Packaging Sector in India

According to a report by the Economic Times, The Packaging Industry in India is one of
the sectors to have seen a very high growth in the recent years. This industry is
currently valued at $24 billion and the current opportunities predict the growth of this
sector to $32 billion by the year 2025. Since the start of this millennium, the growth of
packaging industry in India stands at whopping 15-18%. It is predicted to become 4th
largest in global economy counting to about $42.7 billion in sales by 2018.

On the demand front, the food and beverage packaging market constitutes of 85% of
the packaging demand followed by pharmaceuticals and other products.

The packaging industry in India is highly fragmented. As reported by PIAI (Packaging

Industry Association of India) there are a total of about 25,000 packaging business
units in India and around 85% of these are small and medium scale enterprises.
Volume wise larger firms (15% of the total) fulfill 50% of the total requirement.

The India Packaging Market was valued at USD 50.5 billion in 2019, and it is expected
to reach USD 204.81 billion by 2025, registering a CAGR of 26.7% during the period of
2020-2025.Packaging is among the high growth industries in India and developing @
22-25% per annum and becoming a preferred hub for packaging industry. Currently the
5th largest sector of India's economy, the industry has reported steady growth over past
several years and shows high potential for much expansion, particularly in the export
market. Costs of processing and packaging food can be up to 40% lower than parts of
Europe which, combined with India's resources of skilled labour, make it an attractive
venue for investment. A high degree of potential exists for almost all user segments
which are expanding appreciably - processed foods, hard and soft drinks, fruit and
marine products.
The Indian packaging industry has made a mark with its exports that comprise flattened
cans, printed sheets and components, crown cork, lug caps, plastic film laminates, craft
paper, paper board and packaging machinery, while the imports include tinplate, coating
and lining compounds and others. In India, the fastest growing packaging segments are
laminates and flexible packaging, especially PET and woven sacks. Over the last few
years Packaging Industry is an important sector driving technology and innovation
growth in the country and adding value to the various manufacturing sectors including
agriculture and FMCG segments.

The global packaging industry is developing and expanding day by day and Indian
packaging industry is also growing rapidly. This growth is primarily driven by factors like
growing pharmaceutical, food processing, manufacturing industry, FMCG, healthcare
sector and ancillary in the emerging economies like China, India, Brazil, Russia and few
other East European countries.

TRENDS

With advancement in technology and general awareness, the packaging sector in India
is well poised as most of the raw materials for packaging are abundantly available in the
country. Moreover, the per capita spending has increased tremendously, leading to
changing rural markets and a growing middle class who demand the best of products.
Various upgraded technologies are being used in industry such as aseptic packaging,
retort packaging and biodegradable packaging to enhance the life of food product.
Moreover, the plastic packaging market is expanding rapidly registering a growth of 20-
25 per cent per annum and is valued at 6.8 million tons while the paper packaging
industry stands at 7.6 million tons. The packaging industry is poised to grow rapidly led
by the increasing use of innovative packaging equipment and the rising flexible
packaging market.

In terms of packaging, the food packaging industry is one growth area that has seen the
maximum number of innovations in terms of packaging and branding. Consumers want
their food products to be hygienic, safe and at the same time to look attractive. When it
comes to food packaging, MNCs have a very good ecosystem. They have a dedicated
R&D house, which conducts various research-based experiments using the latest
technologies, and are always innovating to ensure that the consumer is benefited. This
development has led to healthy competition between our local manufacturers to deliver
innovative products, and as a result, the entire ecosystem is gearing up for the change.
Likewise, local manufacturers are now importing state-of-the-art machinery to ensure
that the packaging is of the highest standards. If trends are anything to go by – seeing is
believing! Consumers who have attended any packaging event of late would be able to
identify with the above scenario. Packaging machines for labeling, bar coding and
scanning, to metal and plastic packaging – every contraption is now available to local
manufacturers.

