Food packaging industry: Current, future prospects

Friday, 01 November, 2013, 08 : 00 AM [IST]

Dr Tanweer Alam
Prologue
During pre-historic era, people hunted for food and soon they realised that they could keep their food longer if they
protected it. Therefore, they made pockets out of large leaves and animal skin and kept water in containers made
out of coconut shells and dried skins of vegetables. Gradually, packaging came into existence to take care of
consumer goods, medicine and food - packaging was introduced in 1875 by Henry J. Today, virtually everything we
use needs packaging.

Potential
The Indian packaging industry is currently $18.8 billion with a growth rate of above 12.36% per annum more than
twice the global average while our GDP growth was 8.5%. Not only is the industry growing rapidly but it is also
creating lucrative jobs for those who find a career in it.

India’s Rs 65,000 crore packaging industry is expected to grow at 18-20% to reach Rs 82,500 crore by 2016. The
sales turnover of the Indian packaging industry is expected to reach $43.7 billion by 2016. India’s per capita
consumption of packaging is only 4.3 kg per person per annum, as against Germany’s 42 kg and China’s 20 kg,
which is very low compared to global standards.

Initiatives are needed to convert the large unpacked commodities into processed and packed and well-presented
commodities. India's imports at 20-25% with a value of $125 million of its total packaging machinery indicate
further opportunities not only for Indian companies to increase their share in domestic market but also for
international companies to explore new business opportunities in India.

The food and beverage and pharmaceutical segments occupy the largest share in the packaging industry,
accounting for 85 per cent and 10 per cent, respectively. The plastic packaging market is expanding rapidly
registering a growth of 20-25 per cent per annum and is valued at 6.8 million tonne while the paper packaging
industry stands at 7.6 million tonne.

The packaging industry is poised to grow rapidly led by the increasing use of innovative packaging equipments and
the rising flexible packaging market. Of the total, paper packaging alone constitutes 7.6 million tonne. In fact, 40%
of the total paper production goes for packaging. Plastic packaging comes next at 6.8 million tonne and growing at
20-25%, whereas glass packaging contributes to 4-5% and metal 8%.

The sales turnover of Indian packaging industry is likely to touch $43.7 billion by 2016, according to Indian
Institute of Packaging (IIP 2013). "The total turnover of the packaging industry in India at present is $27.6 billion
and expected to grow to around $43.7 billion by 2016, whereas the global turnover is about $550 billion" (Ray,
2013). He said that the packaging industry was growing at 12% per annum in India as against the global growth
rate of 5%. There are roughly 22,000 packaging companies in the country -- from raw material manufacturers to
machinery suppliers to ancillary material and nearly 85 per cent of them are MSMEs.

A recent report pointed out that as far as sectorwise demand drivers go, the packaging sector is estimated to drive
polymer demand of around 6.3 million tonne by 2016-17 in comparison to consumer goods (1.3 million tonne),
automotive (0.5 million tonne), infrastructure (2.4 million tonne). At the same time, currently the share of pharma
packaging in the Rs 1,25,000 crore polymer processing industry is around 7 per cent, and therefore, there is huge
potential for growth.

Global market
Global packaging industry is worth US$424 billion and out of this Europe has US$127 billion, Asia has US$114
billion, North America has US$118 billion, Latin America has US$30 billion, and other countries have US$30 billion.
In terms of global market percentage, Europe is 30%, North America is 28%, Latin America is 7%, Asia is 27% and
others is 8% of the total industry.

According to the materials used in packaging industry throughout the globe, paper shares the most, 36%, metal is
17%, plastic takes 34%, glass takes 10% and other occupies 3%. According to the type of packaged products,
beverages take 18%, food take 38%, pharmaceutical products take 5%, cosmetic products take 3% and other
products take 36% of the overall industry. The global market value of food packaging is US$161 billion, beverage
packaging is US$76 billion, pharmaceutical packaging is US$21 billion, cosmetic packaging is US$13.3 billion and
others is US$153 billion.

