear indication of the shifts observed. These two categories are moving ahead because of increasing personal disposable income and hence better purchasing power to satisfy sophistication needs.
6%
5% 29%
26%
In the earlier years, the growth of the country was measured by the steel sector and subsequently by the electronics sector. Today, the packaging sector sets the index, and probably packaging alone has its shades cast on every walk of the industry and on human life.
All over the world The global packaging industry is estimated at about $ 600 billion, with a contribution of about 29 per cent from the Asia Pacific region, mainly from Australia, Japan and China; 34 per cent from Europe; 26 per cent from North America; 6 per cent from Latin America and 5 per cent from the rest of the world. India is indeed an opportunistic region. Whereas the world packaging industry is growing at 3–5 per cent, India is at an enviable position of about 12 per cent growth. The easiest way to interpret the potential for packaging is by the fact that 80 per cent of packaging is consumed by 20 per cent of the population. In other words, 80 per cent of the population has access to only 20 per cent of packaging. This opens up the reach possible for the packaging sector, and every percentage shift in the 80 per cent would be the index of growth.
Per capita consumption pattern 34%
Asia Pacific Europe North America
Latin America Rest of the world
Percentage contribution of different regions
84
The interpretation can further be augmented by the per capita consumption pattern. Whereas the per capita packaging consumption in Europe, North America, Australia and Japan could be over $ 200, and at the higher level of $ 400 in Latin America, it is at the lower ebb in Asia and India. As against the global average of
Modern Packaging & Design July-August 2013
about $ 75, India is only at the level of $ 10. Thus, even if we have to reach the global average, the growth opportunity is over 75 per cent. This is the current situation, and hence, packaging appears to be a sector of opportunity. It is further evident by the fact that the Indian packaging sector had a compounded annual growth of only 4 per cent in the early 1980s. This grew in leaps and bounds to a level of nearly 20 per cent by mid 1990s, and subsequently steadied at about 12 per cent. The major growth sectors are ‘Flexibles’, ‘Folding Cartons’, ‘Thermoforms including disposals’ and ‘Labels’, particularly the pressure sensitive and shrink labels. Alongside will be the processing and packaging technologies. The Indian packaging market is estimated at over $ 1,200 million, and the growth trend is driven by growth in DPI, double/multiple income families, increasing retailing infrastructure, foreign direct investment and increasing investment by fast moving consumer goods multinationals and emphasis on brands. The food sector alone is the single point driver and is set to grow by over 12 per cent. The retail sector today is over ` 40,000 crore and is the eighth largest in the globe. Organised retail will be of the order of 10 per cent from the current level of about 4 per cent. This, along with private labelling, will have a very high impact on packaging. Domestic spending can be an excellent indication on the types and trends in packaging. Food & food products account for 31 per cent of spending. Agriproducts is valued at