The packaging industry is one that can surprise even in tough times. It can be rationalized that much of the demand and sales for packaging, which is used mainly for food and consumer goods, is driven by necessity. The global packaging industry serves a broad spectrum of manufacturers including those of food and beverage, pharmaceuticals, and chemical products.
The ability of packaging to make a product stand out on the shelf is unquestionable. Equally strongly held is a belief that packaging will increase in importance in its role in the marketing agenda. According to a recent survey conducted by Swiss-based International Packaging Institute, in association with Adobe and EskoArtwork, a global supplier and integrator of innovative solutions for packaging, today’s brand owners have more capability at their fingertips than ever before as they manage an increasingly complex packaging supply chain. As the packaging supply chain grows increasingly complex and as global competition and regulatory oversight continue to grow, the ability for brand owners to efficiently collaborate with outsourced partners will gain in importance.
A recession can at most slow down the demand for packaging for non-essentials and various types of non-food retail products. Less expensive items, such as private label products might increase in sales while premium products sit on the shelf. The frozen foods market is showing signs of revival, and there may be an increase in purchases of prepared dinners as consumers cut back on eating out.
In addition, unexpected events can trigger demand; for example, pharmaceutical packaging companies are gearing up in every way to handle a swine flu outbreak.
Where does this leave packaging printers in the Middle East?
Printers have been struggling as profit margins shrink because of the rising cost of packaging conversion consumables. Promoting process improvement and optimization has never been more urgent as this has proven to be the key asset in ensuring competency and sustainability of businesses in both boom and bust periods. The threat of the global financial crisis on different industries drives businesses worldwide to strengthen their corporate position by exploring measures to boost operational efficiency, improve quality and implementing cost saving measures.
In this report, we focus on the emerging trends across the region and find out from leading players where the industry is heading.
KSA
Flexible Packaging to have Larger Market Share
Saudi Printing and Packaging Company
Established in Jeddah in 1963, Saudi Printing and Packaging Company specializes in the production of daily newsprints and other loose-leaf publications and magazines targeting various segments of the Arab World, in addition to commercial and package printing.
Dr. Saad Bin Rashid Al Dossary, CEO of Saudi Printing and Packaging Company, explains, “More than 60% of the GCC packaging market, especially in Saudi Arabia, is driven by food and beverage packaging, and the remaining share belongs to home and personal care products. Pursuing the global trend, the Middle East market is also witnessing a shift from metals and glass to plastic as the major packaging substrate. Also, rigid packaging is giving way to flexible packaging. Within the flexible packaging segment the dominance of polyethylene is declining and use of polypropylene is on the increase.”
He adds, “Apart from preserve and protect, the presentation power of packaging using available printing, foil stamping, metallizing, varnishing and embossing technologies are now becoming the main marketing tool for brand building. Products with health promises are becoming more common. In the food packaging segment, various aseptic and non-aseptic packs are positioned on to the shelves as per their respective brand strategy, where surface decoration and graphic appeal are following the same trends as those in Europe or US. Packaging today has also more to do with frozen food and microwave packages. Under hectic lifestyles, the trend of having a ready meal is gaining momentum in this region.”
Saad maintains that the impact of the recession has been less intensive in Saudi Arabia as compared to that in other countries in the Gulf. The company is looking at new investments and M&As in strategic locations across the region and beyond. This includes digital printing solutions to cater to the short run or on demand market.
“The mission, vision and strategy of SPPC are to expand into the best in the regional flexible packaging industry by year 2014, and our way forward is to offer a 360° product and service range to our valued clients. Our aim is to develop capabilities for short, medium and large scale print/conversion runs because each segment has its own demand and margin,” says Saad.
UAE
Experts Foresee Sustained Demand for Special Effects
National Packaging Industries
The local industry has recently witnessed unprecedented boom in all sectors of the economy, bringing with it a plethora of options for packagers. It goes without saying that the demand for services and products of the highest quality remains a norm.