Packaging market
The global plastic packaging materials and products market would reach US$262.6 billion by 2015, according to
Global Industry Analysts, Inc. Although the global economic recession subdued the US and European markets that
make up the bulk of the plastic packaging industry, the industry is witnessing a resurgence driven by demand from
emerging markets in the Asia-Pacific and Latin America, as well as unrelenting technological innovations.

Following a brief lull during the onset of worldwide recession, demand for plastic packaging rebounded due to the
rising demand from the food and beverage and consumer retail products sector. Plastic materials are fast becoming
the preferred choice of manufacturers for packaging new products. With the development of stronger and cost-
effective materials with improved barrier protection, and aesthetic qualities, plastic is expected to further encroach
into the territories dominated by metal, glass and paper packaging materials.

Europe at forefront
For several years, European R&D institutions areat the forefront in developing new technologies for plastic film
materials and manufacturing. Within the rigid plastic segment, PET and HDPE polymers are predominant. Of late,
PET has almost completely taken over the mineral water and household cleaning products markets, and is a strong
contender within the soft drinks market that is dominated by glass bottles and metal cans.

Moreover, researchers are vying to formulate newer varieties of plastics that emulate the aesthetic qualities of
glass, in order to tap the alcoholic beverages segment. Innovations such as squeezable bottles and one-stop
closures are aiding the foray of rigid plastic packaging into newer sectors such as sauces, condiments and
dressings.

Second to paper
Plastic is second only to paper in the flexible packaging materials industry, exhibiting strong growth unlike glass
and metal segments. Industrial packaging is expected to remain the major hub of demand for flexible plastic
packaging with LDPE (Low Density Polyethylene) dominating the market. Lightweight flexible plastic packaging is
also making waves in the consumer retail sector due to cost-efficiencies offered in production and transportation,
as well as reduction of carbon footprint. Self-standing pouches offering better display of the product and labelling
are also helping to optimise space in the retail shelf. Both rigid and flexible materials are finding increasing
application in the healthcare and surgical packaging sectors, particularly from China, in the form of medicine
bottles, sterile pouches, and IV bags.

In recent times, the IT hardware industry emerged as a major consumer of flexible plastic packaging. The demand
for eco-friendly packaging made from bio-plastics is growing with products such as water-soluble and edible plastic
packs are already finding their way into the fertilisers and confectioneries sectors respectively, in several developed
economies.

In addition, plastic manufacturers in several countries, including China and India, were hit by recent government
regulations restraining the use of plastic carry bags and packages. Traditionally, the US and European markets are
the centres of demand for using plastic packaging in food products due to better lifestyle and consumer demand for
convenience.

Thriving industry with large untapped potential

There are some 600 to 700 packaging machine manufacturers, 95% of which are in small and medium sectors and
located all over the country. There is huge gap in demand and supply of food packaging professionals.

India is the world's 2nd largest producer of food next to China

 It is the 2nd largest vegetable and 3rd largest fruit producer in the world
 The growth of food packaging sector has nearly doubled to 13.7 per cent during the last four years
 It ranks second only to Japan in inland sector fish production and produces about 6.57 million metric
tonne fish every year
 Of the world's total annual spice trade of 850,000 tonne, India accounts for 44 per cent in quantity and 36
per cent in value
 The beer market in India is pegged at around 12 million hectolitre
 Functional foods had the market earned revenues of over $185 million in 2007 and this is expected to
reach $1,161 million in 2012
 Factors instrumental in driving growth and investment (FDI) in the Indian food industry are Effective
distribution network and supply chain; Product range that is customised to suit local market requirements;
Superior processing technology; and Brand building and marketing.

