The FMCG packaging market is estimated to grow at a CAGR of about 4.2% over the forecast period 2019-2024
NEW YORK, Oct. 7, 2019 /PRNewswire/ -- Market Overview
The FMCG packaging market is estimated to grow at a CAGR of about 4.2% over the forecast period 2019-2024. According to the Business Association of Stanford Entrepreneurial Students, 84% of professionals working for fast-moving consumer goods are under more pressure to quickly bring new products to the market than they were five or ten years ago. Thus, the role of FMCG packaging has gained greater importance because the packaging is as important as the product itself because it's a crucial marketing and communication tool for the business.
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- FMCG companies are adopting various strategies to increase revenues and expand their customer base. For instance, the introduction of various types of the same product for different user groups, for eg: Calcium Sandoz and Calcium Sandoz for women, Horlicks for older women and Junior Horlicks. This comes with a unique packing to a particular product that attracts the customers of different age groups.
- Moreover, the increasing demand from the growing e-commerce industry is creating a market for FMCG packaging. This sector's growth is attributed to the rising demand for protective packaging for delivering small-sized products coupled with the convenient packaging options.
- However, environmental concerns regarding the use of specific materials such as plastics packaging that have a detrimental impact on the environment are hindering the growth of the FMCG packaging market during the forecast period.
Scope of the Report
Fast-Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG) are products that are sold quickly and at a relatively low cost. The packaging is vital to the FMCG market as it is an essential element for the proper positioning of the product. This serves as an important medium for communication and a tool for companies to distinguish product appearance from that of their rivals. The market has a lot of potentials to develop in the future, with manufacturers engaging in providing customized products that meet the requirements of the customers.
Key Market Trends
Plastic Packaging to Account for a Significant Share
- Packaging generally makes up 7-11% of the total costs of a product for most FMCG companies. Being a cost-sensitive market, the pressure for FMCG companies to reduce packaging costs is strong and they prefer plastics packaging over other materials. This covers all the aspects of the packaging value chain from raw material to post consumption disposal and treatment.
- In a Flexible Packaging Association (FPA) survey of 2,120 consumers, consumers placed a high value on the packaging that is "easy to store," "easy to reseal," and "easy to open." Consumers in the survey also said they are willing to pay more for benefits like "ability to reseal," "ability to extend product life," "easy to store" and "easy to open." Therefore, FMCG companies prefer plastics packaging because of its lightweight and easier to handle.
- Further, with the increasing trend of pet humanization whereby pets are being treated more like humans than animals is creating huge market opportunities for the FMCG plastics packaging. The plastics tubs and cups supplant other packaging containers in wet food, due to peelable lids that are easier to open. In addition, plastics pouch with zippered closure mechanisms is widely preferred in both dry and wet pet food.
- For instance, in January 2018, Nestle has entered into India's pet care segment by introducing arrange of premium dog food called 'Purina Supercoat' under its subsidiary Nestle Purina. Such product expansions by FMCG players support the growth of the packaging market.
Asia-Pacific to Witness the Fastest Growth
- The Asia-Pacific region is going to witness the fastest growth among other regions because of the presence of the two largest economies of the world i.e India and China. Owing to an increase in urbanizations and an increasing population, these countries provide a large pool of customers for FMCG products.
- Further, according to IBEF, the FMCG sector in India is the 4th largest sector in India's economy and generates employment for more than 3 million people in downstream activities. This has a positive outlook on the FMCG packaging market.
- Along with that, with more than 33% of the Indian consumer base present in rural areas, the rural market will be a key growth driver for FMCG players. The Government of India has been supporting rural areas with higher MSPs and loan waivers, through the National Rural Employment Guarantee Act (NREGA) program, which are expected to boost rural purchasing power.
- All the above factors are expected to boost the FMCG market which in return will supplant the growth of the FMCG packaging market.
Competitive Landscape
The FMCG packaging market is highly competitive in nature. The FMCG packaging market is opening up numerous new avenues for new players because of FMCG firms who are now moving for customization of products to cater to more and more customers. Some of the players are Amcor Ltd., Ball Corporation amongst others. Some recent developments in this market are:
- April 2019 - Amcor launched AmLite Ultra Recyclable pouch. It can package a range of food, home, and personal care, and pharmaceutical products, and be recycled in existing polyolefin recycling streams.
- January 2018 - Amcor Limited pledged to develop all its packaging to be recyclable or reusable by 2025. And, also planned to focus on significantly increasing its use of recycled materials and driving consistently more recycling of packaging around the world. This commitment was aimed at establishing the company as a leader in recyclable packaging.
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