Flexi Pack Dubai – a case of

strategic resonance
Mohammed Laeequddin, Ramkrishna Dikkatwar and Vinita Sahay

1. Introduction Mohammed Laeequddin is

based at the Department of
Tariq Khattabi, a mechanical engineer with an MBA, joined Flexi Pack Dubai, UAE, as the Operations Management
general manager on 1 April 2019. Previously, Tariq worked as an operations manager at and Quantitative
Amcor Flexibles in the UK. Amcor Flexibles was a global leader in developing and Techniques, Indian Institute
producing responsible packaging for various products, including food, beverages, of Management Bodh
pharmaceuticals, medicines, home essentials and personal care. Flexi Pack was a family- Gaya, Bodh Gaya, India.
Ramkrishna Dikkatwar is
owned company. During the recruitment interview, Tariq learned that Flexi Pack was
based at the Department of
struggling to maintain itself at a breakeven point. His first responsibility was to develop a
Marketing, Pune Institute of
strategy to ensure the organization’s growth. The company’s vision statement was “Be a Business Management,
leading flexible packaging supplier of the Middle East and North Africa (MENA) Region.” Pune, India.
Although Tariq was excited about his assignment, he was nervous about the business Vinita Sahay is Director,
scenario. Indian Institute of
Management Bodh Gaya,
Moreover, because Tariq had always worked in a corporate setup, he had concerns Bodh Gaya, India.
regarding the family-owned nature of the organization. From the initial meetings with
production, finance and senior marketing managers, he identified problems associated with
the operation and sales of the plant. Tariq wondered whether to develop an operations
strategy or a marketing strategy first to ensure the organization’s growth and whether both
strategies could be developed and applied simultaneously. He was required to present his
strategic approach to the board within two weeks.

2. Company overview
Flexi Pack, a flexible packaging material converting company [1], was started in 1998 in
response to the demand of the customers of its group companies who were producing
other packaging materials, such as display packaging, corrugated boxes and polystyrene
containers. Initially, Flexi Pack focused on a few companies, including the IFFCO group of
companies, Modern Bakery, Emirates Macaroni and Global Food Industries. In addition,
Flexi Pack was producing aluminum lids for the dairy industry in small quantities for
Murmum dairy and Al Ain dairy in the UAE. The majority of dairy companies were importing
lids from European countries because of the technicality involved in their production.
Because of the high quality of materials and service, the sales of Flexi Pack grew from US Disclaimer. This case is written
solely for educational purposes
$2.78m in 2000 to US$18.03m in 2020 (refer to Exhibit 1). From 2005, Flexi Pack started to and is not intended to represent
serve large companies, such as Pepsi, Coca-Cola, Lays, Danone, Almarai and Nadec, in successful or unsuccessful
managerial decision-making.
the neighboring Kingdom of Saudi Arabia (KSA). The surge in supermarkets, e-commerce The authors may have
and packaged foods in the country resulted in an increased demand for packaging disguised names; financial and
other recognizable information
materials. to protect confidentiality.

