By 2025, India is expected to become the fifth largest consumer market in the world, according to CII. The inception of new technologies along with a rise in e-commerce, changing lifestyles, urbanisation and increased personal health awareness has boosted the growth of the print and packaging markets, especially in regions such as the Asia-Pacific.
Print and packaging is the first thing that attracts consumers. These two play an important role especially in the consumer goods industry. In 2009, an American multinational company producing fruit-based beverages learnt a hard lesson when its consumers discarded its products due to new packaging. The company replaced its best-selling orange juice packaging for the North American market, but the new packaging failed miserably. A few days later, sales dropped by 20 per cent as consumers started to criticise the new design on social media.
Another major chocolate brand, Cadbury India underwent a major jolt in 2003 when worms were reported in the chocolate bars. The Food and Drug Administration (FDA) considered it a case of unhygienic manufacturing defects and improper packaging. It took almost one year for Cadbury to revamp packaging of Dairy Milk chocolate, which was engineered than earlier packaging, before it slowly gained market traction.
These two very interesting case studies of packaging redesign tell us how important packaging can be for a brand, even if it is as big as Cadbury.
Taking these two instances into consideration, we can say that packaging has turned out to be a necessary step for any product-launching strategy irrespective of industry sectors. Visually graphic and appealing packaging draws the consumers to buy stuff whether offline or online. Consumers mostly translate an attractive packaging for high quality, thus premium products are often seen in more consumer-friendly and attractive packaging. A study states that 60 per cent of consumers use social media sites to talk about products and recommend them, which can impact the sales drastically.
Thus, the print and packaging sectors have been translated into a new business vertical which includes thousands of packaging companies, including from raw material supplies and processing to from designing and printing. In India, too, the sector has been seeing constant growth with an increase in packaged food consumption, awareness and desire for quality products.
As per industry insights, the Indian packaging industry was about US$ 31.7 billion in 2015. However, the industry is expected to reach an outstanding growth till 2021, anticipated to grow by US$ 72.6 billion by FY20, growing at a CAGR of 18 per cent, according to an ASSOCHAM-EY joint study. “The growth is driven by key factors such as rising population, increase in income levels and changing lifestyles. Increasing media penetration through the means of the Internet and television are fuelling the demand for packaged products in rural India as well,” noted the joint study.
Print and packaging on the rise
The print industry constitutes around four per cent of the global market, while per capita packaging consumption in India is quite low at 8.7 kilograms as compared to countries like Germany and Taiwan where it is 42 kilograms and 19 kilograms, respectively. But the study suggests, and experts too claim that the growth in the packaging industry in India is mainly driven by the food and pharmaceutical packaging sectors. The large and growing Indian middle class along with the growth in organised retailing in the country are fueling the growth in the packaging industry.
Another factor that has provided substantial stimulus to the packaging machinery industry is the rapid growth of exports, which requires superior packaging standards for the international market. With this, the need for adopting better packaging methods, materials and machinery to ensure quality has become very important for Indian businesses.
Kamal Chopra, Chairman, International Relations – All India Federation of Master Printers (AIFMP), writes in his blog, “The print - packaging industry in India is growing; people are taking a keen interest in this key industry now. There are more than 36 printing institutes and some of these are giving even post-graduate education. Printing, especially packaging printing, is now one of the fastest growing sectors in India. It is said that since 1989, the growth of printing coupled with packaging printing industry is above 14 per cent” According to Chopra, there are two main reasons for why India is one of the few markets in the world that offers high prospects for growth and earning potential in the printing and packaging industries: first, the spread of education is making people aware, and second, India has an abundance of raw material for processing and packaging products.
E-commerce and organised retail are also pushing the sector. Online shopping and widespread retail across the country has thrust the demand for quality packaging of products. “The packaging industry, which employs about 5 million people directly and three times more indirectly, will continue to grow due to rapid changes being undertaken by the industry players. Organised retail and e-commerce boom, which offer huge potential for future growth of retailing, will continue to support the packaging industry.” says S. Dayaker Reddy, President of Indian Printing, Packaging and Allied Machinery Manufacturers’ Association (IPAMA)
Typically, there is a predominance of paper and paper boards, but globally, plastic is being used as the packaging material in industries including FMCG and pharmaceuticals. As per IBEF data, at 49 per cent, plastics are the largest single material used for packaging in India. Also, consumerism going towards ready-to-eat products is driving the usage of flexible packaging, with 38 per cent of packaging involving food products. These products have also made changes in the packaging sector with great emphasis on quality of packaging material, while maintaining the hygiene and quality of food.
Similarly, for products like apparel, which do not require rigid boxes for protection, e-commerce offers possibilities for flexible packaging with such advantages as lightweight, energy saving due to less energy consumption of package production, possibilities to adjust it for different products, small pack size, and ease of storage and disposal as compared to rigid packaging. According to PackPlus insights, a global event for packaging stakeholders, the demand for flexible packaging in 2017 was estimated at US$ 5.6 billion, which is expected to grow at around 10 per cent annually over the next five years.
