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The Future of the Active, Smart and Sustainable Packaging Industry in the BRIC Countries by BRICdata

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"The Brazilian active, smart and sustainable packaging industry valued US$X.X billion in 2011. Recently, consumer demand for active, smart and sustainable packaging products has increased, especially in the areas of food and beverages, personal care and cosmetics, and pharmaceuticals. The industry is expected to record a CAGR of 8.80% over the forecast period, to reach a projected value of US$X.X billion in 2016. The Russian smart, active and sustainable packaging industry valued US$X.X billion in 2011. Over the forecast period, it is expected to record a CAGR of 7.14% to reach a projected value of US$X billion in 2016. Although this growth is expected to be driven by increased demand from the food and beverages, and personal care industries, the use of intelligent packaging technologies by pharmaceutical companies is expected to increase over the forecast period. The Indian active, smart and sustainable packaging industry valued US$X.X billion in 2011, and is projected to record a CAGR of 10% over the forecast period. By 2016, it is expected to reach a value of US$X.X billion. The Chinese active, smart and sustainable packaging industry valued US$XX.X billion in 2011. Notably, high consumer awareness, the increasing popularity of smart and sustainable packaging among leading companies and the adoption of environmentally friendly technology in sustainable packaging production have all helped to increase overall demand for active, smart and sustainable packaging in China. Consequently, the value of the industry is expected to record a CAGR of 5.69% over the forecast period to reach a projected figure of US$XX.X billion in 2016."

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									                            The Future of the Active, Smart,
                            and Sustainable Packaging
                            Industry in the BRIC Countries

                            Industry Forecast Report


                            Reference Code: PK0041MR
                            Published: March 2012
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EXECUTIVE SUMMARY



1 Executive Summary
Brazil
Market size and growth potential

         The Brazilian active, smart, and sustainable packaging industry valued US$3.9 billion in 2011. Recently,
          consumer demand for active, smart, and sustainable packaging products has increased, especially in the areas
          of food and beverages, personal care and cosmetics, and pharmaceuticals. The industry is expected to record a
          CAGR of 8.80% over the forecast period, to reach a projected value of US$5.9 billion in 2016.
Trends

         The expansion of the Brazilian food and beverage industry has stimulated the growth of active, smart, and
          sustainable packaging in Brazil. Moreover, a large number of domestic and international companies, including
          Nestlé, PepsiCo, and Coca-Cola recently strengthened their presence in the Brazilian food and beverage
          industry. This resulted in an overall increase in demand for packaging, including active, smart, and sustainable
          packaging.
         Sustainable packaging has emerged as a key priority for Brazilian personal care and cosmetic companies, with
          these companies currently investing heavily in order to offer sustainable and environmentally-friendly products to
          their customers. Notably, these companies are becoming increasingly cognizant of the damaging environmental
          impacts of conventional packaging production methods and are increasingly keen to develop packaging that is
          both biodegradable and easily recyclable.
         Brazil‘s increasingly stringent packaging regulations have also played a key role in encouraging companies to
          explore alternative packaging solutions. For example, the Brazilian Government recently introduced regulations
          that compel food and beverage companies to maintain the safety and quality of their food products by
          electronically enumerating and tracking information related to the production and consumption of their products.
          This encouraged many companies to invest in active, smart, and sustainable packaging for their products.
Drivers

         As increasing the shelf life of products remains a primary objective for food and beverage companies, the use of
          active and smart packaging is increasing, as it allows companies to preserve the quality of their products for an
          extended period of time. In the food and beverages industry, active and smart packaging is primarily used for
          dairy products, meat products, fruits and vegetables, and beverages. Some of the technologies that are
          commonly used in active and smart packaging include oxygen scavengers, carbon dioxide scavengers, ethylene
          scavengers, moisture control, antioxidants, and temperature-control packaging.
         The growth of active, smart and sustainable packaging has also been driven by growing awareness of the
          benefits of such packaging among consumers. This growing awareness, which is primarily concentrated among
          urban areas, has increased consumer demand for active, smart and sustainable packaging.
Challenges

