Indian Paper and Packaging Industry -Current Status

CPP Insight's latest long-term forecast analyses four key trends that indicate how the packaging industry is set to evolve.

According to research by CPP Insights in The Future of Packaging: Long-Term Strategic Forecast to 2028, between 2021 and 2028 the global packaging market is set to expand by almost 3% per annum, reaching over $1.2 trillion.

Trend

It is clear that packaging plays a large role in the perceived value of a product and as a whole, the packaging industry really hasn’t changed too much in the past years, compared to the constant innovations made in portable technology. With all the packaging and box choices available in today’s market, it often becomes difficult to select the most appropriate packaging solution for your product. Let’s take a look at some of the different types of packaging options you can use to enhance your product & customer experience!

The global market for online retailing continues to grow rapidly, driven by penetration of the Internet and smartphones. Consumers are increasingly buying more goods online. This will continue to increase through to 2028 and will see an elevated demand for packaging solutions – especially corrugated board formats – that can safely ship goods through the more complex distribution channels.

More people are consuming products such as food, beverages, pharmaceuticals on the go. This is increasing demand for packaging solutions that are convenient and portable, with the flexible plastics sector one main beneficiary.

In line with the move to single-person living, more consumers – especially younger age groups – are inclined to go shopping for groceries more frequently, in smaller quantities. This has driven growth within convenience store retailing, as well as boosting demand for more convenient, smaller size formats.

Consumers are taking a greater interest in their own health matters, leading to healthier lifestyles. Therefore this is boosting demand for packaged goods, such as healthy foods and beverages (e.g. gluten-free, organic/natural, portion-controlled) alongside non-prescription medicines and nutritional supplements.

Brand owner trends

The internationalization of many brands within the fast-moving consumer goods industry continues to rise, as companies seek out new high-growth sectors and markets. Increased exposure to westernized lifestyles will accelerate this process in key growth economies through to 2028.

E-commerce and the globalization of international trade are also stimulating demand among brand owners for components, like RFID labels and smart tags, to protect against counterfeit goods, and enable better monitoring of their distribution.

Industry consolidation in merger and acquisition activity in end-use sectors such as food, beverages, cosmetics, is also forecast to continue. As more brands come under the control of one owner, their packaging strategies are likely to become consolidated.

The 21^st Century consumer is less brand loyal. This is simulating an interest in customized or versioned packaging and packaging solutions that can create an impact on them. Digital (inkjet and toner) printing is providing a key means to do this, with higher throughput printers dedicated for packaging substrates now seeing their first installations. This further aligns with the desire for integrated marketing, with packaging providing a gateway to link into social media.

1. Paperboard boxes

Paperboard is a paper-based material that is lightweight, yet strong. It can be easily cut and manipulated to create custom shapes and structures. These characteristics make it ideal to be used in personalized packaging. It is made by turning fibrous materials that come from wood or from recycled waste paper into pulp, and then bleaching it. Paperboard packaging comes in various grades, each suitable for different packaging requirements.

SBS (or solid bleached sulfate) paperboard can be used for packing cosmetics, medicines, milk and juice, cosmetics, frozen food, and more. Choosing kraft, or CUK (coated unbleached kraft) paperboard packaging is for those who prefer the natural and environmentally-friendly look of recycled paper, which can be used for similar packaging applications. Kraft is often seen to be less resistant to moisture, making it less suitable for food-related products, or frozen-goods packaging. With the right combination of design options, paperboard packaging can look high-end, without the high-end pricing.

2. Corrugated boxes

Corrugated boxes simply refer to what is commonly known as Cardboard. Corrugated boxes are the ones many probably consider as ‘cardboard’ as it produces the large shipping, shoe & storage boxes.  What a lot of people do not realize is that corrugated boxes also come in different types depending on the durability and strength of the box. Identifying a certain corrugated material, however, is easy. How do you determine the material? Through its corrugated medium (also known as fluting).  Identifying a corrugated material is easy. It consists of 3 layers of paper, an outside liner, an inside liner, and a corrugated medium (also known as fluting). The corrugated medium gives it strength and rigidity.

The main raw material that is used to construct the corrugated board is most recycled paper, made on large high-precision machinery known as corrugators. These types of boards can be reused and recycled again and again as a source of pulp fiber. Corrugated boards are of different types, single-faced, double-faced (single wall), twin wall, and triple wall. They can be used to make packaging with different characteristics, performances, and strengths. The board is cut and folded into different sizes and shapes to become corrugated packaging. Other applications of corrugated board packaging include retail packaging, pizza delivery boxes, small consumer goods packages, and so forth.

and....

GLOBAL PACKAGING INDUSTRY

Key Trends

• According to the latest market study released by Technavio, the global packaging market, valued at $589.9 billion in 2015 with a CAGR of 5.6 %.
• It will reach $770.5 billion by 2020 and USD 1,100 billion in 2024. With a global population of 7.35 billion human beings in 2015 according to the UN, each individual consumes USD114 of packaging per year in the world.