DOI 10.1108/EEMCS-06-2022-0184 VOL. 13 NO. 2 2023, pp. 1-25, © Emerald Publishing Limited, ISSN 2045-0621 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 1
 From 2010 to 2015, the market demand for packaging materials encouraged Flexi Pack and
its competitors to increase their production capacities. Moreover, many new companies
emerged because of few entry barriers, interest-free bank loans available in the KSA and low
bank interest rates in the UAE. In this scenario, the converting capacity of packaging
companies was almost double the demand for packaging material from various food
processing companies in the country (refer to Exhibits 2 and 3). Large-sized food processing
companies started buying packaging materials just in time, which required frequent repeat
deliveries. To rapidly reorient its processes and workforce skills, Flexi Pack invested in multiple
printing, lamination, heat seal lacquer coating, slitting and rewinding machines with a quick
changeover facility to rapidly respond to large-variety low-volume orders. By 2018, Flexi Pack
could quickly produce variety and volume by splitting the same orders on multiple machines.
The increase in the number of machines, skilled labor and variety in customer requirements
led to an increased demand for raw materials. Because of the excess converting capacity in
the industry, customers started perceiving packaging companies as commodity suppliers. No
differences were noted among product offerings, prices, quality and services. To gain a
competitive advantage and retain its customers, Flexi Pack began to provide more value-
added services, such as free packaging design, advising on packaging material cost-cutting
and troubleshooting packaging machinery problems. The major strength of Flexi Pack against
its competitors was its in-house heat seal lacquer formulations. Heat seal lacquer is a resin-
based sealant coating on aluminum foil lids that melts during packaging to seal the lid onto
plastic containers. Heat seal lacquer is a critical component of aluminum foil lids in the dairy
industry and blister packaging in the pharma industry. Some Flexi Pack machines were
specially designed to handle the thin-gauge aluminum foil, thus requiring high-tension control
to manage short production runs. Those machines were expensive. Moreover, they had some
specially sized aluminum lid-cutting dies in which their customers had jointly invested for long-
term usage; such dies were unavailable with their competitors.
In 2016, one of Flexi Pack’s senior marketing managers joined the company’s competitor and
attracted many of Flexi Pack’s customers by reducing the selling price. Flexi Pack wanted to
avoid competing in price by compromising input material quality and service levels, thus
allowing competitors to poach a few customers. Flexi Pack required some time to acquire new
customers and regain some old ones. However, during this period, its pricing strategy was
disturbed. During 2019 and 2020, although the number of customers had increased,
machines were running round the clock, and overtime was required on most Fridays (a weekly
off day in the UAE), the organization’s average profit was approximately 2.5% with the
exception of seasonal profitability during the Ramadan festival. The sales team could not
promptly collect payments from customers. The customers began maintaining multiple
suppliers to prevent carrying inventory and benefited from the credit facilities of numerous
packaging companies, demanding price reductions with every new order.
In August 2018, the general manager left the company to establish a new flexible
packaging company for a well-known business group in the country. He was a techno-
commercial man, and his absence disturbed some customers. Flexi Pack’s sales team
feared losing more customers once he started his commercial production. Thus, Flexi
Pack’s management appointed Tariq Khattabi as the new general manager in January
2019. When Tariq Khattabi joined the company, a COVID-19 outbreak occurred, resulting in
slow business. From his initial meeting with the production, finance and senior marketing
managers, Tariq Khattabi identified some problems with the plant’s operations and sales
refer to key performance indicators (KPIs) and income statement in Exhibit 1.

3. Tariq’s challenges in managing the business

The first challenge for Tariq was to deal with the human resource team. Flexi Pack used to
serve approximately 130 customers every month. Typically, each customer required
approximately eight variants (stock-keeping units). Therefore, Flexi Pack required to make

