In China, the food and beverage plastic packaging market has experienced impressive growth over many years. It is mainly due to the replacement of traditional packaging materials, rapid growth in the food industry, and the improvements in polymer properties and processing technology.
In 2007, the sales revenue of plastic food and beverage packaging was approximated at RMB115 billion, with a growth rate of about 18.5%. Around 6,042 thousand tons of plastics were used in the food and beverage packaging industry.
According to Frost & Sullivan's China Consultant of Chemicals, Materials & Food Practice Sammi Sun, the Chinese plastic food packaging industry experienced a challenging period in 2008.
"In the first half of 2008, the skyrocketing increase in plastic raw materials and much stricter regulations in China pushed a lot of small scale packaging companies out of the market. Then, the Chinese plastic food packaging market was further influenced by the world economic recession in the latter half of 2008," she said.
She added that although the oil price declined sharply releasing the cost pressure for plastic packaging, the packaging industry continued to suffer from shrinking demand, both domestically and overseas, because of the worldwide economic growth slowdown.
In 2009, however, Frost & Sullivan foresees a moderate growth of 12% in this sector as food and beverage are necessities and the economic recession's influence on this industry is relatively insignificant compared to other industries such as the automotive industry.
"Besides, the Chinese government is putting in place some policies to offset the negative impact of the global economic slowdown on China's growth, by lowering interest rates, strengthening infrastructures, expanding domestic demands, lowering export taxes, raising export tax rebate rates, etc. All of these are likely to increase domestic and overseas demand, reduce the cost of manufacturers and ensure the growth of the food and beverage plastic packaging industry," said Sun.
In terms of industry trends and specifics, Sun says companies must consider technology innovation as an effective way for packaging producers to survive. "When demand slows down and increases competition, technology innovation and enhancing product quality is important to be competitive. This pushes the Chinese food and beverage plastic packaging industry to upgrade its technology level," she adds.
Industry consolidations are also likely to be facilitated by the recession. She continues, "In China, great numbers of small scale manufacturers are surviving through selling low-tech products with low profit margins and these companies are likely to be eliminated during the recession period. Large-scale companies are expected to survive by enhancing product quality and winning more market share."
She also added that implementation of more stringent regulation in the food and beverage industry and other relative industries which include food and beverage packaging will be the future trend in China. "Food safety is a hot topic for China in 2008, mainly because of the melamine milk scandal. At present, the QS certification is in the process of implementation. This rule regulates the standard of polymers and additives used in food packaging and the requirements for production equipment and production process. All packaging companies that supply plastic packaging products to food industry should acquire QS certification," says Sun.
Therefore, the Chinese food and beverage plastic industry is expected to endure a tougher period in 2009. "For overseas markets, because of food safety issues in 2008, the demand will shrink in 2009. However, food and beverage are necessities and the economic recession influence on domestic demand is likely to be less than many other industries. Thus, the domestic demand for plastic packaging will be good in 2009," she continues.
One of the hot sub-sectors for 2009 to 2011 as identified by Sun includes PET bottles. She adds, "This is mainly because of high growth rates in the Chinese beverage market, especially in juice and tea markets. The growth potential for new emerging application such as PET bottles for beer and wine is very high."
"Furthermore," she continues, "the market concentration of PET bottles is relatively high in China. The top 3 suppliers have more than 80 percent of the market share and advanced processing technology. Most of their customers are large-scale companies with high anti-risk capabilities, such as Coca Cola, Pepsi, Uni-President, etc. Therefore, the resistibility to economic recession of the PET bottle industry is higher than other sectors, such as the packaging film market, which is highly fragmented and technologically outdated."
Source: Frost & Sullivan