This industry is packaging a lot of prospects; worth a good look

By DK Aggarwal


The packaging industry plays a crucial role, adding value to various manufacturing sectors including agriculture, pharma, retail, FMCG, to name a few. Basically the market has been growing due to solid demand from food and pharma industries. The paper packaging market contributes more than 30% to overall packaging market share and dominates other packaging domains.

Also, demand for sustainable packaging, made of paper, jute, cloth and even plants, is increasing around the country. Plastic is used heavily for packaging owing to its innovative visual appeal for customer attraction and convenience. The growth in lifestyle and consumption patterns has increased the demand for the packaged products resulting in growth packaging industry.

Eventually, with changing consumer preferences, the packaging industry has faced numerous challenges, but by adopting various upgraded technologies, like aseptic packaging, retort packaging and biodegradable packaging, to name a few, to enhance the shelf life of food products, the industry is firm in the runway. Besides, with rapid growth in the Indian e-commerce sector, the industry will see further growth.

The recent 30 per cent drop in crude oil prices will benefit many companies from the industry, as plastic is derived from petroleum refining products. Lower the cost of oil, lower is the cost of plastic raw materials used for packaging purpose. To note, the Indian packaging industry has registered a robust growth of 15% CAGR in the last five years and is estimated to achieve $32 billion annual turnover by 2025.

If data is to be believed, the per capita packaging consumption in India is quite low at 8.7 kg, compared with countries such as Germany and Taiwan, where it is 42 kg and 19 kg, respectively. So, it is expected that there is huge space for the industry to grow.

The industry, which employs about 5 million people directly and three times more indirectly, will continue to grow due to rapid change across the industry. Organised retail and e-commerce boom, which offer huge potential for future growth of retailing, will continue to support the packaging industry. The increased presence of global multinational companies, consumer brand awareness and products with ‘clean-label’ messaging will augur well for the industry.

Meanwhile, the food safety and packaging norms are getting stricter and this is expected to promote use of good quality packaging. Also the affordability, smaller urbanized household size and time compression is expected to give way to the packaged food category. Also, the government’s aim to make India a global manufacturing hub will have a positive impact on growth of packaging industry.

With traditional businesses preferring to package products, the industry is growing at a robust pace and with the addition of demand from new entrepreneurs, and small and medium enterprise will also contribute to the overall growth of the industry.

Given the rate at which the Indian packaging sector is growing, country’s largest package companies such as Essel Propack, Uflex are gearing up with innovative packaging ideas and a host of value added packaging materials and sophisticated products for the market. Essel Propack and Uflex are some of the stocks from the industry, where investors can make investment for the long term.

(DK Aggarwal is Chairman & Managing Director of SMC Investments & Advisors)


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