PAGE 2 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 13 NO. 2 2023

approximately 4,320 changeovers per year on each process, such as printing, lamination
and slitting. Because of restrictions related to employment visas, Flexi Pack had permission
to hire only 140 expatriate workers. However, they required approximately 200 workers.
Thus, the company had a 12-h shift, with 4 h of overtime, instead of the regular 8-h working
shift. Machine operators did not prefer changeovers, which involved more physical work,
and some workmen did not prefer working on specific machines because of the
temperament of machine operators, the smell of chemicals, the heat of machines and high
levels of noise. When workers were allotted work on different machines, they spoiled the
material deliberately or due to their lack of skills.
The second challenge for Tariq was to use existing capacities in a profitable manner. The
sales team often accepted short-run orders, which consumed more setup time than running
time. For example, the customer requirement for PEPSI labels was approximately 50,000
pieces each of Fanta black currant, Fanta green apple and Fanta Iced tea, whose order value
was approximately US$380.00 each. The cost of setup time and production together for each
flavor was 3–4 h and US$1,089.00, respectively. The production team believed that the sales
team was pushing capacity unproductively by accepting short-run orders. Flexi Pack had the
option of investing in machinery based on modular technology, which suited short-run jobs
with a low changeover time. However, the company’s management was not interested in
investing more in machinery. Old machines at the company were semiautomatic and
designed for large-volume orders. They required more setup time, and once set, the machine
was required to run for at least 24 h to be economical. Effective capacity utilization was
approximately 65%–70% (refer to capacity utilization KPIs in Exhibit 1). The company had to
accept small orders as a mixed-volume contract (e.g. large volumes of Pepsi and Aquafina
brands and small volumes of Fanta flavors). The company required such customers for brand
building and enhancing its credibility in the market. Most customers were negotiating either a
price reduction or a new tooling cost waiver and better credit terms while expecting Flexi Pack
to support them in the UAE market. New entrants were racing to acquire customers, and old
companies like Flexi Pack struggled to retain them.
The challenge was to retain customers, match commercial terms and increase capacity
utilization to recover the fixed cost. One of the company’s problems was the wastage of
materials and printing inks because of short-run orders. Irrespective of run size, they were
required to mix 20 kg of ink for each color shade. All the jobs typically involved eight colors. In
most cases, 5–6 kg of ink was consumed to print each color shade, and the remaining ink was
stored as mixed-ink inventory. If mixed inks were not used within six months, they had to be
disposed of as hazardous waste. Flexi Pack’s process wastage was approximately 3.5%
against the industry average of 7%. They had approximately 8,000 kg of accumulated ink as
waste, and the finance manager did not agree to dispose of it for some accounting procedural
reasons. The waste accumulation was a fire hazard, and the production manager had to keep
it safe. To solve the ink wastage problem, the operations department could procure an
automatic ink mixing and dispensing machine to reduce wastage, errors, and delays in color
preparation. However, this entailed investment in the equipment or a reduction in the number
of short-run orders. To solve these problems, Tariq was contemplating a few strategic options:
䊏 reduce costs and wastages to increase profitability;
䊏 improve processes and capabilities, such as offline make-ready, to serve low-volume
high-variety customers;
䊏 target high-volume and low-variety customers; and
䊏 focus exclusively on aluminum foil-based packaging material and reorient resources
and capabilities.
The third challenge for Tariq was to manage the cash flow. Flexi Pack encountered problems
with working capital and operating expenses. Customers made payments within 90–120 days

VOL. 13 NO. 2 2023 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 3

 from the invoice date. Sometimes, payments were delayed by up to 150–180 days. When the
sales team insisted of adhering to payment terms, a few customers switched suppliers.
Customers did not understand the need to pay in advance or against delivery to the supplier
for purchasing raw materials. Because Flexi Pack imported most of the raw materials from
Europe, Malaysia, China and India, it had to maintain an inventory of approximately 60 days
and buy materials of at least a 40-ft container load (i.e. about 20,000 kg). The company often
ran short of funds to open credit letters with suppliers.
While there were a few problems, Tariq saw new opportunities in sustainable packaging and
the growth of the Gulf Cooperation Council (GCC) flexible packaging market. Microplastic
pollution poses a substantial environmental threat if plastics are not effectively managed at the
bottom level of the value chain and throughout their prolonged lifecycle. The disposal of plastic
wastes in oceans and the associated environmental impact warrants special attention.
Moreover, a threat related to substitutes for conventional plastic packaging material exists
owing to environmental concerns and the need to adopt sustainable manufacturing
operations. Food processing companies were downgauging packaging material and making
designs sleeker, thinner, high barrier, recyclable and compostable, moving toward intelligent
packaging. Tariq worried about new investments for developing sustainable packaging
strategies.