One of the largest packaging facilities in the UAE, National Packaging Industries, of the A&P Group of Companies, was established in 1989; it currently has a production capacity of 30000 tons per annum. The company caters to segments such as garments, ceramic tiles, perfumes, oils & lubricants, etc., and exports corrugated boxes to several countries.
Ranjith Prasad, General Manager, National Packaging Industries, says, “Unlike in European countries, where the print details are very unique, particularly single colour with mandatory details, in the UAE, our customers want to have full multicolor print with more graphics and special coating. The ink coverage is almost 50-75%; in European countries, the coverage may be 5-10%. Even under the current financial climate, the demand for high graphic print and special effects trend continues.
Sajith Pareeth, Manager, Production and Development, adds, “Furthermore, the demand for wrap around cartons for automated packing lines have increased considerably, and we have been able to meet the demand with addition of a well known Bobst die cutting machine that is capable of producing cartons with dimensional accuracy and quality.”
Ranjith points out that the demand for short run and customized packaging is increasing. “Corrugated packaging is purely a bespoke product. For a regular customer, you cannot deny their small quantity demands and accept the order only because of their longer runs; we need to service our customers, whether they come with large or smaller orders. The acceptances of short run orders and our on time deliveries are the strengths of NPI,” he says.
Expressing great confidence in the strength of the company’s diverse portfolio, Ranjith says, “There is an impact of the global crisis on the packaging sector. However, our position remains relatively strong because our customer base is diversified with different business segments such as FMCG, ceramics, food stuff, lubricants, restaurant chains etc. An important factor during this time is the considerable reduction in prices, quick response, timely delivery and quality. As a responsible business partner, we have passed on the benefit of the raw material and other consumable price to our valued customers. Of course otherwise, it would be difficult for them to sustain in the market considering the current scenario.”
Short Run Jobs key to sustainability
Majan Printing & Packaging Company
Based in Ras Al Khaimah, Majan Printing & Packaging Co. designs and produces printed folding cartons, servicing diverse market sectors such as food and beverages, cigarette and tobacco, liquid packaging, cosmetics, and detergents.
Khaled Abdulla Yousef, General Manager, says, “One of the trends observed is the adoption of cost-effective measures that can simultaneously save money for customers and maintain a certain level of quality, such as the use of triplex boards instead of food boards. At present, owing to the economic constraints, the major demand is for short run jobs.”
Khaled points out that companies that have a strong structure and management have not been significantly affected by the financial downturn and that achieving success depends on using innovative design and emerging technologies that provide cost-effective products and services to constantly exceed customer expectations.
Kuwait
Food Packaging Finds Steady Growth
British Industries Printing & Packaging Company
The Kuwait-based packaging and print house founded in 1993 has grown into a leading provider of printing services from design to delivery.
Reyad M. Abu Daqer, Board Member and General Manager, highlights the position of the market in Kuwait: “Our clients have always preferred something special to stand out in the market: WB coating, UV coating, UV inks, die cutting, embossing, special locking system, etc. We offer Inline Foiling which produces special affects that discernible customers adopt as a unique and effective marketing tool.”
He adds, “Packaging for fast moving consumables, especially food packaging, is found to be stable; if there is any fluctuation in the purchase of bare essentials, it is definitely very limited.”
Reyad confirms the company’s commitment to offset and looks forward to a relatively gradual transition to digital. “We are specialized in offset printing which is the best medium for effective marketing. We are flexible with our services and do not let the length of the run interfere with customer satisfaction. Digital printing may have its advantages, but it is not yet sufficient to match the glory of good printing enhanced with modern technological advances,” he says.
Lebanon
Investments Remain a Top Priority for Packaging Companies
Luna Press
Founded in 1967, Luna Press has been offering printing services including labels and inserts, general packaging, cosmetic, food and tobacco packaging and general commercial packaging.
