The size of the global packaging industry will increase by almost 170.61 billion between 2021-2025, accelerating at a CAGR of four percent during the forecast period. This growth in market size will be attributed to massive demand from the e-Commerce, transport and shipment, food and beverage, personal care, household care, and healthcare industries for convenience-based packaging. How do you see this market evolving in India?
Given the global macroeconomic outlook, the packaging industry can be cautiously optimistic about a rebound. We see 8-10 percent growth in India in the intermediate term. India's growth rebound will follow global trajectories. However, local factors like the off line to online shift will have a profound impact on the economic rebound and thus on the growth in the packaging industry. E-Commerce enablement in India is now higher than ever before. It will have a spill over effect on growth in the packaging industry.
Two major trends in packaging. First is the digital transformation of B2B commerce and manufacturing. Second is the adoption of sustainable packaging. The government's push for the compulsory use of plastics of a minimum of 75-micron thickness from December 2021 and a minimum of 120-micron plastics from 2022 will generate demand for sustainable packaging and drive investments in these new product categories. Some of the packaging product categories that are likely to witness an increase in demand are seaweed, organic fabrics, corn starch, wood, paperboard, recycled cardboard, and paper.
What are the major challenges impeding the growth of the packaging industry? Where do you see the packaging industry post-pandemic from a technological standpoint?
There are several constraints on the global packaging supply chain. One of the major factors is the evolving role of China as a net importer of kraft paper due to a surge in demand for both its domestic and global trade requirements. Polymer pricing has been volatile both globally and domestically. With greater adoption of sustainable packaging, paper prices have inflated over the last two years.
This has also been the case in the Indian packaging industry. Furthermore, polymer manufacturing in India has a highly imperfectly competitive market morphology. Market share and production capacities are dominated by a quantity leader. It has repercussions on the pricing of packaging material procurement. Government intervention in the form of price ceiling can enable the pass-through of cost cushion from MSME suppliers to enterprise buyers and end customers.
There are two significant avenues for the Indian packaging industry to adopt technology. First is the manufacturing of packaging materials. Second is the digital transformation of the packaging supply chain. Technology adoption in the manufacturing of packaging materials can facilitate capacity expansion, bring economies of scale, and reduce unit costs.
On the other hand, collaborative data sharing among the stakeholders in the supply chain can get greater visibility into demand and supply mapping across locations in India, pricing, and agile distribution. Stakeholders in the packaging industry can benefit by moving away from a siloed approach towards a digitally connected supply chain ecosystem. It will make the packaging supply chain more demand-driven and efficient.
While packaging the products is usually necessary for transporting them and getting them to market, it's also a huge opportunity to increase sales. According to a recent survey, 72 percent of consumers say that packaging design influences their purchasing decisions. Please elaborate on how businesses that are not putting enough focus on the packaging are missing out on potential sales and opportunities to promote their brand?
Packaging performs three roles. It protects a product from getting in touch with foreign elements in the external environment. It preserves the value of the product content and extends its shelf life. Finally, it promotes the brand. The importance of packaging to logistics and sales is interdependent. A key outcome of the pandemic is that each stakeholder in the supply chain now wants "low-touch" processes in the end-to-end journey of goods. This is true for suppliers, manufacturers, distributors, retailers, logistics
service providers, and end-users and holds for both domestic and global trade.
In both cases, there is one question that is integral to creating a great customer experience: In what form does the product content reach the end customer? A robust packaging of the product is a major requisite that all end customers tick off on their checklist. Tamper-proof primary packaging in this sense is very reassuring.
Take the case of the food and beverage industry, Chocolates, soft drinks, processed foods, packaged whole grains, and cereals, for instance, are packaged using laminates. Primary packaging makes all the difference to the first impression of the customer and the brand recall later. Paper boat, for instance, sets a benchmark by visualizing the brand around its packaging with standy pouches that end customers loved and remembered. Innovative packaging is the future.
The packaging industry is adopting smart and sustainable solutions to make product packaging more consumer-friendly, brand-friendly, and environmentally-friendly. Can you please elaborate on the major packaging industry trends that enable smart packaging and its impact on the industry?
