Market Trends of GCC Packaging Industry
Increase Demand for Packaging in Food and Beverage Sector
- GCC has been registering constant growth in urbanization, which significantly means that more consumers in the country would spend on packaged food due to their busy lifestyles, creating an opportunity for the vendors in the country because food packaging is essential for food preservation.
- The packaged food market has been witnessing growth in the GCC market owing to innovations in food processing techniques and changes in consumer lifestyles, which is anticipated to boost product demand eventually, propelling the growth of flexible plastic in the forecast period. A significant emigrant population drives the need for Western-style food. Supermarkets and hypermarkets may be found almost anywhere and offer a wide variety of food.
- Moreover, the GCC's urbanization growth, economic recovery, and the reopening of the hospitality and tourist industries are all projected to contribute to a moderate increase in food consumption. For instance, according to various research estimations, most GCC nations have an urbanization rate of more than 80%. This would significantly enhance the number of consumers visiting grocery stores, mostly finding food packaged in rigid containers. Further, the food industry in the GCC has remained mostly conservative and grown progressively in recent years due to concerns about the economy and international relations. Such factors would contribute to the rigid plastic packaging market growth.
- The region includes significant countries such as Saudi Arabia, UAE, etc., where the food industry remains one of the most vital sectors in the overall economy. According to FoodexSaudi, the domestic food consumption in the country total is 3,130 calories per person per day. This creates a food sector annual consumption growth rate of 18.5%. Consumption rates are anticipated to expand by 55% through 2023. Such trends would significantly create demand for rigid plastic products in the region.
- Many Soft drinks companies are adopting to use of 100% recyclable elements in their packaging, including glass, metal, and plastic packaging. This trend of environmentally friendly packaging initiatives by beverage companies creates an opportunity for the regions market vendors to offer cans, glass, and other eco-friendly packaging solutions.
- For instance, In October 2022, The Coca-Cola Company Middle East and Global Village, the premier multiracial family destination for culture, shopping, and entertainment in the United Arab Emirates and the surrounding area, made Coca-Cola the official soft drink and water partner for the family destination with the signing of a strategic multi-year partnership, in which all Global Village locations would sell beverages from Coca-Cola Middle East and would create an opportunity for the packaging industries due to their application in storing the liquid.
- The region is also witnessing a rise in the consumption of processed food, fresh produce, and meat sectors. New food growth in the country continues to be fueled by health and wellness trends and the increase in consumers' ethical concerns. Additionally, population growth would be the key driver behind the demand for fresh food during the forecast period. A trend for organically produced foods would increase the presence of sustainable fresh food at premium price points in modern grocery retailers.Due to the surging demand for sustainable packaging in the processed food sector, regional players are opening new outlets to become one-stop shops for all packaging needs.
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United Arab Emirates to hold a significant share
- In the UAE, where urbanization is growing at a rate of over 87% and disposable income is rising, there is a growing demand for packaged goods, which opens new opportunities for various packaging materials, thereby contributing to the market growth rate.
- Further, the growing awareness among consumers of sustainable packaging is also among the major factors driving the packaging industry in the country. The growth is majorly attributed to the consumption of non-recyclable plastic packaging. This will result in a greater need for more easily recyclable and sustainable packaging materials, such as paper and board, recycled PET (rPET), and bioplastics, as well as a decrease in secondary packaging.
- The country's food and beverage sector is emerging as one of the largest sectors to adopt rigid plastic packaging products such as food containers and plastic bottles. Moreover, the expansion of the food, beverage, and dairy sector in the country further proliferates the demand for rigid plastic packaging products. For instance, in February 2022, Danish company Arla Foods, one of the leading dairy firms with brands such as Lurpak, Puck, Kraft, and The Three Cows, announced an investment of USD 17 million in new production lines in Saudi Arabia to diversify the product range and further its exports to the Middle East region.
- In addition, the rise of modern retail formats in the country and the availability of a wider variety of frozen ready-to-eat foods has led to a significant increase in demand, attracting time-sensitive consumers looking for convenient groceries. Moreover, the growing influence of Western eating habits among domestic consumers has increased the demand for packaged foods. This is further supported by a high proportion of immigrants, tourists, and young consumers driving demand for ready-to-eat, processed, and frozen foods.
- Companies are continuously working on upgrading their expertise, and investment will help them keep up with the market's rising need for flexible packaging items of the highest caliber. For instance, in March 2023, HexxaFlexible Packaging, a provider of flexible packaging solutions with offices in Ras Al Khaimah, announced the acquisition and installation of two new machines to meet the rising need for effective, flexible packaging in the region.
- Moreover, rising retail focus on dairy products and government initiatives toward encouraging the consumption of dairy products would further drive folding cartons in the UAE dairy products market. According to the report issued by the Business Registration & Licensing (BRL) sector of Dubai's Economy, the Emirate of Dubai has about 583 local and international companies engaged in dairy production and industry such as yogurt, cheese, natural butter, the manufacture and packaging of milk and dairy products, cream and food and dairy counseling.
- Also, UAE is one of the region's most important personal care products markets due to its large population and becoming the local hub for the beauty and skincare industry. Moreover, the rise of beauty encouragement is heightened by social media exposure that encourages word of mouth and is a valuable marketing tool.
- The country is also witnessing significant investments from global companies in the personal ad household care industry. This could augment the need for innovative packaging solutions, thus driving the market demand.
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