Katia Zalloum, Marketing Manager, Luna Press, comments on the demand for packaging in Lebanon: “The packaging trend in our area is for high quality see through packages. Clients, more aware of the importance of packaging on the customer’s impulse buying behavior, and eager to present high image for their products, are requesting more options for their packages, including, boxes with windows, hybrid printing, spot UV effect, hot stamping, cellophane coating and more colors of higher standards. Luna Press has all the adequate equipment to offer all the above options.”
She adds, “Customized packaging is becoming a must. Our industry is a very complicated one. The client should be aware that each job is a unique one and most of the time it requires lots of expertise and experience. Printing is much more than putting ink on paper, it is an artistic process where you should play the role of an adviser, expert and a friend! Most of the time, the client does not have a clear idea of the end product, this is where our role is major. Advising the buyer on the impact of the final product on the end user is creating is vital relationship where the buyer and seller are partners and not a hit and run connection.”
Katia throws light on the necessity of continuing investments despite the slowdown: “We believe in an old adage ‘adapt or die!’ We are indeed in the middle of a world economic crisis but the economy will eventually get better, so by investing now, we will be better prepared for the future. We are always attending international fairs and investing in our workforce in terms of training and education.”
However, she maintains that digital printing cannot replace offset printing and that the focus should be on specific markets. “Each one has a different use and purpose. We might invest in the future in this line but we are emphasizing now our production line to make it the newest and most up to date among our competitors. Our major market is not short run jobs; that’s why we are not interested for the time being in investing in this technology even though we believe that digital printing offers the best solution for such jobs. We focus on packaging and we are proud to have an added value, which is the ISO 9001 certification, and to offer high quality products and services. The point is not to aim to cover the market but rather to focus on specific markets and to be able to work efficiently and take the right decision at the right time.”
Katia quells rumours about significant impact on the industry due to the recession. “Until now, the recession has had a very little effect on the package printing industry in Lebanon. The recession, experienced by many countries around the world, triggered by excess housing inventory and loose lending practices, has had very little effect on Lebanon. The banking policies have been highly conservative and selective. That is why our financial institutions have been spared from the impact of the recession,” she says.
Digital Workflow for Package Printing
Full digital workflow solutions for package printing are becoming a critical element in supply chain management. Packaging can benefit from its long history with vendors to provide the tools necessary to automate the digital workflow process and, hence, cut costs and enhance speed-to-delivery. Investment in digital workflows will depend on how packaging professionals decide to tackle issues of declining margins, tighter deadlines, and the ability to communicate effectively throughout the supply chain.
Saad says, “At present, the use of digital workflow solutions is limited to very few aspects of our supply chain. However, we are expanding the system in a step by step manner to achieve a fully integrated digital workflow in a short period of time. Our aim is to integrate our systems with our major client base to develop a failsafe interface and network. It’s a time consuming, painstaking process but we are sure that once operational, we will be able to offer the fasted service and support to any of our client irrespective of geographic location. We understand that the region is moving very fast towards a very sophisticated logistics and distribution network system by adhering advanced RFID tagging, advanced data handling soft wares and all these aspects are taken into our future consideration.”
Ranjith is of the opinion that full digital work flow is essential nowadays. “At present, we are utilising this partially, whilst still depending on the conventional method. But the plan is to have a full digital work flow is in the pipeline for the next financial year. We prioritized the importance of customer requirement of visualizing the carton before the actual production; hence, we invested in a package designer suite, which will support the entire design process from concepts to samples, and the customer can view a 360 degree 3D visualization of their product,” he says.
Khaled says, “We have been upgrading our design center (prepress section) so that it will be equipped with the latest digital workflow solutions. Other expansion plans are in the pipeline, and we are seriously considering greater investment in this domain.”
Reyad says, “We have already initiated the digitization process; for instance, through a Lasercomb plotter with the latest software prepares prototypes for customer approval. Digitization of other aspects are in the advance stages of planning.”
Katia says, “We use digital technology in the pre-press department, in the job preparation, but when it comes to printing, we believe that offset printing offers the best results for long run jobs and packaging boxes.”