4. UAE flexible packaging market environment

According to the IMARC consulting services group report (IMARC, 2023), the GCC flexible
packaging market reached a value of US$2.86bn in 2020 and was expected to grow at a
compound annual growth rate (CAGR) of 7.3% from 2021 to 2026. According to the report,
the market is segmented into polymer, paper and foil based on raw materials. Polymers
currently represent the most popular raw material. The food and beverage industry
dominates the flexible packaging market based on applications. The food and beverage
sector was followed by nonfood products, consumer products, pharmaceuticals and
others. According to the ASD Market Research Report (Mordor Intelligence, 2020), the UAE
packaging market was valued at US$2,675.25m in 2019 and was expected to reach US
$3,510.06m by 2025, indicating a CAGR of 4.6% during 2020–2025. In collaboration with
Saudi Arabia, the UAE invested AED 5bn in several food security initiatives, opening a
range of market opportunities for the packaging industry in the country. The food and
beverage industry highly adopted the trend of economical small packages and super-saver
bulk packages. For instance, as of 2018, Nutella launched a 750-g format in spreads in the
UAE market. These packs became increasingly popular because they offered better value
to consumers. The demand for flexible plastic packaging in the pharmaceutical industry
was expected to remain robust because hospitals, drugs and personal protective
equipment manufacturers responded to the crisis.
Furthermore, growing concerns regarding using nonbiodegradable plastics for flexible
packaging and its effect on the environment have driven manufacturers to develop
sustainable packaging. Options that were safe and secure were weighed. To reduce the
pressure of costs and maintain the integrity of product packages, manufacturers were
contemplating sustainable packaging solutions that required fewer materials and less
energy in the manufacturing process.
Despite the company’s sales growth from US$2.78m in 2000 to US$18.03m in 2020, an
increase in the number of customers and round-the-clock operations, the company was
trending toward losses. Tariq’s dilemma was how to put the organization back on the
Keywords: growth path? Also, he wondered whether both the operations and marketing problems
Operations strategy, could be solved simultaneously. Tariq was finding dissonance in his options. He had to
Strategic management,
Operations management, present his strategic approach to the board within two weeks. If you were in Tariq’s place,
Competitive strategy, how would you have proceeded?
Packaging

PAGE 4 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 13 NO. 2 2023

Note
1. Refer to Exhibit 4 for a better understanding of the flexible packaging converting process as an
optional reading.

References
IMARC (2023), GCC Flexible Packaging Market: Industry Trends, Share, Size, Growth, Opportunity and
Forecast 2022-2027. Retrieved from www.imarcgroup.com/gcc-flexible-packaging-market
Mordor Intelligence (2020), UAE Packaging Market – Growth, Trends, and Forecast (2020–2025).
Retrieved from www.asdreports.com/market-research-report-508196/uae-packaging-market-growth-
trends-forecast

VOL. 13 NO. 2 2023 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 5

 PAGE 6
Table E1 Key performance indicators – Flexi Pack 2019–2020
KPI 43556 May 2019 Jun 2019 Jul 2019 Aug 2019 Sep 2019 Oct 2019 Nov 2019 Dec 2019 Jan 2020 Mar 2020 KPIs 2019-2020

Financial KPIs
Sales growth rate % 3.63% 2.38% 2.73% 0.61% 1.98% 1.17% 1.45% 10.06% 0.23% 0.42% 9.88%
Direct operating costs (excl depr) 0.852990516 85.05% 85.99% 84.13% 84.49% 84.58% 82.68% 82.66% 80.78% 80.90% 81.42% 79.67%
as % of sales
Gross profit margin % 0.147009484 14.95% 14.01% 15.87% 15.51% 15.42% 17.32% 17.34% 19.22% 19.10% 18.58% 20.33%
Selling and admin (excl depr) 0.066428864 7.10% 6.66% 7.34% 7.13% 6.66% 7.12% 6.95% 6.76% 6.92% 5.78% 6.57%
as % of sales
EBITDA margin % 0.080580621 7.84% 7.35% 8.53% 8.38% 8.76% 10.20% 10.39% 12.46% 12.18% 12.80% 13.76%
EBIT margin % 0.038437689 3.91% 3.17% 4.17% 3.92% 4.27% 5.66% 5.78% 8.16% 7.59% 8.20% 9.56%
Net income margin % 0.018373868 1.91% 0.90% 1.45% 1.21% 1.67% 3.00% 3.16% 5.59% 5.17% 5.74% 7.74%

Working capital KPIs

Accumulated aales – US$ 5,965,435.882 7,615,710.59 9,134,237.65 10,474,180.59 11,978,983.82 13,453,989.41 14,946,225.65 16,416,821.47 18,035,295.00 1,614,819.41 3,236,344.71 5,018,147.07
Cost of raw materials consumed – US$ 4,236,894.412 5,422,310.88 6,596,810.59 7,707,138.53 8,810,141.18 9,893,480.59 10,973,070.29 12,035,620.00 13,190,415.29 1,147,354.12 2,308,015.93 3,545,742.84
Exhibit 1