         The high cost of smart packaging technology remains a primary concern for many companies, as it is a key factor
          that limits widespread acceptance. Currently, smart, active and sustainable packaging represents a considerable
          proportion of the product price and the deployment of such packaging provides additional costs for the
          manufacturer and reduces its profit margin. If however, these increased costs are passed on the consumer in the
          form of an increased selling price, then sales may fall and market share could be lost.
Regulations

         The Brazilian Association of Technical Norms (ABNT) is responsible for the elaboration of technical rules,
          standards and specifications for the Brazilian packaging and container industries. According to the country‘s
          regulations, packaging companies are responsible for the recycling, disposal, and removal of packages that are
          likely to degrade the environment.




The Future of the Active, Smart, and Sustainable Packaging Industry in the BRIC Countries                             Page 2

© BRICdata. This product is licensed and is not to be photocopied                                      Published: March 2012
EXECUTIVE SUMMARY



Russia
Market size and potential

         The Russian smart, active, and sustainable packaging industry valued US$2.9 billion in 2011. Over the forecast
          period, it is expected to record a CAGR of 7.14% to reach a projected value of US$4.0 billion in 2016. Although
          this growth is expected to be driven by increased demand from the food and beverages, and personal care
          industries, the use of intelligent packaging technologies by pharmaceutical companies is expected to increase
          over the forecast period.
Trends

         Among Russian food and beverage companies, vacuum packaging is considered a key active packaging
          solution. Notably, vacuum packaging eliminates oxygen from packaging, preserves the quality of products, and
          extends their shelf lives. This new packaging solution helps companies cater to the growing demand for fresh,
          high quality products among Russian consumers.
         Recently, some of Russia‘s leading packaging companies have strengthened their position in the sustainable
          packaging category. Companies such as Rexam, Petainer, and RPC Superfos Russia have introduced several
          sustainable packaging solutions into the market. These initiatives form a part of these companies‘ strategies to
          offer improved and sustainable packaging products to their customers.
         The demand for nanotechnology-enabled flexible packaging has recently begun to grow in the Russian market,
          as it helps manufacturing companies to increase the shelf lives of their products. This packaging solution is most
          suitable for personal care, cosmetics, and food and beverage products, as it preserves the contents inside the
          package, allows reduced use of preservatives, and helps ensure better quality and longer shelf lives for the
          products contained.
         The growth of counterfeit production has had a significant impact on the performance of the Russian
          pharmaceutical industry and, consequently, the protection of consumers from counterfeit and adulterated
          products has become a key area of concern for pharmaceutical companies operating in the country. In order to
          eliminate or reduce these activities, a large number of pharmaceutical companies in Russia have begun to
          incorporate radio frequency identification (RFID) technology in their product packaging.
Drivers

         Russia recently announced plans to implement a new waste management law designed to reduce packaging
          waste, and to align the country‘s packaging regulations with other European states. The adherence to this law
          and the subsequent establishment of systems to minimize packaging waste is expected to increase demand for
          sustainable packaging.
         Personal care and cosmetics companies are increasingly using premium nanotechnology and thermal packaging
          technology in order to differentiate their products from other suppliers. This phenomenon is expected to generate
          growth for the Russian active, smart, and sustainable packaging industry as a result of increased spending on
          such packaging types.
Challenges

         The high cost of active and smart packaging technologies is a key reason for the low adoption of such packaging
          types in Russia. Furthermore, Russia is largely dependent on imports for advanced packaging technology, with
          this lack of technologically advanced domestic manufacturing further increasing costs.
         The Russian pharmaceutical industry has been substantially impacted by the lack of clear and stringent industry
          regulations. Notably, although the Russian Federation (RF) Criminal Code has a general rule of liability for
          breach of trademark rights, there are no specific rules that deal with counterfeit and adulterated drugs.
          Furthermore, there is no proper legal regulation on internet commerce, the channel through which the majority of
          counterfeit drug sales take place. The absence of clear regulatory procedures to prosecute vendors and
          manufacturers involved in counterfeit drug cases is a key barrier to the efforts of pharmaceutical companies and
          the Russian government to control this problem. This lack of a legal framework to punish counterfeit drug sales
          has also limited the use of intelligent packaging technologies in the Russian pharmaceutical industry.




