The Expedited Disruption of Packaging Industry

Sudhakar Singh, Editor, Industry Outlook

Sudhakar Singh, Editor, Industry Outlook

Packaging industry in India has undergone a systemic change since the advent of Covid-19 pandemic and the resulting lockdown in March last year. A look back at its state one year ago and how it has evolved over this period is worth discussing. The industry has witnessed many fundamentals being redefined. Be it the move towards sustainable packaging or expanding the scope of packaging to newer materials, the industry has transformed in an irreversible way and it is only going to move forward in the direction. It can be attributed primarily to the change in usage pattern of products.

Conforming to the changing customer expectation, the industry is striving to meet the rising demand by using new packaging materials. As a result, the packaging market in India is likely to become worth more than $204 billion by 2025, growing at a CAGR of over 26 per cent. The new materials are being used to fulfill the emerging needs for transit packaging and omni-channel packaging. In terms of use, the fastest growing segment is of packaged food which is fuelling the demand for plastic packaging owing to its capability of ensuring food quality and long shelf life. It is mainly because plastic packaging is considered to be good at ensuring food quality, safety, and long shelf life.

With the changing lifestyle, the demand for packaged foods is going to swell even further in the times to come. As per the Federation of Indian Chambers of Commerce & Industry (FICCI), the major factors contributing to the increase in customer expenditure on packaged goods are the rising disposable income, urbanization, and the increase in the number of working women. As the demand increases, the packaging industry is resorting to different methods to ensure freshness of the product, printability of the packaging as well as barrier protection of packed products.

Emergence of Flexible Packaging
Flexible packaging has emerged as the solution for these challenges as it enhances the shelf life of products, which is a critical factor especially in food & beverages and pharmaceutical sectors. In addition, flexible packaging is compact, lighter, and reduces the waste produced from packaging. As a result, the cost incurred in manufacturing and transportation is reduced considerably, which helps companies reduce their overall carbon footprint. It is these benefits that are causing end users to opt for flexible packaging, which in turn is enabling the growth engine to keep chugging forward.

When the country has hit by the Covid-19 pandemic, the demand for disposable packaging witnessed a sudden decline after the lockdown. It was followed by an apparent shift towards sustainable takeaway packaging, compelling the packaging solution providers to improvise and tweak their offerings as per the changing customer requirements. Another prominent sector that is having direct implications of this change is pharmaceutical industry, wherein we are seeing an overhaul in terms of the type of packaging given the rise in drug delivery to home.

The major boost to the whole packaging industry from the consumer perspective has come from the e-commerce revolution. In the recent five to six years or so, India has seen an exponential growth of the e-commerce sector which is expected to become worth USD 200 billion by 2026. The growth can be attributed to the increasing penetration of internet and smartphones while driven by the wave of digital transformation. As the usage of the internet increases across the country, online retailing is following suit. As per an IBEF report, internet users in India are likely to increase to 829 million by end of 2021.

Mitigating the Environmental Concerns
While all these developments are accelerating the growth of the packaging industry, there are also several environmental concerns that are impeding the progress. The new regulations implemented with regard to the usage of plastic and the dearth of adoption of advanced manufacturing practices is hampering the market growth. “The demand for eco-friendly alternatives are growing and companies are forced to consider ways and means to incorporate materials and methods that could have less of an effect on the planet,” says Gaurav Jalan, Founder, Packman Packaging.

The growth of plastic packaging in the e-commerce space is being affected by the regulation on the ban of single-use plastics. The other factor that is affecting the growth of the e-commerce packaging industry in India is the lack of a packaging machinery manufacturing ecosystem in the country. While there are several global players opening their manufacturing plants in the country, the fervor from the indigenous players and more new players venturing into the market remains to be seen.