No. of days for working capital 122 153 183 214 244 275 306 334 365 30 61 91
calculation from YTD – DAYS
Days payables – DAYS 60 65 60 58 64 64 66 61 65 90 81 83
Days receivables- DAYS 95 95 99 112 106 103 102 97 95 112 97 96
Days of inventory – DAYS 97 101 100 95 105 107 114 120 114 140 122 117
Cash conversion cycle – DAYS 132 132 139 149 147 146 149 157 143 161 138 130

j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 13 NO. 2 2023

Total inventory size – US$ 3,375,889.118 3,589,825.29 3,612,184.71 3,414,406.47 3,787,172.06 4,200,170.29 4,075,406.76 4,333,642.94 4,112,497.94 4,491,250.88 4,612,679.71 4,573,819.22
Working capital – US$ 5,668,484.706 5,248,420.88 5,274,639.41 5,333,380.59 5,386,358.53 5,350,427.94 5,406,196.76 5,512,009.12 5,527,907.06 1,100,412.06 1,243,032.65 948,915.00

Leverage KPIs
Short-term debt balance – US$ 4,299,687.941 4,593,243.82 5,154,362.35 5,600,468.53 5,480,982.94 5,446,363.82 5,298,159.12 5,078,469.71 5,114,718.53 4,891,628.53 4,691,758.53 4,727,794.63
Long-term debt balance – US$ 0 – – – – – – – – 1 – –
Interest coverage ratio 3.912621359 3.2 3.1 3.1 3.4 3.8 4.0 4.8 5.0 5.0 p;/32q 7.6
(EBITDA / interest expenses) – ratio
Interest coverage ratio (CF)
(Unlevered FCF / interest expenses) – Ratio
Debt service coverage ratio
(EBITDA / debt service) – ratio
Debt service coverage ratio (CF)
(Unlevered FCF / debt service) – ratio

Production KPIs
Plant capacity – Input MT 333 333 333 333 333 333 333 333 333 333 333 333
Volumes produced – MT 223 230 202 207 219 217 233 187 236 234 216 246
Volumes sold – MT 226 232 203 211 218 214 217 202 218 215 237 238
Capacity utilization rate % 0.66966967 69.1% 60.7% 62.2% 65.8% 65.2% 70.0% 56.2% 70.9% 70.3% 64.9% 73.9%
Pack to feed ratio – ratio 1.013452915 100.87% 100.50% 101.93% 99.54% 98.62% 93.13% 108.02% 92.37% 91.88% 109.72% 96.75%

Sales KPIs
# Sales people – Input 3 3 3 3 3 3 3 3 3 3 3 3
Revenue per sales staff – US$ 512,892.7451 531,492.16 518,833.92 504,684.71 501,601.18 491,668.53 497,412.06 490,198.53 539,491.18 538,273.24 540,508.53 593,934.15
Total sales commission – US$ 0 – – – – – – – – – – –
Commission per sales staff – US$ 0 – – – – – – – – – – –

Customers KPIs
# new clients 1 1 1 2 2 1 1 2 1 1 – 1
# new clients per sales staff 0.333333333 0.33 0.33 0.67 0.67 0.33 0.33 0.67 0.33 0.33 – 0.33

Source: Adapted by the authors, courtesy company document

 Table E2 Flexi Pack Income Statement 2019–2020
(figures are in US$ million
unless specified) Apr 2019 May 2019 Jun 2019 Jul 2019 Aug 2019 Sep 2019 Oct 2019 Nov 2019 Dec 2019 Jan 2020 Feb 2020 Mar 2020 Total LTM CAGR