The Future of the Active, Smart, and Sustainable Packaging Industry in the BRIC Countries                             Page 3

© BRICdata. This product is licensed and is not to be photocopied                                      Published: March 2012
EXECUTIVE SUMMARY



Regulatory framework

         Russia and the European Union (EU) concluded a Partnership and Co-operation Agreement in 1994. However,
          despite this, Russian government legislations have not yet been aligned with EU packaging and packaging waste
          laws. Furthermore, there is currently no proper, clear, and specific federal legislation that governs packaging and
          packaging waste in Russia. However, there are some standards on packaging and treatment of packaging waste
          mentioned in the Civil Code in the chapters, "About wastes of production and consumption" and "About
          environmental protection." Also, there are no specific laws governing active and smart packaging in Russia.
India

Market size and growth potential

         The Indian active, smart, and sustainable packaging industry valued US$3.3 billion in 2011, and is projected to
          record a CAGR of 10.00% over the forecast period. By 2016, it is expected to reach a value of US$5.3 billion.
Trends

         In contrast to the advanced state of development found in economies such as the US, Canada, Japan, and
          Western Europe, the Indian active, smart and sustainable packaging industry is still in the early stages of its
          development. Over the forecast period, fast-moving consumer goods (FMCG) manufacturers are expected to be
          the key end-users of active packaging materials in India. Furthermore, a large variety of active packaging
          materials are increasingly being used by packaged food companies, their use depending on the type of food
          offered. However, smart packaging is yet to be introduced in the Indian food and beverages industry. Moreover,
          many active and intelligent packaging solutions that are currently available have not been widely introduced due
          to a lack of demand. However, with awareness expected to increase and cost expected to reduce, the usage of
          active and intelligent packaging systems is projected to increase over the forecast period.
         The Indian sustainable packaging category valued US$3.19 billion in 2011, and is currently growing more rapidly
          than the overall packaging industry. Specifically, the sustainable packaging category is currently recording annual
          growth of 25%, while the overall packaging industry is recording annual growth of 20% and is expected to reach a
          projected value of US$4.87 billion in 2016. The rapid growth of the Indian sustainable packaging category has
          been driven by increased concern regarding carbon emissions and the growing health awareness of the Indian
          population.
         Recently, major food and beverage brands such as Lays and Bingo have begun using nitrogen pressure
          technology in order to package snacks. An increase in the nitrogen pressure of packaging reduces the
          permeability of oxygen and moisture and minimizes the thickness of the packaged layer, thereby increasing the
          shelf life of the product.
         The use of perforated packaging material is rapidly gaining popularity amongst packaged food product
          companies in India. This material is largely being used in the packaging of perishable food products such as
          dwarf beans, strawberries and lettuce, as well as niche bakery items such as pastries and pies. The material
          allows the products to go through a natural respiratory mechanism and maintains the freshness and nutritional
          content of the product. Notably, bakery products require material with more holes per square inch, while highly
          perishable products such as vegetables need fewer holes per square inch. Consequently, a wide variety of
          packaging material is available for processors ranging from 1, 4, 8, 32, 160, 360 holes per square inch of
          material, with material selection based on the nature of the product and its perishability.
Drivers

         The changing consumption habits of the Indian population have been a key driver of the growth of the country‘s
          active packaging category. Specifically, consumers have started to prefer packaged food but are not prepared to
          compromi
								
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