Frost: Flexible Packaging More Advantageous Than Traditional Packaging

December 5, 2008 // Published as a news service by IHS

According to Frost & Sullivan, flexible packaging wins out over traditional packaging because of its ability to keep products from adulteration and moisture, its convenience of disposal and its transportation cost savings.

Recent analysis from Frost & Sullivan of the Indian flexible packaging market found earned revenues of Rs.114,000 million in 2007, with estimates for it to triple by 2014.

"For a company to be successful in the Indian flexible packaging market, it needs to understand the end-user requirements and provide packaging materials that offer better barrier properties," said Frost & Sullivan consultant Rakhee Iyer.

"Flexible packaging offers the advantage of packing smaller quantities compared to traditional packaging and hence, middle-class consumers, who comprise a major section of the Indian society, have the choice of purchasing just the required amount of products."

Analysts said the flexible packaging market has got a boost from the growth in the processed food, personal care and hygiene industries, as well as the retail sector. The demand for smaller packaging and increasing consumerism due to higher purchasing power also bodes well for the market.

However, there is a certain lack of quality consciousness among end-users, analysts said, and they tend to gravitate toward low-grade products, thereby hampering the sales of flexible packaging. Additionally, the existence of more than 800 processors in the Indian market creates a fiercely competitive marketplace, which fosters price wars.

Processors can dig deep into this fragmented market by making consumers more aware of the advantages of flexible packaging, offering superior quality product lines and pricing their products more attractively.

"The use of new polymers, which enhance the packaging requirements, as well as facilitate innovative techniques for faster packaging, will help companies grow in the Indian flexible packaging market," said Iyer. "With the advent of metalized films and other novel materials, the industry will be looking at increasing the quality of the products and thereby, unit sales."

At a compound annual growth rate (CAGR) of 17%, the Indian flexible packaging market is one of the most dynamic and fastest growing in the country, analysts said. In fact, the market is expected to triple its output in the next seven years from 1,000 kilotons in 2007 to 3,100 kilotons in 2014, largely due to greater demand from the processed food, pan masala and retail segments.

Source: Frost & Sullivan.