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Food packaging industry: Current, future prospects
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Friday, 01 November, 2013, 08 : 00 AM [IST]
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Dr Tanweer Alam
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fiogf49gjkf0d Prologue
During pre-historic era, people hunted for food and soon they realised that they could keep their food longer if they protected it. Therefore, they made pockets out of large leaves and animal skin and kept water in containers made out of coconut shells and dried skins of vegetables. Gradually, packaging came into existence to take care of consumer goods, medicine and food - packaging was introduced in 1875 by Henry J. Today, virtually everything we use needs packaging.
Potential
The Indian packaging industry is currently $18.8 billion with a growth rate of above 12.36% per annum more than twice the global average while our GDP growth was 8.5%. Not only is the industry growing rapidly but it is also creating lucrative jobs for those who find a career in it.
India’s Rs 65,000 crore packaging industry is expected to grow at 18-20% to reach Rs 82,500 crore by 2016. The sales turnover of the Indian packaging industry is expected to reach $43.7 billion by 2016. India’s per capita consumption of packaging is only 4.3 kg per person per annum, as against Germany’s 42 kg and China’s 20 kg, which is very low compared to global standards.
Initiatives are needed to convert the large unpacked commodities into processed and packed and well-presented commodities. India's imports at 20-25% with a value of $125 million of its total packaging machinery indicate further opportunities not only for Indian companies to increase their share in domestic market but also for international companies to explore new business opportunities in India.
The food and beverage and pharmaceutical segments occupy the largest share in the packaging industry, accounting for 85 per cent and 10 per cent, respectively. The plastic packaging market is expanding rapidly registering a growth of 20-25 per cent per annum and is valued at 6.8 million tonne while the paper packaging industry stands at 7.6 million tonne.
The packaging industry is poised to grow rapidly led by the increasing use of innovative packaging equipments and the rising flexible packaging market. Of the total, paper packaging alone constitutes 7.6 million tonne. In fact, 40% of the total paper production goes for packaging. Plastic packaging comes next at 6.8 million tonne and growing at 20-25%, whereas glass packaging contributes to 4-5% and metal 8%.
The sales turnover of Indian packaging industry is likely to touch $43.7 billion by 2016, according to Indian Institute of Packaging (IIP 2013). "The total turnover of the packaging industry in India at present is $27.6 billion and expected to grow to around $43.7 billion by 2016, whereas the global turnover is about $550 billion" (Ray, 2013). He said that the packaging industry was growing at 12% per annum in India as against the global growth rate of 5%. There are roughly 22,000 packaging companies in the country -- from raw material manufacturers to machinery suppliers to ancillary material and nearly 85 per cent of them are MSMEs.
A recent report pointed out that as far as sectorwise demand drivers go, the packaging sector is estimated to drive polymer demand of around 6.3 million tonne by 2016-17 in comparison to consumer goods (1.3 million tonne), automotive (0.5 million tonne), infrastructure (2.4 million tonne). At the same time, currently the share of pharma packaging in the Rs 1,25,000 crore polymer processing industry is around 7 per cent, and therefore, there is huge potential for growth.
Global market
Global packaging industry is worth US$424 billion and out of this Europe has US$127 billion, Asia has US$114 billion, North America has US$118 billion, Latin America has US$30 billion, and other countries have US$30 billion. In terms of global market percentage, Europe is 30%, North America is 28%, Latin America is 7%, Asia is 27% and others is 8% of the total industry.
According to the materials used in packaging industry throughout the globe, paper shares the most, 36%, metal is 17%, plastic takes 34%, glass takes 10% and other occupies 3%. According to the type of packaged products, beverages take 18%, food take 38%, pharmaceutical products take 5%, cosmetic products take 3% and other products take 36% of the overall industry. The global market value of food packaging is US$161 billion, beverage packaging is US$76 billion, pharmaceutical packaging is US$21 billion, cosmetic packaging is US$13.3 billion and others is US$153 billion.
Packaging market
The global plastic packaging materials and products market would reach US$262.6 billion by 2015, according to Global Industry Analysts, Inc. Although the global economic recession subdued the US and European markets that make up the bulk of the plastic packaging industry, the industry is witnessing a resurgence driven by demand from emerging markets in the Asia-Pacific and Latin America, as well as unrelenting technological innovations.
Following a brief lull during the onset of worldwide recession, demand for plastic packaging rebounded due to the rising demand from the food and beverage and consumer retail products sector. Plastic materials are fast becoming the preferred choice of manufacturers for packaging new products. With the development of stronger and cost-effective materials with improved barrier protection, and aesthetic qualities, plastic is expected to further encroach into the territories dominated by metal, glass and paper packaging materials.
Europe at forefront
For several years, European R&D institutions areat the forefront in developing new technologies for plastic film materials and manufacturing. Within the rigid plastic segment, PET and HDPE polymers are predominant. Of late, PET has almost completely taken over the mineral water and household cleaning products markets, and is a strong contender within the soft drinks market that is dominated by glass bottles and metal cans.