Sales 1,538,678.235 1,594,476 1,556,501.765 1,514,054.118 1,504,803.235 1,475,005.882 1,492,236.156 1,470,595.671 1,618,473.529 1,614,819.412 1,621,525.294 1,781,802.456 18,782,972.22 13.27%
Direct operating costs -1,312,477.941 1,356,174 1,338,449 1,273,794 1,271,407 12,47,590 12,33,714 1,215,653 1,307,370 1,306,398 13,20,178 1,419,535 15,602,739
(excl. depreciation)
as a % of sales 85.30% 85.05% 85.99% 84.13% 84.49% 84.58% 82.68% 82.66% 80.78% 80.90% 81.42% 79.67% 83.07%
Gross profit 226,200.29 238,302.65 218,052.65 240,260.29 233,396.18 227,416.18 258,522.27 254,943.10 311,103.53 308,421.47 301,347.06 362,267.36 3,180,233.03 4.37%
Gross margin 14.70% 14.95% 14.01% 15.87% 15.51% 15.42% 17.32% 17.34% 19.22% 19.10% 18.58% 20.33% 16.93%
Selling and administrative -102,212.6471 113,254 103,692 1,11,183 107,319 98,255 106,315 102,211 109,477 111,705 93,768 117,012 1,276,404
exp. (excl. depreciation)
as a % of sales 6.64% 7.10% 6.66% 7.34% 7.13% 6.66% 7.12% 6.95% 6.76% 6.92% 5.78% 1.93% 6.80%
EBITDA 123,987.65 125,048.53 114,360.88 129,077.06 126,076.76 129,161.18 152,207.70 152,732.42 201,626.18 196,716.47 207,579.12 245,255.34 1,903,829.29 6.40%
EBITDA margin 8.06% 7.84% 7.35% 8.53% 8.38% 8.76% 10.20% 10.39% 12.46% 12.18% 12.80% 4.05% 10.14%
Depreciation and amortization -64,844.41176 62,706 64,980 65,907 67,069 66,170 67,695 67,693 69,524 74,156 74,653 74,935 820,332
Operating profit, EBIT 59,143.23529 62,343 49,381 63,170 59,008 62,991 84,512 85,039 132,102 122,561 132,926 170,320 1,083,497 10.09%
EBIT margin 3.84% 3.91% 3.17% 4.17% 3.92% 4.27% 5.66% 5.78% 8.16% 7.59% 8.20% 2.81% 5.77%
Finance expenses, net -30,871.76471 31,960 35,356 41,159 40,730 38,374 39,761 38,633 41,695 39,148 39,826 32,467 449,982
Other income 0 0 0 0 0 0 0
Profit for the period 96,123 1,03,300 47,685 74,836 62,147 83,698 152,154 157,779 307,384 283,604 316,540 137,853 1,823,103 3.33%
Net margin 1.84% 1.91% 0.90% 1.45% 1.21% 1.67% 3.00% 3.16% 5.59% 5.17% 5.74% 2.28% 9.71%
Depreciation:
As a part of cost of sales 56,197.05882 54,058.82353 56,166.47059 57,094.11765 58,255.29412 58,290.88235 59,917.79412 60,003.23235 62,275.58824 67,001.47059 67,726.47059 68,008.86471 724,996.0676
As a part of selling and 8,647.352941 8,647 8,813 8,813 8,813 7,879 7,778 7,690 7,249 7,154 6,926 6,926 95,336
administrative expenses

VOL. 13 NO. 2 2023

Total depreciation 64,844.41176 62,706 64,980 65,907 67,069 66,170 67,695 67,693 69,524 74,155 74,653 74,935 820,332

Source: Adapted by the authors, courtesy company document

j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 7

 Exhibit 2

Table E3 Flexible packaging market segment of UAE and KSA collectively (estimated numbers)
S. no. Market segment Market share in tons Product

1 Snack foods 24,736 Chips and snack foods

2 Water and beverages 14,100 Water, carbonated drinks, juice, tea and coffee
3 Dairy 12,050 Yogurt, milk, Laban, cheese, butter and custard
4 Confectionery and bakery 13,834 Bread, cakes, rusk, biscuits and wafers,
chocolates, candies, jelly and halwa
5 Frozen foods and other food products 6,780 Edible oil, pasta, frozen foods, dates, nuts, spices,
dry fruits, hygiene and catering, and plastics and films
6 Pharmaceuticals and cosmetics 2,800 Blister foil, paper foil laminates and PE and PE laminates
7 Detergents 2,400 Laminated pouches
8 Edible oil and fats 3,000
Total (in metric tons) 79,700
Source: Primary data collected and compiled by the case author