Newer segment and future prospects

In today's world of global markets and stiff competition in every product along with increasing consumer demand,
it becomes imperative for companies to explore ways to improve their productivity in terms of maintaining safety,
using sustainable packaging materials, implementing flexible and standardised technology, and adopting proven
management principles in the food processing and packaging industry in the light of recent advancements in the
fields of (i) smart packaging and materials including the application of nanoscience and technology, (ii) automation
and control technology, standards, and their application scenarios, and finally (iii) production management
principles and their improvements for the food industry. This paper reviews the major influencers that will drive
change in meat packaging.

Nanocomposites
The development of nanocomposites is a new strategy to improve physical properties of polymers, including
mechanical strength, thermal stability, and gas barrier properties. The most promising nanoscale size fillers are
montmorillonite and kaolinite clays. Graphite nanoplates are currently under study. In food packaging, a major
emphasis is on the development of high barrier properties against the migration of oxygen, carbon dioxide, flavour
compounds, and water vapour. Decreasing water vapour permeability is a critical issue in the development of
biopolymers as sustainable packaging materials. The nanoscale plate morphology of clays and other fillers
promotes the development of gas barrier properties. Challenges remain in increasing the compatibility between
clays and polymers and reaching complete dispersion of nanoplates. Nanocomposites may advance the utilisation
of biopolymers in food packaging.

Over the past decades, polymers have replaced conventional materials (metals, ceramics, paper) in packaging
applications due to their functionality, lightweight, ease of processing, and low cost. The use of synthetic polymers
is ubiquitous in food packaging where they provide mechanical, chemical, and microbial protection from the
environment and allow product display. Polymers most frequently used in food packaging are polyethylene,
polypropylene, polystyrene, polyvinyl chloride (PVC), and polyethylene terephthalate (PET).

Novel system
A novel silver-based anti-microbial layered silicate additive for use in active food packaging applications. The silver-
based nanoclay showed strong antimicrobial activity against gram-negative Salmonella spp. Despite the fact that
no exfoliation of the silver-based nanoclay in PLA was observed, as suggested by transmission electron microscopy
(TEM) and wide angle x-ray scattering (WAXS) experiments, supporting the potential application of this biocidal
additive in active food-packaging applications to improve food quality and safety. Apart from well proven modified
MAP and Vacuum Packaging system these are future potential of novel food packaging system.

Active, map packaging technologies

Active packaging technologies offer new opportunities for the food industry, in the preservation of foods. Important
active packaging systems currently known to date, MAP, CAP VP, including oxygen scavengers, carbon dioxide
emitters/absorbers, moisture absorbers, ethylene absorbers, ethanol emitters, flavour releasing/absorbing
systems, time-temperature indicators (TTI), and anti-microbial containing films, are reviewed. Recent technological
advances in active packaging are discussed, and food related applications are enormous. Modified atmospheres
(MA), i.e., elevated concentrations of carbon dioxide and reduced levels of oxygen and ethylene, can be useful
supplements to provide optimum temperature and relative humidity in maintaining the quality of fresh fruits and
vegetables after harvest.

MA benefits include reduced respiration, ethylene production, and sensitivity to ethylene; retarded softening and
compositional changes; alleviation of certain physiological disorders; and reduced decay. Subjecting fresh produce
to too low an oxygen concentration and/or to too high a carbon dioxide level can result in MA stress, which is
manifested by accelerated deterioration. Packaging fresh produce in polymeric films can result in a commodity-
generated MA.

Atmosphere modification within such packages depends on film permeability, commodity respiration rate and gas
diffusion characteristics, and initial free volume and atmospheric composition within the package.

Temperature, relative humidity, and air movement around the package can influence the permeability of the film.
Temperature also affects the metabolic activity of the commodity and consequently the rate of attaining the
desired MA. All these factors must be considered in developing a mathematical model for selecting the most
suitable film for each commodity of fresh and processed packaged food.