However, at this stage, the industry is eagerly looking forward to the government
machinery, which they hope will support them by implementing effective policies that will
help them to compete on the international arena. This is where PIAI will play an active
role in resolving the issues faced by the packaging industry.

There has been a recent boom in the packaging industry and it has seen a dramatic
shift from usage of conventional packing materials. The recent trends that have
shaped the course of packaging Industry in India are:

Flexible packaging has captured the market share of the traditional metal cans and

glass bottles.
Flexible packaging is slowly taking over the applications of rigid packaging. This is due
to a change of focus to sustainability and convenience. Flexible packaging offers
attractive properties like lightweight, ease of printing and transporting, easy variation
in packaging shapes and sizes and the capacity to hold large volumes. Notice that the
mother’s dairy pickle which used to come in those glass bottles have now been
replaced by flexible pouches. A lot of restaurants now use flexible bags and pouches to
parcel for home delivery.

PET bottles have seen a very fast growth in the Indian market in the last decade with
the growth figure being 20% y-o-y. PET bottles are being used across different
industries for all kinds of applications. They are being adopted by beverage industries
(packaged flavoured drinks, alcoholic drinks), food industry (sauce and jam),
pharmaceutical packaging and in household chemicals like dishwashers, toilet
cleaners and disinfectants.

In India, the market for metal cans market has remained stagnant due to high raw
material cost but is likely to grow due to urbanisation and demand for canned
vegetables, juices etc.

Overall the packaging industry is poised to grow in the coming decade. Some factors
which indicate bright future for this particular segment of the economy are:

Innovation: With time, packaging industry has become highly specialised. Increase in
the middle class consumption has led to diversification of the packaging produced
based on the industry. Everything right from the noodle box that you order from the
Chinese restaurant across the street to the customised meal tray you prefer on a lazy
sunday afternoon, everything is carefully packed in containers designed attract the
consumer. The materials used in industries like F&B are very different from materials
used in pharma or materials used for industrial products. This has also led to creation
of jobs and educational courses for expertise in packaging.
Bullish prospects for growth of economy : Several businesses like e-commerce and
on-demand services are booming in India, and these companies consume packaging
material in large quantities.

Urbanisation and changing food habits: Due to urbanisation, India has seen an
increase in demand of packed foods which has given a boost to the packaging
industry. Organized retail is also shifting from ‘loose’ items to branded packets on
items such as food grains, pulses and vegetable oil

Lower Purchasing Power: Since the purchasing power of people is low in India, it
results in huge demand for packets which are small in volume especially in the rural
market.

Make in India Campaign: The boost in the manufacturing segment in India due to the
efforts of the current government will itself increase the need for packaging and
related job opportunities.
Packaging industry has contributed to the economy not just by itself but by adding
value to other major industries. It has helped preserve the quality of products,
increased their shelf life and added innumerable value. Hence in the near future the
growth and development of this industry will be of utmost importance to the GDP of
the country as well as overall economic growth.

CURRENT TRENDS
• Growth in consumer packaged goods
• Growth of organized retail
• Increasing use of Flexible Packaging
• Growth in the usage of Metal Packaging
• Usage of glass packaging for Beverages
• Increasing usage of Tetra packs for diary and juice products
• Coding and marking
• Aseptic Packaging

• Usage of recyclable packaging material

• Vacuum Packaging
• Modified Atmosphere Packaging
• Aerosol packaging
• Skin Packaging
• Shrink and Stretch Packaging
• Temper evident Packaging

TECHNOLOGICAL DEVELOPMENTS IN PACKAGING

INDUSTRY

• Specialty film and laminates

• Multi-layer films
• Multi-layer blow moulded containers
• Injection moulded containers
• Roto moulded containers
• Bulk containers
• Thin-wall glass containers
• Thin-wall metal containers
• Two piece metal containers
• Aluminum containers