Moreover, researchers are vying to formulate newer varieties of plastics that emulate the aesthetic qualities of glass, in order to tap the alcoholic beverages segment. Innovations such as squeezable bottles and one-stop closures are aiding the foray of rigid plastic packaging into newer sectors such as sauces, condiments and dressings.
Second to paper
Plastic is second only to paper in the flexible packaging materials industry, exhibiting strong growth unlike glass and metal segments. Industrial packaging is expected to remain the major hub of demand for flexible plastic packaging with LDPE (Low Density Polyethylene) dominating the market. Lightweight flexible plastic packaging is also making waves in the consumer retail sector due to cost-efficiencies offered in production and transportation, as well as reduction of carbon footprint. Self-standing pouches offering better display of the product and labelling are also helping to optimise space in the retail shelf. Both rigid and flexible materials are finding increasing application in the healthcare and surgical packaging sectors, particularly from China, in the form of medicine bottles, sterile pouches, and IV bags.
In recent times, the IT hardware industry emerged as a major consumer of flexible plastic packaging. The demand for eco-friendly packaging made from bio-plastics is growing with products such as water-soluble and edible plastic packs are already finding their way into the fertilisers and confectioneries sectors respectively, in several developed economies.
In addition, plastic manufacturers in several countries, including China and India, were hit by recent government regulations restraining the use of plastic carry bags and packages. Traditionally, the US and European markets are the centres of demand for using plastic packaging in food products due to better lifestyle and consumer demand for convenience.
Thriving industry with large untapped potential
There are some 600 to 700 packaging machine manufacturers, 95% of which are in small and medium sectors and located all over the country. There is huge gap in demand and supply of food packaging professionals.
India is the world's 2nd largest producer of food next to China
- It is the 2nd largest vegetable and 3rd largest fruit producer in the world
- The growth of food packaging sector has nearly doubled to 13.7 per cent during the last four years
- It ranks second only to Japan in inland sector fish production and produces about 6.57 million metric tonne fish every year
- Of the world's total annual spice trade of 850,000 tonne, India accounts for 44 per cent in quantity and 36 per cent in value
- The beer market in India is pegged at around 12 million hectolitre
- Functional foods had the market earned revenues of over $185 million in 2007 and this is expected to reach $1,161 million in 2012
- Factors instrumental in driving growth and investment (FDI) in the Indian food industry are Effective distribution network and supply chain; Product range that is customised to suit local market requirements; Superior processing technology; and Brand building and marketing.
Newer segment and future prospects
In today's world of global markets and stiff competition in every product along with increasing consumer demand, it becomes imperative for companies to explore ways to improve their productivity in terms of maintaining safety, using sustainable packaging materials, implementing flexible and standardised technology, and adopting proven management principles in the food processing and packaging industry in the light of recent advancements in the fields of (i) smart packaging and materials including the application of nanoscience and technology, (ii) automation and control technology, standards, and their application scenarios, and finally (iii) production management principles and their improvements for the food industry. This paper reviews the major influencers that will drive change in meat packaging.
Nanocomposites
The development of nanocomposites is a new strategy to improve physical properties of polymers, including mechanical strength, thermal stability, and gas barrier properties. The most promising nanoscale size fillers are montmorillonite and kaolinite clays. Graphite nanoplates are currently under study. In food packaging, a major emphasis is on the development of high barrier properties against the migration of oxygen, carbon dioxide, flavour compounds, and water vapour. Decreasing water vapour permeability is a critical issue in the development of biopolymers as sustainable packaging materials. The nanoscale plate morphology of clays and other fillers promotes the development of gas barrier properties. Challenges remain in increasing the compatibility between clays and polymers and reaching complete dispersion of nanoplates. Nanocomposites may advance the utilisation of biopolymers in food packaging.
Over the past decades, polymers have replaced conventional materials (metals, ceramics, paper) in packaging applications due to their functionality, lightweight, ease of processing, and low cost. The use of synthetic polymers is ubiquitous in food packaging where they provide mechanical, chemical, and microbial protection from the environment and allow product display. Polymers most frequently used in food packaging are polyethylene, polypropylene, polystyrene, polyvinyl chloride (PVC), and polyethylene terephthalate (PET).
Novel system
A novel silver-based anti-microbial layered silicate additive for use in active food packaging applications. The silver-based nanoclay showed strong antimicrobial activity against gram-negative Salmonella spp. Despite the fact that no exfoliation of the silver-based nanoclay in PLA was observed, as suggested by transmission electron microscopy (TEM) and wide angle x-ray scattering (WAXS) experiments, supporting the potential application of this biocidal additive in active food-packaging applications to improve food quality and safety. Apart from well proven modified MAP and Vacuum Packaging system these are future potential of novel food packaging system.