Growing Emphasis on Niche Packaging Markets
Predominantly, the packaging market has been driven by the end customers decision and choice. The rate of product innovation has gone up quite significantly, and an increasingly larger number of complex products are now indigenously produced by local manufacturers. Therefore, the metamorphosis to the tight and niche product segment is now becoming evident to a very large extent.
Saad comments, “Being a free market, supermarket shelves in the retail, hyper and super market is the open to global competition platform. Sensing the opportunity simply by import substitution in the last 15-20 years, the GCC Packaging conversion market has developed more than 65% in terms of installed capacity and technology. With the advanced technology investment, the capability shoot up was drastic taking the customers level of expectation to a new height.”
Ranjith adds, “The market for packaging is big, but the competition is very high as there are many corrugators in the market. One important factor as mentioned earlier is the price. During market conditions such as those at present, many of the buyers revert back to the strategy of pricing rather than quality. Therefore, it’s a challenge to meet the price factor as smaller players can offer highly economical prices without considerable quality improvement, due to a smaller stock of imported raw materials.”
Khaled indicates that customers are always on the lookout for alternatives, and therefore it is necessary for printers and packagers to be creative and support the vision of the customer. “In this regard”, he says, “customization will have greater prominence in the future.”
Reyad argues that niche marketing is not a new trend at all. “The Gulf, especially Kuwait is comparatively a small area where consumers with high purchasing power are selective. Knowledgeable producers have been taking smart decisions with regard to exclusive interest in smaller sectors of the market. Customization and generally restricted runs go with the territory,” he says.
Katia adds, “Printing jobs are becoming more demanding and more specific. A printing press cannot be equally specialized in different services such as commercial printing, packaging, books, etc.; therefore, it is essential for a company to choose what kind of market it needs to serve, to invest in this field and not spend its limited resources on unnecessary machinery, especially that our industry requires high investments. The better you choose your market, the better you guarantee your future success.”
The ‘Go Green’ Factor
The ‘environment’ factor has grown into an important issue in recent times and has started getting into shape through social awareness. A product can be more appealing to consumers who prefer recyclable packaging or packaging from renewable sources. Universities and institutions in various GCC states are putting it as a prominent agenda.
Saad explains, “As the economy continues to struggle, people want to know what companies are doing to reduce packaging costs, whether it’s through materials reduction, conversions or other initiatives. They also want to know about the latest packaging sustainability efforts and how improved recycling programs can reduce cost and further protect the environment. And they are interested in knowing what lies ahead; what new technologies and ideas will influence packaging in the future. With the volatility of the world oil markets and governments’ bid to reduce plastic usage, plastic recycling is receiving more attention in the sector. Plastics recycling is also been seen as a cost-cutting measure by plastics producers.”
Ranjith adds, “The ‘Go Green’ initiative is showing great progress; environmental issues are very sensitive and are an important aspect in terms of customer requirement as well as the government regulatory authorities. Waste disposal is a major issue and it need to be as per the mandatory regulations. In addition to recycling of paper, our latest investment has been in an In house Waste Water treatment plant, which definitely ensures the purification of waste water from the chemicals, metals and bacteriological elements, which is further re-used within the factory.”
Khaled, however, plays down the large amount of attention given to companies going ‘green’ and considers it to be a hype. He says that in reality few companies are aware of eco-friendly procedures and that it will take a considerable amount of time to see widespread consciousness on fully adopting environmentally friendly policies.
Reyad says, “More and more people are becoming environmentally conscious. In some countries regulations are in place to make parties involved pro active in protection of environment and promote sustainable growth. Customers, mostly with international exposure, mainly due to franchise obligations, show preference for environmentally friendly productions.”
Katia concludes, “This phenomenon is new to our part of the world. It needs more public awareness in order to change the existing culture, and greater incentives to printers and their clients in order to change current practices; however, the environment is becoming an issue we can no longer ignore, as international clients demand adherence to strict environmental requirements. Luna Press is committed and involved in environmental issues; mass commuting for its employees as well as recycling and proper disposition of its waste, are just few of the measures the company has adopted to protect the environment.”
