The future of packaging trends in Asia
18 June 2018
Asia is the largest market for the packaging industry, accounting for over 40% of the world’s consumption. Yet, led by China and India, the regional market is still predicted to grow at the world’s fastest rate. From now till 2022, China alone is predicted to represent nearly half of world’s packaging consumption growth.
Four of the main customers of the folding carton industry are the healthcare, tobacco products, household care, and hardware & electrical markets. With the growing Asian economy, all these markets are performing extremely well, outperforming the world as a whole in terms of percentage growth.
The largest opportunity for the corrugated market in Asia, however, lies in the online retail market. Although the online retail market hasn’t taken off in India yet, it’s still expected to more than double there by 2021.
"China and the rise of online retail"
Online retail in China, on the other hand, has already grown exponentially. This growth is driven by broadband Internet popularity, increase in smartphone use, and increase in ‘tech-savvy’ consumers. Specifically online grocery shopping in China rose to $7 billion back in 2014, an 80% rise from 2013. For instance, Yihaoadian—a Walmart owed China based online supermarket where customers use smartphones to purchase products—grew its user base from 27 million in 2012 to 57 million in 2013.
This growth in online grocery shopping corresponds with increased demand in packaged food products and convenience food, both of which add to the demand for folding cartons. Even when not considering China, Asia as a whole also provides an opportunity for the Corrugated industry due to the increase in online retail. Online retail in Asia is expected to grow to over $1.6 trillion by 2021.
This growth can be attributed to the rising middle class, who have access to increased disposable income. This increase in consumption would therefore increase demand for folding cartons because as opposed to traditional in store retailing, where only one corrugated case would be used for each product, in online retail often a secondary package is used when shipping the product to the consumers.
With the growth in consumption, packaging is also increasingly becoming more important to brand identity due to increased interests for the ‘unboxing’ experience, therefore increasing demand.
"How growing environmental concerns affect Asia’s Corrugated industry"
Another trend to notice is the increase in environmental concerns and protection. A report by Smith Spira shows that growing environmental concerns are benefitting the corrugated board market generally because there is a perception that cellulose-based materials are more environmentally friendly compared to other packaging materials.
However, producers are also making significant investments to further increase environmental protection and energy optimization. China, for instance, has become a leader in imports of recycled paper. This increase in demand for environmental friendly products could provide an opening for investments in recycled fibre to reduce environmental output. This trend can be observed throughout Asia, with the continent accounting for the largest sales in low carbon goods and services.
"South East Asia in Context"
Specifically for South East Asia there is also a noticeable growth in the packaging industry: this is true for both flexible packaging and corrugated packaging.
Although ASEAN has a high degree of competition in the flexible packaging market, new companies are continuously entering the market due to the high-predicted growth. The market has a high CAGR of up to 5.7%, and from 2016-2024 is expected to grow from $4.32 billion in 2015 to $6.71 billion in 2024.
Similarly, the increase in need for lightweight packaging in the development of ASEAN electronics, healthcare, and food & beverages industries has increased demand for corrugated packaging, driving growth. For instance, the rapid growth in the industrial and agriculture sectors along with expansions of shopping malls in Indonesia is at the core of the growth in the corrugated packaging market in the country. Likewise, changing lifestyles, expectations, and preference towards corrugated packaging, along with an increase in purchasing power of consumers in Thailand, is leading to more demand in the industry.
Moreover, like the rest of Asia, the major advancements in ASEAN e-commerce are creating opportunities in the market. Evidently, this change in lifestyles, which corresponds with the rise of the middle class, leads to growth in the packaging industry.