Machinery & automation sector: Triggering growth

The globalisation of the Indian economy has exposed the domestic companies to the free market dynamics. With
no protection from the state, these companies are learning to be more efficient and are re-engineering the
business processes to compete with the global businesses. Among other things, deployment of IT has been
extensive in the better-managed companies and the one field where it is being successfully deployed is the
management of the supply chain. This has brought the focus on the Automatic Identification and Data Capture
technologies and integrated with the ERP/ EDI (Enterprise Resource Planning / Electronic Data Interchange)
applications.

RFID and IT elegant packaging

Worldwide, RFID (Radio Frequency Identification) is being driven by an electric mix of researchers and
businessmen of Indian origin and provides an unprecedented opportunity for the country to export services and
software. The technology whose applications are limited by ones imagination is primarily finding use in fleet
management, inventory and asset management, warehouse automation, asset tracking, quality control, packaging,
security and access control, hazardous material management, advertising and promotion, delivery and smart card-
based payment systems. The application is happening in many industry segments but still the areas of focus are
retail and supply chain management. The technology has got a new impetus with the emergence of Electronic
Product Code (EPC), a set of standards that weaves basic RFID technology into a numbering schemes as they move
across the business supply chain.

Bulk and transport packaging

The Indian bulk packaging market started moving significantly only in the 1990s as the industries acquired bulk
handling capabilities to compete in the globalised world. The markets really took off at the turn of the new
millennium spurred by an export-led and domestic growth in agro produce & foods. The market grew at around
28% for the first 6-7 years and then settled down to a 15-20 % band largely bucking the worldwide slowdown.

The rigid packaging industry that comprises drums and containers made from metal, plastics, fibre board and
composite materials is growing at about 13% pa. Within the industry, there is a migration to plastics and the major
metal drum manufacturers have joined the bandwagon themselves by setting up parallel facilities for
manufacturing plastic containers. The 6 million units plastic drum market (Rs 5 billion.) is growing at over 16%
while the 10 million drum steel market still manages a positive growth of 2% and is valued at around Rs 2 billion.
The fibre drum and composites valued at Rs 4 billion is also growing at around 10%. The Rs 140 billion flexible bulk
packaging industry that includes woven sacks, leno bags, wrapping fabric, and flexible intermediate bulk container
(FIBC) is growing at over 20% with FIBC containers expected to grow three-fold in the next 5 years riding an
increased industrial production and a shift toward higher-value containers offering enhanced performance and
supply chain efficiency. In fact, the global slowdown has been an opportunity for the Indian FIBC manufacturers as
the production cuts by the companies in Europe and USA have resulted in the sourcing shifting to India adding an
important factor to the growth story.

Legislative issues to be concerned

The application of novel food packaging materials has increased the number of occurring hazards due to the
migration from packaging material to the packaged food. Although polymers have mainly monopolised the interest
of migration testing and experimentation, recent studies have revealed that migration also occurs from “traditional”
materials generally considered to be safe, such as paper, carton, wood, ceramic, and metal. The regulations and
the directives of the EU tend to become stricter in this respect. The emphasis is on reaching a consensus in terms
of food simulants and testing conditions for migration studies. Furthermore, the list of hazardous monomers,
oligomers, and additives continues to augment in order to ensure that the consumer safety is in current agreement
with the HACCP, which is continuously gaining ground.

(The author is joint director, Indian Institute of Packaging, Delhi. He can be contacted at
amtanweer@rediffmail.com)
Global demand for flexible packaging is projected to reach 210 billion USD in 2015 and
will continue to grow to 248 billion USD in 2020, according to market research by
Smithers Pira.

Flexible packaging has been one of the fastest growing packaging sectors over the past
10 years, thanks to increased consumer focus on convenience and sustainability, and
this rapid development will continue to accelerate, the report has found. The Smithers
Pira Future of Global Flexible Packaging to 2020 report stated that the market will grow
at an annual average rate of three percent, reaching 248 billion USD in 2020.