Active, map packaging technologies
Active packaging technologies offer new opportunities for the food industry, in the preservation of foods. Important active packaging systems currently known to date, MAP, CAP VP, including oxygen scavengers, carbon dioxide emitters/absorbers, moisture absorbers, ethylene absorbers, ethanol emitters, flavour releasing/absorbing systems, time-temperature indicators (TTI), and anti-microbial containing films, are reviewed. Recent technological advances in active packaging are discussed, and food related applications are enormous. Modified atmospheres (MA), i.e., elevated concentrations of carbon dioxide and reduced levels of oxygen and ethylene, can be useful supplements to provide optimum temperature and relative humidity in maintaining the quality of fresh fruits and vegetables after harvest.
MA benefits include reduced respiration, ethylene production, and sensitivity to ethylene; retarded softening and compositional changes; alleviation of certain physiological disorders; and reduced decay. Subjecting fresh produce to too low an oxygen concentration and/or to too high a carbon dioxide level can result in MA stress, which is manifested by accelerated deterioration. Packaging fresh produce in polymeric films can result in a commodity-generated MA.
Atmosphere modification within such packages depends on film permeability, commodity respiration rate and gas diffusion characteristics, and initial free volume and atmospheric composition within the package.
Temperature, relative humidity, and air movement around the package can influence the permeability of the film. Temperature also affects the metabolic activity of the commodity and consequently the rate of attaining the desired MA. All these factors must be considered in developing a mathematical model for selecting the most suitable film for each commodity of fresh and processed packaged food.
Machinery & automation sector: Triggering growth
The globalisation of the Indian economy has exposed the domestic companies to the free market dynamics. With no protection from the state, these companies are learning to be more efficient and are re-engineering the business processes to compete with the global businesses. Among other things, deployment of IT has been extensive in the better-managed companies and the one field where it is being successfully deployed is the management of the supply chain. This has brought the focus on the Automatic Identification and Data Capture technologies and integrated with the ERP/ EDI (Enterprise Resource Planning / Electronic Data Interchange) applications.
RFID and IT elegant packaging
Worldwide, RFID (Radio Frequency Identification) is being driven by an electric mix of researchers and businessmen of Indian origin and provides an unprecedented opportunity for the country to export services and software. The technology whose applications are limited by ones imagination is primarily finding use in fleet management, inventory and asset management, warehouse automation, asset tracking, quality control, packaging, security and access control, hazardous material management, advertising and promotion, delivery and smart card-based payment systems. The application is happening in many industry segments but still the areas of focus are retail and supply chain management. The technology has got a new impetus with the emergence of Electronic Product Code (EPC), a set of standards that weaves basic RFID technology into a numbering schemes as they move across the business supply chain.
Bulk and transport packaging
The Indian bulk packaging market started moving significantly only in the 1990s as the industries acquired bulk handling capabilities to compete in the globalised world. The markets really took off at the turn of the new millennium spurred by an export-led and domestic growth in agro produce & foods. The market grew at around 28% for the first 6-7 years and then settled down to a 15-20 % band largely bucking the worldwide slowdown.
The rigid packaging industry that comprises drums and containers made from metal, plastics, fibre board and composite materials is growing at about 13% pa. Within the industry, there is a migration to plastics and the major metal drum manufacturers have joined the bandwagon themselves by setting up parallel facilities for manufacturing plastic containers. The 6 million units plastic drum market (Rs 5 billion.) is growing at over 16% while the 10 million drum steel market still manages a positive growth of 2% and is valued at around Rs 2 billion. The fibre drum and composites valued at Rs 4 billion is also growing at around 10%. The Rs 140 billion flexible bulk packaging industry that includes woven sacks, leno bags, wrapping fabric, and flexible intermediate bulk container (FIBC) is growing at over 20% with FIBC containers expected to grow three-fold in the next 5 years riding an increased industrial production and a shift toward higher-value containers offering enhanced performance and supply chain efficiency. In fact, the global slowdown has been an opportunity for the Indian FIBC manufacturers as the production cuts by the companies in Europe and USA have resulted in the sourcing shifting to India adding an important factor to the growth story.
Legislative issues to be concerned
The application of novel food packaging materials has increased the number of occurring hazards due to the migration from packaging material to the packaged food. Although polymers have mainly monopolised the interest of migration testing and experimentation, recent studies have revealed that migration also occurs from “traditional” materials generally considered to be safe, such as paper, carton, wood, ceramic, and metal. The regulations and the directives of the EU tend to become stricter in this respect. The emphasis is on reaching a consensus in terms of food simulants and testing conditions for migration studies. Furthermore, the list of hazardous monomers, oligomers, and additives continues to augment in order to ensure that the consumer safety is in current agreement with the HACCP, which is continuously gaining ground.
(The author is joint director, Indian Institute of Packaging, Delhi. He can be contacted at amtanweer@rediffmail.com)
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