Exhibit 3

Table E4 Flexi Pack’s competitors’ profile

Sr. Flexible packaging companies based in Production capacity
no. UAE and KSA Product/service focus in tons/year

1 Flexi Pack Dubai Snack foods, water and beverages and dairy and pharma 6,200
2 Huhtamaki, UAE Serves almost all segments of flexible packaging 24,000
3 Rotopak, UAE Snack foods, confectionery and frozen foods 5,400
4 Arabian Packaging, UAE Snack foods, confectionery and frozen foods 4,800
5 Integrated Plastics Packaging, UAE Snack foods, confectionery and frozen foods 4,800
6 Emirates Printing Press, UAE Plastic pouches, snack foods and confectionery 4,200
7 Emirates Technopack, UAE Dairy, industrial polymer films, plastic pouches and bags, 4,200
snack foods and frozen foods
8 Fujairah Plastics, UAE Construction films, agricultural sheets, trash bags, and 3,600
shopping bags
9 Falcon Pack, UAE Aluminum-based packaging, cling film, and catering 2,400
packaging
10 Amber Packaging Industries LLC, UAE Disposable packaging material and flexible packaging 3,600
11 Print- o -Pack, KSA Snack foods, confectionery, and frozen foods 12,000
12 Obaikan Packaging, KSA Snack foods, confectionery, frozen foods, and water 9,000
13 Napco, Dammam & Jedha, KSA Snack foods, confectionery, dairy, and pharma 7,000
14 Al Aoun Packaging, KSA Snack food, confectionery, frozen foods, dairy, and pharma 6,000
15 Al Sharq Flexibles, KSA Frozen foods, detergent, water, and beverages 4,500
16 Jawwad Plastics, Al Hassa, KSA Frozen foods, detergent, and secondary plastic packaging 3,300
17 Fafa Adhesive Label Ind. Est., KSA Water and beverages and dairy 3,000
18 Al Watania Plastics, KSA Secondary plastic packaging 2,000
19 Asia Plastics and Packaging, KSA Snack foods, confectionery, dairy, and pharma 1200
20 ASPCO, Dammam, KSA Water and beverages 1,000
21 United Flexible Package, KSA Detergent bags and secondary plastic packaging 800
21 Other small converters, KSA Mixed capabilities to serve small food companies 2,800
Total capacity 1,21,800
Source: Primary data collected and compiled by the case author

PAGE 8 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 13 NO. 2 2023

Exhibit 4

1. Introduction to packaging
Every product, whether grown or manufactured, needs packaging to reach the consumer in an
acceptable condition. Packaging involves preparing and enclosing goods for handling,
transport, distribution, storage, retail, display, sale and end-use. Packaging is an art, science
and technology. The primary function of packaging is to protect the content from loss of
intended purpose and function. For example, a food item needs to be fresh and retain its flavor
throughout its shelf life, a glass item must be protected from shocks and vibration, and a
consumer electronics item should be protected from temperature changes during transport.
Packaging creates an impression of the product until it is consumed. Under the self-service
retail system, package design plays a vital role in sales and acts as a salesperson on the shelf.
Consumers expect the package design to be user-friendly in terms of carrying, ease of
opening, closing, handling, security, product integrity, reuse and disposal, as well as provide
the necessary information for purchasing decisions. With a solid ethical identity concerning the
environment and human relations, packaging assists the consumers’ decision-making and
drives purchasing. Packaging is considered a part of the product and its brand from the
marketing perspective. Therefore, marketing managers play a crucial role in designing
consumer packaging (primary packaging) from a marketing point of view and collaborate
closely with operations managers to ascertain the feasibility of the packaging design in
production and distribution processes.
In the production and industrial manufacturing supply chain, producers of packaging materials
are considered separate links and are known as packaging converters. Converters print
flexible materials and convert them into single or multilayer films suitable for packaging the
goods. Strategically, converting companies focus on one or two market segments, such as
dairy and beverages, snack foods and confectionary or frozen foods, which provides them
control over inventories, raw material cost, inks and alignment of processes and machinery. For
example, a converter focusing on milk powder pouches, yogurt cup lids, chewing gum wraps
and ice-cream cone wraps works with aluminum as a base material and produces appropriate
packaging material for each product laminating the aluminum foil with other materials. The
converting industry primarily serves business-to-business (B2B) markets supplying flexible
packaging materials for the production and manufacturing industry.