CHALLENGES
• Rapid changes in technology
• Shortage and Rising cost of raw material
• Costly Skilled Manpower
• Rising input costs
• Highly inadequate credit flow
• Lack of Market Access & Advanced technology
• Lack of exposure to Best Management and Manufacturing
Practices • Lack of 100% commitment to the quality standards • Lack
of Marketing, Distribution and Branding
• Non-availability of skilled man-power
 Principles of Packaging

8 principles of sales-effective package design

1. Stand out: You’re doing it wrong
Standing out on the shelves of high-volume retailers amongst a sea of 30,000-
plus products requires boldly different approaches than what most brands are
taking. Break the rules, break boundaries, and break new ground. You’ll never
know your true sales potential if your package doesn’t effectively work to nab
the shopper’s attention. Packaging’s number-one responsibility is to get
noticed. All brands know this, yet most of what we see in stores is brands
blending in, instead of standing out.

Shoppers fight grocery store attention-deficit disorder with routine and speed.
To attract new customers, we have to design to interrupt those shoppers who are
on a B-line path to the brand they buy week-after-week. When shoppers survey
a category from three- to four-feet out, we have to stop the scanning eye.

Don’t go barging into your design team’s office demanding the loudest, most
obnoxious package the category has ever seen; there are tactful ways to stand
out. Consider introducing a new package structure that also improves the
consumer experience, or utilize colors and symbols, or strokes and borders that
are designed to attract the eye from a distance. Do what hasn’t been done, go for
it, stand out. To sit quietly on shelf is to leave sales on the table.

2. Present a clear hierarchy of information for hurried shoppers

Hurried shoppers gravitate toward packaging that presents the most pertinent
information in the most prominent and organized fashion. Those brands that
design with respect for hierarchy are positioned to appeal to shoppers who just
want to grab and go. Limiting and prioritizing copy and design elements on your
package are 101-level fundamentals, yet it’s so tempting to throw in one more
claim or symbol, or introduce yet another font style—but this is an urge that can
bring overwhelming disorder to the eye.

Beyond knowing that the eye wants to read top to bottom and left to right,
mastering hierarchy involves knowing that shoppers in the canned tomato aisle
hardly need to see the word tomato; they are more interested in finding the type
of tomato they need—chopped, whole, stewed, diced—faster.

3. Compete: Duke it out on shelf!

Everyone talks about and touts differentiation, but most differentiation is hardly
noticeable or meaningful. First, start by abandoning any lazy me-too product
strategies; otherwise, this principle will have you racking your brain forever in
search of something worthwhile to talk about. If you routinely see two or three
other options on shelf that compare similarly (think objectively, judge from the
perspective of an uninformed shopper), start thinking about your next
differentiator or product line. Pursue differentiation, but make sure it’s
differentiation that matters to shoppers in the category. With so few slots
available at high-volume retailers, you can’t afford to be replaceable.

How it translates to packaging: Shoppers show up to shelf wanting to compare

products on features and attributes, but a cluttered marketplace makes it harder
than ever for them to distinguish between products. The number-one and
number-two reasons the consumer should buy your product instead of your
competitors’ should smack them across the face. These reasons should be
differentiated and relevant. They shouldn’t be promises about taste or quality,
these are subjective claims—we don’t know or trust the source. What makes
your gluten-free, almond-based cookie different than the other brand of gluten
free, almond-based cookie? If it’s price, talk value, if it’s your ingredient source,
tell that story—and do it on the front of the package, because most packaging
isn’t picked up and turned over!

4. Express yourself: You’re not a corporation anymore

Today, shoppers buy based on what a brand will reveal about them and their
worldview almost as much as how the actual product performs functionally. In
response, we’re witnessing what we call the counter-corporate movement. This
movement involves abandoning the use of stock photography and generic
taglines. It’s about expression, about flexing personality! It’s about creating
brands that matter and being real, charming, opinionated, quirky, happy, or
exceptionally transparent on shelf.