However, e-commerce has also boosted the demand for rigid packaging, such as for cartons or corrugated boxes. As per the study, rigid packaging accounts for 80 per cent of the Indian packaging market. These are especially used in the packaging of electronics, glasswares and products that require firm packaging for protection.
Technology and trends
With the advent of exponential technologies, the print and packaging sectors have revolutionised the way things work, while digital printing has changed the game. According to AIFMP data, the industry is growing rapidly at the rate of 12 per cent per year and consists of more than 250,000 MSMEs and big printers. The data also suggests that the packaged printing industry is growing at an annual rate of 17 per cent, commercial printing at an annual rate of around 10 per cent and digital printing at a robust growth rate of 30 per cent.
With this, the print-packaging sector has already moved from heavy machinery to more software-based businesses. Digital, also known as quick printing, is considered as the industry’s second largest segment, mostly used by small businesses where printing solutions have quick turnaround times.
Another trend experts are noticing is of UV digital printing and inkjet technology, which are on the rise in India. Whereas, offset and digital are co-existing in printing operations.
Experts are of the opinion that, with the use of newer technologies, digital printers and other packaging platforms are together making a synapse to bring out the best packaging solutions to the market. “Here, the key thing is that digital packaging today is enhancing the ‘unboxing experience’ that attracts the consumers beyond the brand reach,” says Varun Rao, Director of Leo Design Packaging. The demand for packaging products for promotions, launches and similar events have put an emphasis on packaging and it is now much more imperative t han ever. “People now want to print on everything, from company products to giveaways, and packaging too matters along with bags and boxes. Packaging has become the product extension and part of branding,” he adds.
Another trend that is transcending is of smart packaging, which embeds every pack with a unique identity, allowing interaction between manufacturers, brand owners and consumers throughout the lifecycle of the pack. Last year, packaging and processing solution provider Tetra Pak introduced smart packaging with dynamic QR codes for liquid food packaging. Out of three Tetra Pak markets globally, India is now one to have the unique PICCO printing technology for printing dynamic QR codes. The company is piloting with two F&B brands, which are being produced at Tetra Pak’s India manufacturing facility near Pune.
Ashutosh Manohar, Managing Director, Tetra Pak South Asia says, “With the rising number of smartphones and Internet penetration in the country, India provides the perfect opportunity for smart packaging technology that uses dynamic QR codes. While food safety and traceability, plant productivity and consumer engagement are the most obvious benefits, this technology can be used for many other benefits, like sharing information about recycling, what happens to the cartons after use, etc. The possibilities are endless!”
“Smart packaging will not only make the packaging more interactive and act as a medium to create conversations, it will also allow brands to trace each package throughout its lifecycle from production through the supply chain, all the way to the consumers, gathering valuable insights along the way, thereby making this a truly transformational technology,” he adds.
The print and packaging sectors are a mix of organised to very small players with localised presence. In addition to this, factors such as the booming Indian economy, increasing consumerism, entry of global brands in the country and opening of the sector to foreign investors are bound to offer growth opportunities to the industry. With this, the domestic and overseas demand for packaging is to grow rapidly within the next few years. Companies like Uflex, Essel Propack, TCPL and others are coming up with innovative packaging solutions and hosts of other sophisticated material for the market to bring up the growth graph. For instance, Uflex has already crossed the one billion-mark in 2017-18 by registering a total consolidated income of ¿ 6,808.53 crores (around US$ 1.01 billion). The company has ventured into aseptic liquid packaging with its brand Asepto last fiscal, and has high expectations from this segment in the coming years. Considering these figures, companies like Essel Propack and Uflex are some of the stocks where investors can seek to invest for the long term.
As per the Confederation of Indian Industry (CII), by 2025, India is expected to become the fifth largest consumer market in the world. A steep rise in the demand for personal care products as a result of changing lifestyles, urbanisation and increased personal health awareness has boosted the growth of the rigid packaging market, especially in regions such as the Asia-Pacific.
In addition to this, the pharmaceutical industry is one of the fastest growing industries globally. The need for packaging tonics, vaccines and tablets in durable and isolated packages is stimulating the rigid packaging market.
Moreover, the hiking food and beverage sector growth in countries such as India is also supposed to bring growth opportunities for the very market. However, increasing implementation of flexible packaging materials, fluctuating raw material prices and stringent government regulations in different countries regarding usage of plastic packaging and its disposal might act as restraining factors for market growth. Nevertheless, with all the technologies interventions and growing capabilities in the last decade, the Indian print and packaging sectors have advanced significantly and are becoming one of the most trending businesses at this time. “Both small and medium enterprises in print and packaging sector have considerable growth opportunities. As far as Government initiatives are concerned, these two sectors are getting encouragement, as far as product promotion is concerned. These sub-sectors are also getting subsidies and financial assistance through Government agencies like NSIC, Export Promotion Councils, DC, MSME, Ministry of MSME etc.” concludes Reddy of IPAMA.