1.1 Flexible packaging material

Any packaging material that is flexible while handling can be called flexible packaging. For
example, potato chips, biscuits, bread, labels on a milk or water bottle and chocolate wrap
are packaged using flexible packaging material. This material can broadly be classified into
eight categories (examine the packaging of the following products whenever you visit a
supermarket or hypermarket):
䊏 Dairy;
䊏 Chips and snack foods;
䊏 Biscuits and confectionery;
䊏 Beverages;
䊏 Frozen foods;
䊏 Detergents;
䊏 Pharmaceuticals; and
䊏 Others: dry fruits and nuts, spices, etc.
All flexible packaging materials appear the same, but the type of machinery, technology,
processes, raw materials and skills required differ for each sector. The structure of the
packaging material may vary from a single-layer surface or reverse-printed material to a
combination of other materials laminated into two, three, four and more layers depending on the
nature of the products. For example, mayonnaise, garlic paste and turmeric powder are
aggressive materials that react with the packaging material, aromatic coffee and milk powder
are sensitive to moisture, and hot-filled ketchup and dairy products are susceptible to
microorganisms, storage conditions and shelf life. Therefore, the structure and processes of
packaging materials are designed based on the material’s physical, chemical and biological
properties. The material structures are designed based on the client’s product, volume, weight

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 and shelf life. Flexible packaging companies manufacture the material according to the
customer’s design and requirements. Furthermore, they print the material as per the
customer’s designs, for example, Lays, Coke, Pepsi, Maggi noodles and Huggies diapers, and
supply the material in the form of rolls, sheets or pouches depending on the customer’s
packaging machinery type, speed and level of automation.
The raw material cost for flexible packaging, including plastic granules, films such as
polyethylene terephthalate, bi-axially oriented polypropylene (BOPP), cast polypropylene,
paper and aluminum, are controlled globally by the large-volume producers. Therefore, the
input costs for packaging remain almost the same for every converter.

1.2 Flexible packaging converting machinery

The converting machinery is the same and standard for all the flexible packaging materials. For
example, printing is done on rotogravure, flexographic or narrow web printing machines. The
image and text are projected on a photopolymer plate in flexographic printing and transferred
to the substrate. Narrow-web label printing involves the flexographic printing process for
materials of less than 600 mm in width). Rotogravure printing refers to the printing technology in
which the image and text are engraved in reverse on a steel cylinder, and the image is
transferred to the substrate as shown in the line diagram of Figure E1.

Figure E1 (a) Rotogravure printing machine; (b) gravure printing line diagram

Multilayer films are developed by laminating them with solvent-based or solvent-less

adhesives. These machines are used to bind more than two different substrates with the
help of adhesives (refer to Figure E2). Heat seal lacquer coatings on aluminum foil surfaces
(polymers or resins are coated in the liquid form and then dried) act as a heat seal medium
at the packaging stage. Some multilayer polyethylene films are produced directly using
blown-film technology or film-casting technology.
Printed and laminated packaging materials are slit into the required widths using slitting
and rewinding machines (these machines are used for slitting multiple rolls from a wide
printed roll). Depending on the desired application and customer requirements, packaging
companies may need additional finishing machines to complete the work, such as heat seal
lacquer coating, wax coating, hotmelt coating, cold seal application machines, pouch
making, die-cutting, guillotine, sheet-cutting and bag-making.

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Figure E2 Laminating machine line diagram

Corresponding author
Mohammed Laeequddin can be contacted at: laeequddin.m@iimbg.ac.in

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