Rather than dedicating packaging space to self-serving corporate-sounding

claims, calls-to-action, and promises consumers are tired and cynical of,
approach packaging with more of a human mindset. You can connect with
shoppers on a deep and connected level when you dedicate space to reflect your
core audience’s broader interests around food, causes, or activities, or just by
eliciting an emotional response through presenting something likable,
unexpected, warm, or inviting.

Share an odd company tale, poke a little fun at a competitor, or transform the
label of your high-end bottle of wine into an artistic stained-glass mosaic.
Whatever you decide, it shouldn’t feel like contrived marketing or advertising.
Make sure you’re collaborating with a team that’s up-to-date on how brands
should express themselves today and can filter for your corporate tendencies. In
the end, brands, not products, are irreplaceable. The first brand to market never
sticks its landing if it’s not first to people’s hearts and minds.

5. Clarify your value proposition: In which mental box do you belong?

Shoppers want to make sense of the pecking order of a category in terms of

value. Who’s the Acer, who’s the HP, who’s the IBM, and who’s the Apple?
Knowing how you want to be seen by shoppers in terms of value segmentation
can go a long way toward informing not only the overall tone, but also the
subtlest details of your packaging. Obviously, if you’re the value brand, you let
your price communicate value, and you gear your packaging to suggest a quality
comparable to higher-priced options. But if your pint of gelato is priced
anywhere above private-label or value brands, you need to continually elevate
what premium is and looks like.
Remember, just because you think your product is premium and say that it is,
that doesn’t mean the shopper sees it that way. The shopper is deciding the
value of your brand based on how your product compares with all the other
packages on the shelf next to it.

6. Understand purchase drivers: If you don’t know them, you’re flying

blind

It’s startling how many brands cannot name the top four or five purchase drivers
consumers use to the shop their category. These are not differentiators; it’s a
mental list shoppers bring to shelf to help them identify which products fit their
primary baseline qualifications. These drivers should influence not only what
you call out on your packaging and the hierarchy you employ, but also how you
develop and market your products.

Have you done any research to understand the drivers for your product, and
does your package work to address these? Are shoppers choosing a product in
your category based on perceived quality? How do they measure quality? Are
they looking for specific health-benefit callouts? Are they weary of certain
ingredients? Do awards influence their purchase decision? Do they shop by
flavor, or by variety?

If you’re uncertain how shoppers in your category buy, hire someone who’ll
develop a well thought out, quantitative survey to dig up these insights, then use
this information to inform what you feature, and how you feature it, on your
packaging.
7. Define the product: Assume the shopper knows nothing!

Too many brands assume the shopper is willing to or capable of connecting the
dots to understand what their products are about. If your product category or
segment isn’t represented in at least 50% of the population’s fridges or pantries,
go out of your way to provide context.

If you sell fruit-based cooking sauces in the condiments section, get down and
dirty right on the principal display panel (PDP) and show the consumer what to
do with the product. If you sell cassava root chips, tell them about cassava,
where it comes from, how it’s processed, what it compares to in taste, and why
they’d want it over a potato or veggie chip. In a scenario like this, there’s
nothing you could put on a package that would provide more value to shoppers
to encourage trial.

8. Design with the store in mind

Sales-effective packaging accounts for the realities of the physical store

environment. Frosted-over freezer doors obscure vision, hang-tags intrude upon
products stocked on the shelf below, lights cause reflections and shadows, and
stocking preferences of retailers vary. It is crucial that you understand these
factors, and it is these aspects that should influence what packaging substrates
you use, whether or not you utilize dual PDPs, and where you place your most
critical messaging.

For example, while shopping the packaged, sliced deli-meat category, I

observed a brand whose primary differentiator callout of “more product for your
money” was placed in the upper-right corner of the package, which was
concealed by the retailer’s sale tags hanging from the shelves above. Without
the context of “more for your money,” the brand looked like the most expensive
option in the category. How many shoppers are turning away because of this
simple oversight?