The pivot to sustainable packaging in India will be wholesome and spread across domestic and global trade in manufactured goods. Single substrate packaging structures and recyclable materials will see a surge in demand and replace multi-substrate packaging. For instance, a famous snacks brand uses three layers of packaging. The first layer is that of BOPP. The second layer is that of LDPE, and the third one is the metal pack. Now imagine the possible cost savings through a switch to a single substrate structure or a recyclable material.
With the phased withdrawal of single-use plastics, India is zeroing down the gap with matured markets like the US and the European Union for sustainable packaging. The switch to sustainable packaging will bring Indian manufacturers closer to carbon emission regulatory frameworks in the US and the E.U. and unlock new opportunities for exports of pharmaceuticals, processed foods, textiles, auto components, EVs, footwear, chemicals, white goods, and horticultural commodities.
E-Commerce will drive the demand for smart packaging solutions in domestic and global trade. Manufacturers are adopting new-age smart packaging solutions like unique barcodes for poly bags, chip insertions, and Q.R. codes to create 3D experiences. Inventory track and trace is a significant benefit that will drive the adoption of smart packaging. A trackable packaging solution gives greater visibility into the supply chain to all stakeholders. The right use of packaging track and trace data analytics holds immense potential for domestic trade and EXIM.
According to the Food and Agriculture Organization (FAO), one-third of all the food produced for consumption is wasted globally. Food waste is a big challenge to be addressed as companies often incur huge losses because of the same. Please elaborate on how Active packaging helps in increasing the shelf life of the product and has applications in various sectors such as the food, beverage, cosmetic, and pharmaceutical industries?
Active packaging has always been critical to enhancing the shelf life of products and has the potential for widespread application across pharmaceuticals, food, chemicals, and many perishable product categories. When done using sustainable packaging materials, active packaging can unlock new opportunities for several verticals in India. Consider this.
Active packaging has always been critical to enhancing the shelf life of products and has the potential for widespread application across pharmaceuticals, food, chemicals, and many perishable product categories
At Moglix, we are partnering with one of the largest fruit exporters in India. With our diverse and pan-India supplier base of 16,000, we have been able to map suppliers that have the capability to manufacture active packaging materials that keep bananas fresh for 15 days. We are leveraging our enterprise customer base to ensure that these suppliers get recurring purchase order values and volumes to attain the right scale where the adoption of this material becomes economically viable and feasible.
We are excited about taking this successful supplier collaboration to other customers and industries. It will unlock new opportunities for our suppliers and farmers. What is good for the planet if done right can be good for businesses and communities of people.
The major challenges associated with packaging are productivity, precision, and quality control. Automating the packaging processes, for instance, for pick and place, depanning, filling, packing, sealing, labelling, and palletizing is a big packaging industry trend. Kindly elaborate on how packaging automation not only eliminates human errors but also ensures the safe handling of delicate products?
There's great scope for automation in finding standardized packaging solutions for warehouse operations, box casing, strapping, inventory management, and more. The cost savings from automation extend across efficiency wages, staff-hours, faster cycle time of operations, quality, and overall equipment efficiency levels. In mature markets, packaging automation is enabling businesses to unlock up to 33 percent cost efficiencies.
Coming out of the pandemic, packaging automation will gain momentum as Indian manufacturing will mature from primary goods to ones with the greater quantum of localized value addition.
The innovations surrounding LED embedded illuminating packaging, color-changing packaging, as well as oxygen and moisture scavengers, are expected to transform the packaging industry. Where do you see the market for the Packaging Industry in the near future?
Globally, innovations around LED embedded packaging, color-tunable packaging, and temperature and moisture-sensitive packaging have been there for some time now. Some of these innovations can find great application in India for edibles and perishable commodities like food crops, processed foods, chemicals, and pharmaceutical products. The paradigm shift in consumer behavior will drive transformation in the packaging industry in the near future through the pandemic and beyond. Much of this transformation will happen by integrating technology lines, supplier bases, category expertise, logistics, and warehousing into a single supply chain ecosystem.
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