According to the executive summary of the report, flexible packaging is the most
economical method to package, preserve and distribute food, beverages, other
consumables, pharmaceuticals and other products that need extended shelf life. It can
be designed with barrier properties tailored to fit the products being packaged and their
end-use, whereas other barrier packaging formats generally provide a one-size-fits-all
approach. Flexible packaging can now be made in a wide variety of innovative shapes,
sizes and appearances, and can include components such as handles and opening and
reclosing features such as zips and spouts.

Flexible packaging technology has advanced dramatically over the past 10 years and is
now a consumer household mainstay, steadily moving into new markets and
applications. Products have progressed from simple monolayer bags and wrappings to
coextruded or laminated engineered multilayer and coated constructions, comprising
multiple materials such as plastics, paper and metal foils, coatings and other additives.
These developments provide properties such as high barrier to oxygen, extended shelf
life and convenience, all of which are increasingly demanded in packaging for food,
consumables and pharmaceuticals. The properties of flexible packaging can be tailored
to provide specific combinations required for packaging a broad range of products.

Future of Global Flexible Packaging to 2020 has also noted that the global consumer
flexible packaging market value is estimated at 91.7 billion USD for 2015, and is
forecast to grow at an annual average rate of 4.4 percent during the 2015-20 period to
reach 114 billion USD. The market tonnage of this segment is estimated at 26.2 million
tonnes in 2015 and is forecast to grow on average by 3.8 percent during the 2015-20
period to reach 31.7 million tonnes. World demand for consumer flexible packaging us
to continue its upward growth trend in 2015 and well beyond, especially as developing
economies continue to expand, according to the report. China is the largest national
market for consumer flexible packaging, with a market tonnage of 6.07 million tonnes.
Asia is the largest regional market with 40 percent of global market volume, followed by
Western Europe and North America. Asia is also projected to be the fastest growing
market for consumer flexible packaging over the forecast period, with an annual
average rate of 6.6 percent in volume terms. India and China are the fastest growing
national markets for consumer flexible packaging at 9.4 percent and 6.9 percent annual
rates, respectively, over the 2015-20 forecast period.

Forecast consumer flexible

packaging consumption by product category, 2010-20 (‘000 tonnes)

(graphic and date source: Smithers Pira)

Food is projected to account for almost three-quarters of global consumer flexible and
forecasts packaging consumption in 2015. Meat, fish and poultry account for the largest
usage food sector for flexible packaging, followed by confectionery and baked goods.
Flexible food packaging has been growing at an average annual rate of four percent in
volume terms over the 201conv0-15 period. It was the fastest growing end-use sector
with beverages and pharmaceuticals following close behind.

In terms of future growth, a number of new packaging materials will become

commercialized over the forecast period. Packaging converters looking to reduce
production and transport costs are benefiting from the increase in flexible packaging
types, aided by the continual development of new pouch designs – particularly the
potential for an all-plastic barrier pouch – and by growing consumer demand for
convenience and packets that are easy to open and close. New processes and
machinery will enable pouch filling speeds to match those of bottles over time.

Advances in digital printing will provide opportunities for direct in-line printing as part of
the conversion operation and developments in packaging and graphics to meet the
requirements of brand-owners and consumers for rapid product changes, versioning,
personalization and individualization.

A recent report from Canadean has predicted that nearly 800 billion units of flexible
packaging will be consumed within global retail food markets in 2018, meaning
flexible packaging is set to expand its share in the food packaging market to 53.1
percent in the next three years.

Another recent Smithers Pira report has stated that the global folding carton market
will be worth over 100 billion USD by 2020 and will consume almost 47 million tonnes
of material.

Both flexible packaging and folding carton printing will form part of package printing’s
overall presence at Labelexpo Europe 2015. This will include Nilpeter showing
flexible package printing on an FA-4* in the technical Packprint Workshop feature
area.

Read more about digital flexible package printing in L&L issue 2, 2015