Trends in the INR 1 trillion Consumer Packaging Market in India

Indian packaging industry

The Indian packaging industry has gained in stature and has kept pace with the evolving needs of the brand owners. Over 50 urban agglomerations and thousands of Tier II/ III towns across the country’s landscape drive the consumption economy. Increasing demand for innovative and better-quality packaging that adhere to higher levels of safety and sustainability standards have nudged the packaging industry to reinvent itself. The growth in the packaging sector in India has been ahead of the nation’s GDP growth during the recent years.

The consumer packaging markets in India (excluding bulk packaging) registered a growth of around 11.3% p.a since 2011-12. The market was valued at close to INR 1,000 Bn in 2019-20.

Flexible packaging accounts for around 30% of the market and has emerged as packaging format of choice backed by favourable barrier properties and excellent cost to performance ratio. The substrate has undergone significant technological developments during the last two decades. The emergence of gusseted bags and stand-up pouches enhanced visibility on store shelves thus giving brand owners a versatile medium to work with. With steady growth over the last decade, India has emerged as one of the leading markets for rigid plastics packaging in the world. In addition to key benefits such as ease of stacking and display, rigid plastics can be designed to aid reuse/ recycling and provide a more sustainable solution. Paperboard packaging has been growing well over the last decade benefiting from the push for shelf-appeal, better brand building, greater awareness of environmental concerns.

The container glass market has been registering slow growth in the recent past owing to adverse packaging economics and competition from alternate materials. Manufacturers are investing in new technologies to improve packaging economics of glass packaging. Metal can players are also focusing on light weighting and adapting to improvements in printing technologies in order to remain competitive and addressing the packaging needs of modern-day consumer. Caps & closures are the forefront of innovation in ensuring tamperproof packaging and prevention of counterfeiting.

The Indian consumer packaging market witnessed a slowdown in 2019-20 accentuated by the nationwide lockdown enforced in the backdrop of the spread of the covid-19 pandemic since Q4 2019-20. The year on year growth of consumer packaging markets during 2020-21 is expected to decline to around 2.4%. With the gradual lifting of the lockdowns in some parts of the country since June 2020, manufacturing operations are slowly limping back. Demand is forecast to reach around INR 1,350 billion by 2024-25, at an annual growth rate of 6.3% during the 5-year period from 2019-20. Amidst multiple challenges, demand for health and hygiene products, especially hand sanitisers, witnessed unprecedented growth. With greater focus on health and hygiene, the tendency to purchase branded and packaged products is set to grow and is expected to provide an impetus to the consumer packaging market in the medium to long term.

Safety and sustainability have emerged as key differentiators in the consumer packaging markets in India. Heightened consumer awareness supported by Government regulations have shaped the direction and choice of consumer packaging medium in the recent past and the trend is expected to continue. Terms such as Post-Consumer Waste and Extended Producer Responsibility are mainstream and improvements in packaging are set to follow these guidelines. Brand owners across food, beverage and non-food are adopting a hands-on approach with regard to product safety. Developments such as RFID, barcoding and anti-counterfeiting emphasize the role of packaging in product safety. Several innovations have been introduced in all formats of packaging that ensure products safety without compromising on ease of use and branding. With the rapid growth of e-commerce and increasing consumerism, brand owners are implementing omni channel marketing through blend of digital presence and brink and mortar retail stores. Amidst the fast-paced multifarious developments, consumer packaging is expected to change for the better.

Disclaimer: This note has been prepared by Madras Consultancy Group (MCG) and is intended to provide the reader a flavour of the industry in India. MCG does not accept any direct or indirect legal liability of any kind. This note remains MCG’s intellectual  property and no part may be reproduced or circulated without the  prior permission from MCG.

Rashmi Narayanan is a Senior Consultant with Madras Consultancy Group. She has handled market studies relating to packaging markets and closely follows industry developments.

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