PACKAGING INDUSTRY VALUE CHAIN

PACKAGING MATERIALS

The global packaging market is divided into five main categories of materials: plastics, paper and board, glass, metal and wood (textile is marginal). For many years, this market has been seeing growth in the use of rigid plastic materials and flexible materials. In terms of packaging units, the main packaging materials used in the world are also

1. Flexible materials (36%),
2. Paper and board (24%)
3. Rigid plastic materials (20%)

PACKAGING INDUSTRY IN INDIA

Overview

1. Domestic manufacturers largely control the Indian packaging industry; although some leading global packaging companies have also established a strong presence in India.
2. Consequently, the M&A activity in the packaging sector in India has been on the rise as many global companies have established are looking to establish a presence in the fast-growing geography. M&A activity has picked up the pace with over 15 transactions in the packaging industry in India since 2012.
3. Despite this visible transition over the last decade from a 70% unorganized share, roughly 45-50% of this industry still remains unorganized.

In most of the past decade, the Indian paper industry, which is in perpetual crisis despite its above GDP growth rate (www.ippstar.org), is alternately praising the government and looking for some concessions from it. The Covid-19 pandemic has practically wiped out the publication paper segment, described as ‘writing and printing’ paper and includes newsprint.

The lockdowns and the continuing constraints of an economy coming back toward full production while the pandemic is not fully under control have meant a big hit in newspaper printing and a collapse in textbook production. Schools are still closed in many parts of the country, and there is a lack of clarity when they will physically open again. Bookshops also remain closed in many parts of the country. However, bookshops were declared essential in Kerala and allowed to open within protocols soon after the March lockdown.

Monocarton packaging continues to drive the demand for paperboard from greyboard to better varieties, including SBS and FBB whiteboards that have a percentage of imported pulp. The other packaging area that has prospered during the pandemic and step by step un-lockdown is corrugated packaging. Brown boxes are used for the home delivery of everything from fruit, vegetables, and meat products to ready-cooked meals from local suppliers to the household and luxury goods and furniture from Amazon and Flipkart.

Recycled corrugation liner (called Kraft by some) was always the most significant part of Indian paper production. While current total Indian paper production would be around 18 million tons, recycled corrugated liner makes up more than 8 million tons, and it is growing better than the other varieties. In former days, recycled liner and corrugated boxes were considered low value except by those who could see the future.

There has been a remarkable improvement at the top end of corrugated box production in India in the past ten years. Quality has been driven by the higher specs of the large consumer product companies and exporters who cannot afford to have their goods arrive in bent boxes with and odor and other problems. The arrival of Flipkart, Amazon, and IKEA have also played a part in a healthier demand from those to whom quality matters. Apart from the import of better paper and corrugation machines, some of the organized players have upgraded raw materials and technology, especially in Southern and Western India.

An article by Suresh Iyengar in the Business Line quotes Lalit Garg, chairman (Paper Committee) of the Material Recycling Association of India, saying that the price of the recycled liner (which they call kraft paper) with a burst factor of 18 bf has now reached the pre-Covid price level of Rs 27 a kilogram. The price of recycled liner fell to Rs 19 or 20 during what one presumes were the early days of the pandemic and the lockdown. With the lack of demand for writing and printing paper, some mills have also started making recycled liners to absorb overheads and keep their paper machines running.

Demand for liners revived quickly since June, and waste paper prices started moving up, forcing paper mills to hike finished product prices to the pre-Covid levels of Rs 27 per kilogram in most of Western India. Making an excellent corrugated board requires good recycled liner, glue and chemicals, and proper technique. The recycled liners need waste paper, which is also in short supply and has historically been imported.

Ironically, as Indian corrugators and liner suppliers have improved, the recycled liner paper mills have become competitive exporters. In a recent paper industry webinar, they openly said that exports are necessary to maintain remunerative prices domestically. The further irony is that several large shipments of the recycled liner from India have been exported to Chinese corrugators, mainly from Western India, in recent months.

China, which had banned waste paper and plastic imports a couple of years ago, is said to have reentered the waste market, and this has increased the global demand for waste paper and driven up the price, which varies from US$ 200 to US$ 220 per metric ton. Industry sources also say that the cost of sea freight has gone up by US$ 100 to 150 per ton in the past month. In the continuing triangle of goods suppliers, liner, and corrugated box manufacturers, the idea is how to raise the price of the recycled liner by another Rupee, in
In other words, how to increase the cost to Rs. 28 or Rs. 29 when the box makers and buyers are reluctant to absorb higher prices.

FACTS AND FIGURES

1. According to the Packaging Industry Association of India, the Indian packaging industry was the fifth largest in the world in 2016. The Indian packaging industry, which constitutes about 4 per cent of the global packaging industry, has been growing at an annual rate of 18 per cent and is expected to touch $73 billion by 2020.
2. The per capita packaging consumption in India is quite low at 8.6 kg, compared to countries such as Germany and Taiwan where it is 42 kg and 19 kg, respectively. However, organized retail and boom in e-commerce, which offer huge potential for future growth of retailing, is giving a boost to the packaging sector.
3. India has 22,000 packaging units that operate in the area of glass, plastic, paper, metal, and corrugated packaging, and 85 percent of which are SMEs. These packaging companies further focus on four different categories-raw of materials, converting industry, machinery, and ancillary. Packaging growth is directly linked to GDP growth.

