Monday, 13 February 2012

Australian Packaging Industry - Forecasts to 2015

The Australian packaging industry is the thirteenth largest and thirteenth fastest-growing packaging industry in the world and is expected to experience strong growth from 2011–15, driven by growth in the food and beverage, pharmaceutical and retail industries, and the high level of disposable income in Australia. The industry faces challenges from environmental regulations and the advent of ‘smart’ packaging, and some companies may be deterred from investing in the industry because of its highly consolidated nature.

Australian packaging industry to grow in forecast period (2011–15)
From 2006–10, the Australian packaging industry grew at a CAGR of nearly 4%, with paper and board packaging the largest category in 2010, holding a third of the total market share for packaging. Driven by demand from the food and beverage industry, the Australian packaging industry is expected to witness growth at a CAGR of nearly 4% from 2011–15, and to reach a total value of just over US$11 billion.

In the forecast period (2011–15), the food and beverage industry, which accounts for 60% of all packaging demand in Australia and was valued at just over US$80 billion in 2010, is expected to grow at a CAGR of approximately 6% and to continue to aid growth in the packaging industry. In addition to this, food and beverage companies are expected to focus on exporting their goods in this period, and this will bring international demand to the Australian packaging industry.

In addition to this, the aging population in Australia will also be a factor behind growth in the packaging industry in the forecast period. From 2010–50, the number of people aged 65 and over in Australia is expected to increase by 10% and this will lead to an increase in spending on pharmaceutical products. As the packaging industry supplies tubes, blister packs, cartons and bottles to the pharmaceutical industry, it will also benefit from the spending habits of an aging population.

Paper and board packaging to grow steadily
The largest packaging category, paper and board, which constitutes a third of all Australian packaging, is expected to grow to a value of just over US$4 billion from 2011–15, driven by demand from growing industries such as food and beverages, electronics, pharmaceuticals, tobacco and personal care products. Australia is the world’s fifteenth largest producer of paper and board packaging.

Outlook for packaging industry is challenging
Despite predictions flor growth from 2011–15, the Australian packaging industry will face challenges in this period as it attempts to provide customers with cost competitive and innovative packaging solutions. For example, packaging manufacturers have developed ‘smart packaging’ in which microchips are embedded in packaging in order to provide information on products and to facilitate supply chain management. Other packaging products include ‘intelligent’ solutions which display the temperature and age of food products during transit. As demand for these ‘intelligent’ packaging solutions grows, packaging companies will be forced to increase their expenditure on packaging technology.

Packaging industry in Australia highly consolidated
In the past decade the Australian packaging company has become increasingly consolidated, with just two to five companies operating in each packaging category and collectively holding around 95% of the market share. The presence of these large and dominant companies, along with the high volume and low margin nature of the packaging industry, may deter smaller companies from entering the market. The competition is intensified in the flexible and rigid plastic categories due to the presence of a large number of foreign companies.

Per capita expenditure on packaging ranks eighth in world
In 2010, per capita expenditure on packaging in Australia stood at approximately US$420, which was higher than the average of the top 20 countries. As a result, Australia has the eight highest per capita spending on packaging in the world, after countries such as the US, Switzerland and France. In the forecast period, the per capita spend on packaging in Australia is expected to further increase and this will aid growth in the packaging industry.

As Australia did not fall into recession during the review period, its retail industry grew at a CAGR of over 8% and in 2009, average disposable income stood at approximately US$10,000. This means that Australian citizens have the capacity to spend their disposable income on packaged products within many industries, including retail and food.

Packaging industry is regulated by environmental laws
From 2008–10, the Australian government implemented the National Packaging Covenant, which was a voluntary initiative to reduce waste created by packaging and office paper. A national recycling rate of 65% was established for post-consumer packaging and a 25% recycling rate for packaging products that are difficult to recycle or cannot be recycled. In addition to recycling targets, the Australian government also restricted the production of plastic bags, which are particularly bad for the environment. These reductions in packaging production and recycling schemes provide a challenge for the packaging industry in Australia, which must adapt its manufacturing lines to create environmentally friendly packaging manufacturing and meet recycling legislation targets.

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4 comments:

  1. very informative and comprehensive industry report provides top level overview of packaging industry in Australia..It helps to understand emerging trends and opportunities in the Australian Packaging Industry..

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  2. indeed this review was good, but missing the source. Please put the source of the data so we can also check that this article is based on real fact or not. thanks

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