Market Trends of Middle East And Africa Paper And Paperboard Industry
Demand For Corrugated Boxes Backed By E-commerce Growth
- As sustainability becomes a pivotal concern across the supply chain, corrugated packaging is gaining traction. The pulp and paper industry's advancements in producing modern containerboards from raw materials enhance its recyclability. Moreover, there's a growing preference for corrugated protective formats over polymer-based alternatives like foams.
- The rise of e-commerce has reshaped the retail landscape. This trend, which has altered consumer behavior and retail business models, is now expanding in the Middle East, presenting substantial opportunities for industry stakeholders. Key drivers fueling e-commerce growth in the Middle East include high per capita income, robust transportation and logistics networks, rising internet penetration, and technological advancements.
- Regulatory and governmental bodies nationwide are increasingly prioritizing sustainable packaging solutions, such as corrugated boxes, for their environmental benefits and financial advantages. This emphasis is further propelling market expansion. For example, in July 2023, Apex Business Trading inaugurated a new branch of its Corrugated Boxes Factory at the Facility Building in Samail Industrial City, Oman, and simultaneously launched four innovative products.
- According to the International Trade Administration, Africa is projected to have over 500 million e-commerce users by 2025. The grocery sector witnessed a 54% surge, primarily driven by the pandemic and subsequent lockdowns. Similar growth trends were evident across various food delivery platforms, encompassing both the grocery and fast food sectors. Consumers displayed price sensitivity, often capitalizing on online promotions and coupons.
- Saudi Arabia is ambitiously positioning itself as a key player in the global e-commerce landscape, aiming to establish a significant national, regional, and international presence. Cross Border Magazine, a prominent international digital commerce news outlet, projects Saudi Arabia's online revenue growth to maintain a robust annual rate of 13.5% through 2027. E-commerce sales in the kingdom are anticipated to soar to USD 30 billion by 2027, further escalating to USD 44 billion by 2030. This surge in e-commerce engagement is expected to drive demand for lightweight, air-free corrugated boxes and secondary and tertiary packaging solutions.
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United Arab Emirates is Expected Witness the Fastest Market Growth
- As end-user industries expand significantly in the food and non-food sectors in the United Arab Emirates, the demand for containerboard, folding cartons, and corrugated boxes will rise during the forecast period. Changing food habits, driven by a growing adult population, are evident across the studied regions. This shift has intensified the food sector's demand for packaged foods, fresh vegetables, and fruits.
- The paper and paperboard packaging market in the United Arab Emirates is witnessing accelerated growth. This surge can be attributed to heightened environmental awareness among the populace, a rising demand for sustainable packaging solutions, and the need for appropriate packaging. Contributing factors include the burgeoning e-commerce market and an uptick in demand for electronic goods, household items, and personal care products, all spurred by economic growth and increasing per capita incomes.
- In light of the ban on single-use plastics, industry players are pivoting towards recyclable and reusable packaging solutions. The growing appetite for biodegradable packaging papers and boards further fuels this market expansion. A notable example is Khalifa Economic Zones Abu Dhabi (KEZAD Group), which recently announced the establishment of a new plant dedicated to producing recycled Kraft Paper Jumbo reels. This move diversifies the company's product offerings and aligns with the surging demand for biodegradable packaging materials in the United Arab Emirates.
- Ready-to-eat meal products prominently utilize cartons as their secondary packaging. Data from the USDA's Foreign Agricultural Service highlights the robust food and beverage landscape in the United Arab Emirates; as of April 2024, the country boasted 568 manufacturers and processors in this sector, predominantly small to medium-sized enterprises, and over 2,000 manufacturing companies. Notably, the United Arab Emirates's food processing sector caters to domestic needs and regional and global markets.
- Also, the growth in online food delivery services and takeaways would bolster the country's demand for paper packaging products. Food retail is the fourth largest e-commerce segment in the United Arab Emirates. Food e-commerce refers to items sold online from retailers or restaurants, whether groceries, packaged food, or ready-to-eat meals. According to the USDA Foreign Agricultural Service, the retail value of food e-commerce in the United Arab Emirates increased from USD 641 million to USD 1072 million in 2023. This growth is expected to be witnessed in the upcoming period with the rise in demand for products like folding cartons and boxes for packaging food.
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