PACKAGING INDUSTRY – SEGMENTATION BY PLAYERS 

Segment	Offering	Features
Primary / Secondary Packaging	Folding Cartons, Rigid and Flexible Plastics, glass, metal based packaging	Serves as containment and a medium of branding to communicate product attributes
Transit Packaging (for E-commerce)	Corrugated Cartons, polybags, bubble wraps etc	Protection for safe, damage free and efficient transportation over logistics channel

 

CLASSIFICATION OF PLAYERS IN THE PRIMARY / SECONDARY PACKAGING SEGMENT

Packaging Type	Few Industry Players
Folding Cartons	Kondaiah's Creative Print and Pack Pvt Ltd, Parksons Packaging, Pragati Pack, Offset, TCPL Packaging, Borkar Packaging, Temple Packaging
Rigid Plastics	Manjushree Technopack, Mold-Tek Packaging, Sunrise Containers, Hitech Plast, SSF Plastics, Chemco Plastic
Flexible Plastics	Uflex, Positive Packaging (Huhtamaki), Creative Polypack, Kanodia Technoplast, Kris Flexipacks, Uniglobe Packaging, Parikh Packaging, Packaging India, Kamsri (Pharmaceutical Packaging), Powerband Industries, Max Specialty Films
Corrugated Cartons	Creative Corrugated Boxes, Horizon Packs
Security Polybags, Envelopes	Dynaflex
Closures	Axiom Propack, Oricon Packaging, Oriental Containers
Paper	Ruby Macons, Webtech Industries, Janus Packaging, Plus Paper Foodpac
Labels	Interlabels
Glass	Neutral Glass & Allied
Pharma	Triveni Polymers
Lamitubes	Essel Propack, Skypack,
Corrugated Cartons, polybags, bubble wraps, etc	Driven by eCommerce, 3PL, Online Grocery & Food Delivery, Electronics, Apparel, Books, Personal Care, Home Furnishings and others)

 

WAY AHEAD – TRENDS AND CHALLENGES

Key Packaging Trends:

1. Reduction in packaging materials – thinner, stronger design, lighter, simpler.
2. Packaging closer to the manufacturer – fewer empty cartons carried in Lorries.
3. Smart packaging – rapid print, aligned with real-time campaigns and offers; more use of RFID technology for electronic tagging, tracking of stock, as cost of RFID tags falls.
4. Better recycling – easier recycling of packaging, higher percentage of recycled materials in new packaging.
5. Biodegradeable packaging – eg plastics made from starch, more use of cardboard.
6. Space-saving packaging – eg growth of square cartons for drinks.
7. Customer Returns packaging – improvement in re-seal pouches to keep pace with huge growth of online ordering of eg clothes where customers often order several sizes to try on, returning most goods ordered.
8. Better ways to print branding/marketing on plastics eg bottles.
9. Less use of solvent-based inks for printing.
10. Consolidation of packaging industry – economies of scale with larger machines, faster turnarounds, next-generation technology

Challenges

1. Competitive Intensity
2. Investments / Rapid Changes in technology
3. Government regulations
4. Shortage and Rising cost of raw material
5. Costly Skilled Manpower
6. Rising input costs
7. Highly inadequate credit flow
8. Lack of Market Access & Advanced technology
9. Lack of exposure to Best Management and Manufacturing Practices
10. Lack of 100% commitment to the quality standards
11. Lack of Marketing, Distribution, and Branding
12. Non-availability of skilled man-power

WHAT THE FUTURE FOR THE PAPER AND PACKAGING INDUSTRY?

In line with the conclusion, the packaging industry has less impact due to coronavirus pandemic. The global supply chain is set for a major overhaul as the pandemic has exposed the vulnerability of countries and companies. Several packaging companies have started re-evaluating their supply chains and are in the process of shifting their supply chains to other countries. However, plastic manufactures conclude the issue as short-term. However, with some manufacturers shutting down production or shifting to new products that are essential to fight the pandemic, forest, paper, and packaging companies need to remain focused.

The pandemic has also showcase Indian pharmaceutical companies an opportunity to become an alternative hub for the manufacturing of intermediates which will consequently raise the demand for domestic packaging manufactures and suppliers.

Proper availability of raw material is a greater concern for the market. If the raw material is not available in the appropriate quantities, according to consumer demand, the production cannot be done properly, due to which manufacturing has to face losses and business growth happens at a very low rate. Now plastic and paper are used as raw materials for many products. Thus, in conclusion, the decline in the availability of the proper quantity of raw materials for the production of packaging type will hamper the impact on the packaging industry drastically.